The only part that is wrong with the picture is abstractors allowing it to happen.  I see what Steve was getting at - technically everything that is listed on a settlement statement is suppose to be actual costs to the consumer, no more, no less.  Escrow accounts are suppose to totally balance out from fees charged.  If a "settlement fee" represents several things they still are split out into separate payments.  If in an audit it is found that originally an amount was allocated to be paid to an abstractor then it changed, in my state at least, that amount would have had to be returned to the consumer.  Our settlement statements are very much line to line even listing recording fees, tax certificates, etc. separately.  We are an attorney- based state and an attorney would be disbarred for ethics violations if everything didn't balance out. 

Here a settlement fee would not generally entail anything to do with the title examination but rather a fee charged to actually get everything together to perform the closing, including the mobile notary, if used.  That yes is usually a flat fee but an internal office fee, save and except the mobile notary, which if used, I am assuming is deducted from this settlement fee and the balance going to the office that got the closing papers, etc. together.