March, 23, 2010

It has been well documented that during the subprime-loan era, lenders took all kinds of shortcuts, such as failing to verify borrowers' employment or income, to sell mortgages.Now, Bank of America Corp., the nation's biggest mortgage lender, is saying one of the nation's largest title insurers did much the same thing and should be on the hook for more than $500 million in losses.

In a lawsuit filed this month, BofA alleged that First American Corp. relied on homebuyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches.The shortcut was part of a program called QuickClose that BofA said in its suit did not require "title searches in connection with loans processed under the program."The bank said in the suit that the insurer has not made good on more than 5,000 mortgages it was supposed to protect.

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