Title insurance has always been a very controversial topic at lease in my mind. The consumer pays for a risk the lender is taking. This isn’t so bad, but the consumer has very little choice on title insurance providers. I think as long as there is choice then I believe the consumer is protected. Here is an article in CNNMoney that provoked this post:
Spitzer said to eye title insurers
Paper says the New York AG’s office is looking at possible illegal rebates and referral fees.
NEW YORK (CNNMoney.com) – New York Attorney General Eliot Spitzer may have found a new industry to investigate, as a published report says state authorities are probing whether some of the nation’s biggest title-insurance companies illegally paid secret rebates and referral fees that could have raised costs for those buying or refinancing a home.
The Wall Street Journal said the New York state authorities are in the late stages of the investigation, which follows probes in some other states. The paper did not estimate how much money borrowers might have been overcharged due to the practices.
Eliot Spitzer is reporting probing the practices and pricing of the title insurance industry. Title insurance can cost anywhere from a few hundred dollars to hundreds of thousands for searches of title records to guarantee the property does not have any hidden owners, liens or other encumbrances. It is required by banks before they will issue a first mortgage on a property.
Title-insurance rates are set by some states, including New York, leaving consumers little room to bargain, according to the paper. It reports investigators in New York believe some title insurers misled the state into setting rates too high in order to fund questionable rebates for a few large customers.
Read full article: http://money.cnn.com/2006/03/02/news/companies/spitzer_titleinsurance/index.htm