Defalcations: Today's Challenge in Title Insurance
Defalcations are embezzlement by individuals who are serving as the closers of a real estate transaction. When funds associated with a closing are misappropriated, if a closing letter is in place, the title underwriter that issued the closing protection letter generally is responsible for properly financing the closing and generating the appropriate public information related to the public records and the title insurance policy. However, from a consumer's perspective there are gaps in coverage and protection that can exist. This white paper explains how title insurance helps to diffuse the risk of defalcations.