Even the most careful agent, issuing the most scrutinized policy is worthless without a good title search as the foundation. The major underwriters have continually reduced their requirements for the title search. Many agents now sub-contract out the search to unqualified, unregulated title searchers for the lowest fee they can negotiate.

Ask yourself why every other person involved in a real estate closing is required to have a license and continuing education; real estate agents, mortgage brokers, surveyors, appriasers, and, of course the title agents. Yet, independent abstractors are free to take an online course and begin selling title searches with no oversight.

The Iowa program is most often critisized because it takes longer to close. That is mainly because they still require a thorough title search by a professional title searcher. In most parts of the country, its all about short-cuts, turn-around time, and low fees. Unfortunately, the fees get marked up before the consumer pays them so the only party that benefits from the “reduced cost” of the search is the title company.

For the process to work at its best, the whole process needs to be regulated from top to bottom. So heavily regulating the rest of the industry and ignoring the title searchers is very much like closing the barn door after the horses get out.

Robert A. Franco
SOURCE OF TITLE
http://www.sourceoftitle.com

In October, the Washington Insurance Commissioner issued a report concluding that title insurers have paid inducements in violation of Washington law. The Commissioner concluded that “this industry is rife with practices gone haywire.”
You can read the report at: http://www.insurance.wa.gov/publications/news/Investigation_Title_Insurance.pdf

My law firm, Phillips Law Group, PLLC, has filed a suit against some of the title insurance companies identified in that report on behalf of insured home purchasers and refinancers If you are interested in this case and are not an employee of a title insurance company, we would be happy to speak with you regarding your own experiences as we continue to conduct our factual investigation of the case. My contact information is set forth below.

Thomas E. Loeser
Phillips Law Group, PLLC
315 Fifth Avenue South, Suite 1000
Seattle, WA 98104-2682
t 206-382-8808
f 206-382-6168
tloeser@jphillipslaw.com
http://www.jphillipslaw.com

Good information from California Dept of Insurance.

Jargons:
http://www.insurance.ca.gov/0100-consumers/0200-consumer-tools/0300-compare-premiums/title-terms.cfm#Escrow

Compare Premiums:
http://www.insurance.ca.gov/0100-consumers/0200-consumer-tools/0300-compare-premiums/index.cfm

Complaints ratios:
http://www.insurance.ca.gov/0100-consumers/0200-consumer-tools/0500-complaint-study/index.cfm

The wonderful thing about all of the media focus on title insurance is that the light of day is shining on the industry. Economic laws will prevail given a fair playing field. Consumers acting in their own self interest – using all available tools will select title/escrow/closing providers based on price, quality of service, convenience and all the factors everyone uses when they shop. Our industry is morphing in a way to will raise the level of service and lower the price. I expect that the businesses that rely on kickbacks and shams won’t be able to compete. There just won’t be enough money in it to pass around. This is a natural selection process. I fully trust the consumer’s ability to serve their own self interest. My attention is targeted on their needs. BTW the Post Gazette ad ran last Sunday and I am pleased with the response from consumers and some industry professionals. Its really separating the wheat from the chaff. If you are of like mind and a title professional, I strongly suggest you take a stand publicly and start promoting that your fees are not padded to cover referral programs. Something big is happening and I think our industry is about to come clean.

bob

Thanks for the feedback. That is the first time I’ve heard of a title company doing ads on the radio. Interesting that they are targeting Bellingham. What stations are they advertising on? That would probably give us a hint at the the audience they are trying to reach.

Bob

Ask a title rep if THEY WOULD CARE if they advertised with an agent and the agent was found to steer business to another competitor. 9 out of 10 would REALLY care.

For example, when we did an ad with an agent from the major r.e. company in our area, the title company that also had an ad with the agent got ticked off and pulled her ad.

Gotta go make lunches for the kids tomorrow…..bye!

Ardell, I am aware of RESPA and the allowed practice of paying for only the portion of the ad. In escrow we have a variety of RESPA issues to comply with outside of the issue being discussed. So, I agree with you that many are trying to comply with RESPA. Unfortunately, what many people say is not necessarily what they practice.

For example, who are title companies marketing to? The consumers? Nope. To every agent that advertises in those magazines. But that is old news. Why don’t title companies advertise to the public? This is a KEY problem that a report raised to the Subcommitte of Housing & Community Opportunity in Washington DC this past Spring.

How to pass the muster test? Pull the ads and see who starts complaining. Is it the public? No. It would it be the real estate community losing the subsidy of ad dollars. Another suggestion I had was to not allow title and settlement service providers to advertise on the same page of agents. Make them independant.

Am I the one shedding light on this issue? Hardly. Title companies CAN’T stay out of the media. Title companies are being investigated by both HUD and State Attorney Generals. They are having a hard time NOT being charged with “alleged” kickbacks. Every major title company has paid out tens of millions this year alone to settle these cases. This is chump change in a mutli billion dollar industry dominated by only 4 -5 major players across the county. A senior title officer of one of the largest insurers in the country just received jail sentencing this past week for “alleged” kickbacks and the same company THIS WEEK was fined millions in California for “alleged” kickbacks.

From the report submitted to the ‘Subcommitte on Housing & Community Opportunity’ this past April 2006 by former Director of Insurance, Robert Hunter:

“As mentioned, title insurance is not marketed directly to the consumers who buy it, but instead is marketed to the intermediaries that service real estate transactions. As a result, there is almost no competition for consumers as there is with the marketing of auto and homeownership policies. Instead, title insurers compete to secure referrals from the real estate service providers who steer title insurance buyers to their businesses. For example, Stewart Information Services Corporation, the nation’s fourth largest title insurer, does not include homebuyers in its list of customers in its Securities and Exchange Commission filing, only “attorneys, builders,
developers, lenders and real estate brokers.”

How can maverick state Iowa ban title insurance companies? Why is it that their citizens are charged a fraction of the premium consumers pay in other states and here in Washington?

With stuff like this that consumers read, it appears the real estate community has a LONG WAY to go to gain their trust. Again, not everyone should be painted with a broad brush. But, there are enough bad actors and ethical breaches that makes consumer driven agents like yourself work in a tougher environment.