Scott Woolley at Forbes strikes again with another blasphemous article about title insurance. You may remember the rather insulting article he wrote in late 2006 - Inside America's Richest Insurance Racket.  So far, all he has shown is that he hasn't got the faintest clue about title insurance, but he is spreading his ignorance like an infectious disease.  In his latest rant against the industry, How To Save On Home Closing Costs, he mentions "title insurance and other dubious charges."  Somewhere along the line, perhaps in a former life, he must have been wronged by a title agent... this is apparently his revenge.

In the 2006 article Woolley basically came to the conclusion that title insurance was over-priced and that technology "could severely curtail the need for title insurers."  Somehow he even got Parker Kennedy, from First American, to say that with technology improving, "eventually insurance won't even be an important component of the product."  I'm sure you know what I think about Kennedy. 

And, technology seems to be the focus of Woolley's new article, too. 

Title insurance dates back to the 1800s, when property records were kept on paper and buyers were required to make sure they had clear title to the land they bought before a bank would lend them money. Two centuries later, the business is belatedly being dragged into the digital age, despite fierce lobbying by some members to slow the process.

But, what Woolley doesn't understand - is that how the records are kept doesn't really have anything to do with the work involved or the cost of insuring titles.  We have been doing title work here through the evolution of paper records to digital recording.  The big myth is that it is faster to search titles on a computer than it was to use the old books.  In my experience, that isn't the case at all.  We have noticed no appreciable difference in the time it takes our examiners to complete a title search.

First, indexing errors are much more common now than ever before and finding them can be much more time consuming.  Rather than go to an index page in a book and scan through the entries, we now have to anticipate indexing problems and search several different ways.  Each time we have to wait for a new results page and scan through the results.  And, in some counties, the images are only available on the computer and they are sometimes slow to pull and view.

Second, the computer does not obviate the need for a human title examiner to review the documents and assemble all of the relevant information.  For some reason, Woolley seems to believe that the computers have made this process unnecessary.  He is under the mistaken impression that all we have to do is enter an address, or some other information, and we get an instant list of all of the document, and only those documents, that affect the property.  If only that were the case.

And, the search is only one part of the whole process.  Although it is an integral part, after all, a thorough title search is the foundation for any title policy, there is more work to be done in order to insure the title.  Someone has to review all of the documents to determine the status of title and find any defects.  Defects, according to ALTA, plague 1 in 3 properties that are searched.  I wonder how Woolley thinks computers are going to clear the title on these properties. 

Also in 2006 article, are Woolley's misleading statistics that the premiums for title insurance has risen since 1993 and the cost of claims has declined since 1989.  He seems to be indicating that because their are fewer claims the cost should be decreasing.  However, what he misses is that the cost is relative to the number of defective titles... fixing more defective titles takes more time and, thus, costs more money.  The fact that the cost of claims has come down is a result of the industry doing a better job of clearing the titles.  Perhaps the industry should be applauded for providing clear title to more homeowners.

As I have said in the past, Woolley isn't soley to blame for his ignorance.  He has simply fallen for the propaganda disseminated by some of the biggest companies in the industry. Instant title searches, commitments in 15 minutes or less, and various other unrealistic claims have certainly made it appear like technology can replace good title agents and save everyone money.  But, perhaps this faulty reliance on technology is the reason that 1 in 3 title searches reveals a defect and why title insurance premiums are rising to deal with the clean up.

Regardless, for Woolley to persist in his vendetta against the title industry, one that has spanned several years now, he must have a personal grudge against someone.  Maybe his ex-wife is a title agent... who knows.

Robert A. Franco
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