So, let's get this straight.  "One of our insured" suggests that your company insured the borrower on his purchase.  You paid off the unsatisfied mortgage based upon a payoff statement that was provided to you.  The loan your company paid off resulted in a release posted to the property down the block.

Somewhere in the interim, the owner(?) obtained a court order correcting the legal descriptions? Here's where I get confused.  Unless the legal descriptions were fixed by a very speedy court order, the release of the mortgage down the block, which should have released the lien on your property, would already have been recorded with the wrong legal description.

That's not all that confuses me.  When you insured the purchase (as your post seems to suggest) you should have received a copy of the mortgage in question in order to complete your examination.  So, your company would have also had the opportunity to question the address on the mortgage.

Not having a clue as to how the records are indexed in the nameless county, I would also be interested to know whether you believe the abstractor should have pulled all documents pertaining to the property down the street - to be certain that the problem was not perpetuated.

As to the later HELOC search ordered by the bank, I will venture another guess:  Some banks in our jurisdiction are a little bit lax in the search product required.  If they were to order a cheapo search without a search of the court records, and the court order were not filed with the clerk/recorder's office, it might not get noticed.  I can't say this is the case because, as I pointed out, I am clueless about the indexing and searching methods in most places, much less the nameless county.

Either you left out some helpful details, Diane, or I am erring by imagining this in my locale only - which may be worlds away from yours.  One big difference in our locales is that, in mine, the lender would have simply had the two mortgages (and the release, if necessary) rerecorded with the correct legal descriptions, with a notation on each as to the purpose of the rerecords. 

Hmmph...you could have saved me a lot of time if you would have not left out the minor details.