I am with you in your belief that title agents should be compensated for services rendered.  I am not so sure about your position on the unfair effect on the consumer.  If it were the realtor or the mortgage broker ultimately paying for the service, I might agree with you.  But those charges are paid by the consumer directly.  So, really the consumer who does not complete the deal is receiving the benefit of the wash - not the referrer of service.

The credit report and appraisal usually make up the non-refundable mortgage application fee.  With title fees payable up front in the same manner, it would make it that much more difficult for the borrower to turn down a loan that differed in terms from those originally expected.  I suppose this might not be such a factor with the new tolerance rules imposed by HUD.  And the pre-application without the application fee might also assist with the borrower's ability to shop the deal.  (I'm arguing with myself now.)

I guess if the new HUD rules have their intended effect, they might result in a lower overall fall-through rate anyway.  But, let me ask you this:  Since it seems most PA title agents are not charging the borrower when the loan falls through, they are probably building the cost of the fall throughs into the overall fee structure for the deals that do close, correct?  If that is the case, will there be a wholesale reduction of filed rates if the agents are compensated routinely for those that don't close?