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OCTOBER 19, 2007

Title insurance companies accused of running
"racket"

First Realtors took it on the chin when the U.S. Department of Justice
accused them of pushing overly high commissions on consumers.

Now it's the turn of title insurance companies. Here's a critical
article from Forbes that's still making the rounds after being published
months ago.

Here's a juicy part concerning First American, the country's biggest title
insurance company:

First American has doubled its prices in a decade, to an average charge
of $1,472 per home for a title search and insurance. Meanwhile, thanks to
computerized record-keeping, the cost of searching for a home's ownership
records online has fallen to as low as $25. Technology also has helped make
mistakes rarer; now only $74 of each policy goes to pay claims--that is, make
home buyers with defective deeds whole. That leaves a $1,373 spread for overhead
and for profit.

Fancy this: racetracks that keep 93% of your money and return only 5% in
winning tickets. They wouldn't last long, not unless they could somehow rig the
rules to both forbid price competition and make the purchase of race bets
mandatory. That's more or less what the title insurance industry has done to
American homeowners.

When I bought a new home last year I certainly felt overcharged by paying
more than $1,000 on title insurance. My home site had been a citrus grove for
decades - not much chance a tangerine was going to stake a claim to my
property.

What do you think?

Posted by James Thorner at
8:59:00 am on October 19, 2007 | Permalink
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