Judges have placed both companies in the hands of receivers. First Ohio Title has filed for bankruptcy. Critics of the state's laws concerning title companies said the cases point out the lack of oversight for such companies. They're not bonded and there's very little legislation covering title companies. Legislation should be required that the funds be isolated.
Title companies are the middlemen in real-estate transactions.
They accept money from the property buyer and the buyer's lender and distribute it to the seller's mortgage company and other parties to the transaction. Escrow money usually is kept separate from the title company's operating account. In the case of Midwest Title and First Ohio Title, the escrow and operating accounts were not kept fully separate, according to the lawsuits. Buyers whose deeds were not recorded could lose their down payments and still owe their new mortgage. Sellers whose money wasn't distributed might lose any profits from the sale of homes.