My two cents: The GOA article, as a whole is excellent reading,but points our how truly misunderstood titleinsurance is. It is not reasonable for anyone to compare Title Insurance premiums to Property and Casualty premiums. P&C companies pay claims based on uncontrollable future losses such as hurricanes. Title claims can be controlled, as they cover past events. Also, Unlike P&C where you pay insurance every year, title premiums are only paid once, and the policy lasts as long as the mortgage or ownership interest lasts. The products are totally different. (Although I believe the industry is moving in that direction because of the lack of concern over the quality of abstracting and examining.)
Title Insurance used to be a thorough search of public records, with most time and effort spent unearthing and fixing problems that have been identified - unpaid taxes, missing releases of mortgages that were paid off when refinanced, but never released by the lender, unpaid Federal Tax Liens, and hundreds of other items. It has been very important to the mortgage industry and the consumer that title companies deal with these issues.
The GAO report to Congressman Oxley has a lot of meat. There certainly are areas that I, as a consumer and consultant to title insurers, believe Agents, Underwriters and Regulators should look at:
- Regulation varies significantly from state to state. In many cases there is NO OVERSIGHT.
- Little or no effort exists to co-ordinate between various Federal, State, and local regulators (Insurance Commissioners, HUD, RESPA, Attorney's General, FNMA, FHLMC, etc.) Clear and consistent oversight and rules would be in the best interest of consumers, title insurers and agents. No one seems to be in charge.
- Some Title Insurance Underwriters have given away the store, signing virtually any agent that brings business, without regard to whom they are signing as an agent. Just type "title insurance fraud" in any search engine and it's clear. Numerous title agencies all over the US are being charged with misappropriation of funds, fraud and sham title operations. Perhaps not all, but certainly some of the major title underwriters are encouraging unfair and unethical business practices by not disclosing relevant information as the relationship between the lender, builder, real estate agent, closer, etc.
- Premium "splits" between large Agents and Underwriters in some instances are outrageous. It is only fair that there is accountability on these issues to the consumers as well as the stockholders of these large underwriters.
- Other issues pertaining to many inflated settlement fees, should also be addressed. For example, a title company may charge a $30 delivery fee for a courier to deliver a mortgage payoff, when their out of pocket expense is perhaps $10. They pocket the difference, is that a "reasonable difference" and should "mark-up" of fees not be disclosed?
- Other issues - referral fees and "inducements" to do business with a particular company, although in violation of RESPA, occur in many, if not most, transactions with no effort to disclose the information.
- There certainly are weaknesses in the Affiliated Business Arrangements, and I believe the GAO will uncover a host of embarrassing issues, and cause much distress for the Title Industry before they are through. It may be a wake up call.
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