I doubt that for $35.00 they are getting insurance. Probably something more along the lines of the lien protection policies that Fidelity National Title is promoting. Seems to be a response to the Radian thing of a few years ago. It may be that Fidelity or someone else has further dumbed down the product and reduced the actual coverage for the lender.
That being said, it has been the practice in central Ohio for many years for second mortgage lenders to not require title insurance. Most just want a current owner search. The companies that perform this work have long, through disclaimers regarding liability, generally limiting their exposure to the cost of the search. As much as we may wish that all loans included a through search of the records, in most cases involving a second mortgage it really is not needed, and adds additional costs for the borrower. The credit report is a pretty good indicator of any lien problems the borrower may have. Given that they expect a fair amount of default on these loans at the outset, lending the money as a secured second is more profitable than an unsecured line of credit. They can charge some upfront fees and improve their APR. It also puts the lender in a better position in the event of a bankruptcy.
I don't think title abstracting is dying so much as evolving. The industry got a gigantic boost years ago when other forms of consumer interest were made non-deductible. Prior to that time, most of the equity loans we now see were done as signature loans. Nobody took out an equity loan for an auto purchase for instance. For that matter, people did not refinance as much as they do now. When I started, we charged extra for reporting a refinance or equity loan. They were that rare. I think we are moving back to where we were when I started. The majority of our work is going to be in sales. The lenders have every right to try to reduce costs on seconds and refinances. It is bad for us, but good for the consumer. The only downside I see for the consumer is the lack of a title company monitoring the proper release of old liens.
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