"I have a keen interest of Ethics in Business, particularly real estate. A good portion of my comments, questions and posts are with this in mind. And, frequently, our office comes across ethical issues that we encounter or observe from clients, loan officers and Realtors that we work with everyday."Consumers get the short end of the stick.
- Tim Kane (Blog handles: anonymous, Tim, S-Crow, Chief Errand Boy)
Title Insurance is a necessary function in the purchase or sale of a home. I'm posting this topic here and also over at Rain City Guide (a blog predominantly for Realtors and other professionals who work in the industry). It will be interesting to get commentary from both sides. Realtors don't really hang out much or at least post comments in the open at Seattle Bubble and consumers don't really comment that often at Rain City Guide. If only a few consumers new to home buying learn a little about title insurance, then I'll be happy. I believe this will be educational for everyone.
Title Insurance is one of the least understood, yet one of the most expensive closing costs consumers will encounter in a purchase and sale of a home. Recently, title insurance companies have been under significant pressure to clean up their act. Many state investigations (insurance commissions or Attorney Generals), including here in Washington State, have looked into and filed cases against title insurance companies for alleged kickback schemes involving real estate brokers, lenders and builders. Many high profile cases have led to significant settlements with title insurance firms.
I hope to post the issue simultaneously on both blogs so that, if people are interested, you can get quite a glimpse into how both consumers and Realtors address the issue.
Many facts I'll present are eye opening, controversial and alarming. Title insurance is huge business. Huge. Realtors, lenders and builders steer clients to affiliated business relationships (ABR's) they have, including title companies. It raises questions that I'll try to answer:
- Are affiliated business relationships created with consumers best interests in mind or is it used to steer/control another profit center in the revenue generated by the transaction?
- Why do title insurance companies never advertise to the public?
- Why is title insurance so expensive?
- Why do only four or five title insurance companies have a stranglehold of 92% of the entire US market?
- Why does the maverick State of Iowa ban title insurance companies? And how can they self insure at half the cost of title insurance firms in other states?
- If you own a home, did you shop for insurance or were you steered by the agent, builder, lender or escrow firm you worked with?