As ALTA tried to convince state regulators to ban the lien protection products of Radian Group and other non-title insurers, it argued that such products were dangerous and misleading knockoffs of real title insurance, and that such offerings would undermine the integrity of the public record-- a valuable resource that traditional title insurance would preserve.  But ALTA's largest members were already undermining those arguments.

In the 1990's and into the new millennium, lenders aggressively sought to cut time and cost from the process of issuing home equity loans and home equity lines of credit (HELOCs).  One of the largest costs of these transactions was traditional title insurance, and the title exam process that underlie these title insurance policies took time-- too much time, some thought, especially considering that title-related claims on this type of lending were very rare.

In an attempt to fill a perceived need for something faster and cheaper than traditional title insurance for these types of loans, several non-title insurers introduced what was termed "mortgage impairment insurance" or "lien protection insurance" during this period-- insurance policies similar in some ways to traditional title insurance, but which offered a more restricted range of coverage and which in most cases used evidence other than a title search-- typically credit reports, borrower statements and/or affidavits. 

Perhaps the most notable foray into lien protection insurance was that of Radian Group, Inc..  Radian, an established provider of mortgage insurance, had bought a company, ExpressClose, which had offered a lien protection product.  Though ExpressClose ceased sales of its product in 2000 under regulatory pressure from various states, Radian was undeterred, and announced the introduction of its own lien protection product in 2001, marketing it as a "title insurance alternative." 

Radian's bold insurgency into the title insurance market sparked swift reaction in the title industry.  The American Land Title Association (ALTA), the main professional association for title insurers, had always argued that such lien protection was in fact title insurance, not a "title insurance alternative".  In most states, the title insurance business was by law a monoline insurance business-- meaning that companies which offered title insurance could offer no other type of insurance.  Most of the companies that were offering lien protection policies were either mortgage insurers (like Radian) or property and casualty insurers, so a ruling by a state regulator that lien protection was indeed title insurance effectively forced these companies out of the lien protection business.

This was by no means ALTA's only argument against Radian's product and similar lien protection products, however.  And most of these other arguments had very little to do with who was offering the product, but instead were arguments against the very nature of lien protection insurance-- arguments that still would apply if a licensed title insurer offered the product.

For example, ALTA argued that no-search lien protection products were inherently inadequate to the task of insuring home equity loans and HELOCs.  James Maher, then Executive Vice President of ALTA, warned that mortgage impairment products didn't "measure up" to traditional title insurance.  "[T]here is a great danger to lenders and borrowers who may be misled into believing that what they are getting from Radian and other sellers of similar mortgage impairment products is comparable to standard title insurance," Maher told Realty Times Magazine.

ALTA has also frequently argued that products like Radian's were detrimental to the integrity of the public record by virtue of the fact that no title search was performed.  "[T]he public land title records will not be revised and corrected on a regular basis.  Instead, there may be numerous real property transactions affecting the property in which defects to the public land title records occur," ALTA said in a 2002 paper.  In a public statement reported in the July 2008 issue of ALTA's TitleNews newsletter, ALTA CEO Kurt Pfotenhauer said: “Mortgage impairment/lien priority insurance offered by property and casualty companies violates state laws, puts lenders and consumers at risk, and because no title search or corrective [work] is performed, it threatens the integrity of public land records—the bedrock upon which real estate ownership in this country is built.” 

Eradicating lien protection products seemed to be one of ALTA's key advocacy issues-- a battle that it waged for years, attempting to convince various state regulatory bodies of the dangers of the product.  In reference to ALTA's battle to urge states to prohibit companies like Radian from selling mortgage impairment insurance, Mayer told The Title Report, "It's a hydra-like challenge.  You think you've cut off its head and it only grows another one." 

But at the same time that ALTA was more or less successfully cutting off the heads of the lien protection upstarts outside of the title industry-- Radian's product, for instance, was dealt a death blow when the California Department of Insurance banned it in 2003-- its largest members were rolling out products modeled after those "no-search" title insurance alternatives.  Stewart Title announced a similar product called EQuick in 2004.  Land America and Old Republic also had similar products.

Fidelity National Financial announced its Lien Protection Policy in May of 2003.  It distinguished its product from "certain other similar insurance offerings"-- a not so subtle reference to Radian's product-- not by promising to back its lien protection product with a title search, but by not conditioning the product on borrower credit worthiness. 

Has ALTA really protected the integrity of the public record by successfully battling Radian if its own members just filled the void with short-search and no-search lien protection products of their own, which did little to expose and correct hidden errors in the public record? Has ALTA really protected lenders and consumers from misleading lien protection insurance policies, if its own members were rolling out similar products which have led to confusion?  Or has it only really successfully waged a turf battle, protecting a revenue stream for its biggest members from outside competitors?

Earlier this month, Bank of America filed a lawsuit against ALTA member First American over it's version of lien protection, QuickClose, offered via lender service provider Fiserv.  Given the fact that there is over a $500 million discrepancy between what Bank of America feels it is owed on its lien protection policies and what First American has paid in claims, is it fair to say that, at the very least, the danger that lenders might misunderstand critical differences between lien protection and traditional title insurance has become reality, even in the absence of Radian?