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Source of Title Blog

ALTA Propaganda
by Robert Franco | 2007/09/19 |

Yesterday, The American Land Title Association (ALTA) announced the launch of "The Title Industry Consumer Initiative" in response to the recommendations of the Government Accountability Office (GAO). The focus of the initiative is on consumer education to help them make more informed choices when it comes to title insurance and title-related services. The new ALTA sponsored Website, homeclosing101.com, provides an overview of the closing process and explains the purpose of title insurance, including the process of the title search and repairing title defects.

Here is an excerpt from homeclosing101.com:

The Title Search

After your sales contract has been accepted, a title professional will search the public records to look for any problems with the home's title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For instance, a previous owner may have had minor construction done on the property, but never fully paid the contractor. Or the previous owner may have failed to pay local or state taxes (See below for some other common title problems). Title professionals seek to resolve problems like these before you go to closing.


While I would say that ALTA has a strong grasp of the way things are supposed to work in the industry - they are neglecting to inform consumers of a few relevant facts. This site is a bit less "informative" and perhaps too much "marketing propaganda."

"A title professional will search the public records to look for any problems with the home's title." Has it somehow escaped ALTA's awareness that a couple of the largest underwriters are outsourcing the title searches to India? In a recent post on Title-Opoly, A Question for Underwriters: What's Going On?, Ed Rybczynski pointed out that one of the Indian companies was boasting about 40 days of title training in the Unites States. Is that what ALTA considers a title professional these days?

As for a search of "the public records," these companies in India, and even many domestically, are searching thin-title plants and online databases. Those of us who are truly "title professionals" search the "official" records at the courthouse (or a complete title plant, which is more common in the western states). Many of the records which affect title are not available electronically.

"This search typically involves a review of land records going back many years." Could ALTA be unaware that it has been common practice to insure titles based on "short searches?" Many years?? Really?? Granted, there are still some "real" searches being done, but I would hardly call that typical these days. Virtually every underwriter will allow title insurance to be written on a short search, though some allow the practice only in limited circumstances; i.e. refinance transactions and sales of real estate in platted subdivisions. While short searches may be acceptable in some circumstances, some of the title search guidelines take them to the extreme.

Anyway you slice it, ALTA is selling a fiction of yesterday. The realities of today are swept under the rug and ignored. This all seems like what is commonly called a "bait and switch" in the retail world. Title insurance was once as ALTA portrays it, but those days are long gone. You can't keep promoting the "thorough process" of issuing title insurance if nobody is actually going to provide it.

ALTA should not have published this fantasy version of what title insurance should be until it has cleaned up the poor practices of it's largest members. Make it a reality, then, by all means, promote it!

Along with the new Website, ALTA has also published "Principles of Fair Conduct," but we will save that post for another day. There are a few points I would like to make on that effort as well.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com

Source of Title Blog ::




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Categories: Abstractors, Title Industry

941 words | 1881 views | 6 comments | log in or register to post a comment


ALTA's a dinosaur....
ALTA's a dinosaur. 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/09/19 | log in or register to post a reply

I'm not too familiar with the inner...
I'm not too familiar with the inner-workings of ALTA, but I would hesitate to be too harsh on them. Voluntary professional associations have nothing if they do not have unity. In the case of ALTA and the state title associations, they are usually small fish compared to other lobbies they compete with, so without unity, they are basically reduced to nothing in the eyes of politicians and government.

This places ALTA in the unfortunate role that many such associations have of attempting to keep members united on as many issues as possible even when there is disagreement over a major issue. If I were in ALTA's shoes I would continue to paint a pretty face on the issue of off-shored and short searches and hope it goes away either because (a) it generates massive losses for underwriters and they cease such operations or (b) it proves to be successful and therefore not a source of claims.

I have only heard anecdotal evidence that (a) is true, but until someone fesses up or shuts down their offshore operations, we can only assume (b) is true or at least financially viable. If world gets out that it is financial viable, expect more underwriters to do the same to stay competitive.

That leaves it up to the rest of us to encourage agents to stop working with companies that use unreliable searching methods since they, the agents, will pay the ultimate price of losing customers. I've heard that after an underwriter in this area shutting down their regular courthouse searching departments, there was an immediate backlash of agents leaving them due to a combination of loyalty to the searchers and fear of the quality of future searches. How much truth there is to that I don't know, but I'm sure the agents know what is best for themselves.
 
by David Jenkins | 2007/09/19 | log in or register to post a reply

David: I'm a member. They deserve...
David: I'm a member. They deserve harsh treatment.

http://www.google.com/custom?hl=en&client=pub-7388356213288098&cof=FORID%3A1%3BGL%3A1%3BLBGC%3A336699%3BLC%3A%230000ff%3BVLC%3A%23663399%3BGFNT%3A%230000ff%3BGIMP%3A%230000ff%3BDIV%3A%23336699%3B&domains=radicaltitletalk.blogspot.com&ie=ISO-8859-1&oe=ISO-8859-1&q=alta&btnG=Search&sitesearch=radicaltitletalk.blogspot.com
 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/09/20 | log in or register to post a reply

If you can't use that link, just go...
If you can't use that link, just go to Radical and do a search for ALTA on the site.

I've been sending them over $2000 per year in dues and that's not going to continue.
 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/09/20 | log in or register to post a reply

David: This makes sense...
<...
David: This makes sense...

If I were in ALTA's shoes I would continue to paint a pretty face on the issue of off-shored and short searches and hope it goes away either because (a) it generates massive losses for underwriters and they cease such operations or (b) it proves to be successful and therefore not a source of claims.

However, I don't think this is what ALTA is doing with homeclosing101.com. They are promoting a thorough search conducted by a professional title examiner, when in reality that isn't what goes on. If ALTA wants to back the thin-title plants, I would understand (though strongly disagree). But homeclosing101.com seems to mislead consumers into thinking they are getting "old fashioned" service while ignoring huge efforts to automate and off-shore the work.
 
by Robert Franco | 2007/09/20 | log in or register to post a reply

Seems to me that inasmuch as ALTA's...
Seems to me that inasmuch as ALTA's video is aimed at the consumer, it runs afoul of some truth-in-advertising law.

Just one man's opinion.
 
by Scott Perry | 2007/09/20 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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