If the register has enough employees to be able to run a title company on top of the duties of running the registers office, he has too many employees and should consider downsizing.  Chances, are, if he wants to make a go of it, Youngblood would need to bring in some new people to make the underwriting decisions and get the deals closed.  He's at least going to need to charge enough to carry the cost of new employees.  Those costs are often significantly higher in the public sector, with generous benefits paid by the tax payers.

And what about the reserves?  The money the office would need to set aside has to come from somewhere.  If the money is there, they are probably charging too much for the services the office already provides.

And, who says they would not have to spend any money on advertising?  What if they should realize a loss in the venture?  Who pays for that? 

I can just imagine being a representative of a party in a real estate transaction calling to schedule a closing.  "Thank you for calling the Wayne County Register of Deeds Bernard Youngblood's recording office, Car Rentals and Title Company.  Your call may be recorded for training or campaign purposes.  If you are calling for our hours of operation, press 1.  If you are calling for our locations, press 2.  If you are calling for......"

Fast forward 23 minutes.  "Our offices are now closed.  Please press 1 for our hours of operation and call back during our hours of operation."

Cook County, Illinois, used to insure title using the Torrens system.  It eventually got to the point where the system was so slow and cumbersome that everybody used privately issued title insurance anyway.  The system was eventually phased out.

Government offices should just stick to their government functions.

I thought about the costs involved with government employees, but then you have to consider that there won't be any highly paid executives (I assume) and million dollar bonuses.  And, they presumably won't be in this for profits, so that may leave some wiggle room in employee costs.  Surely their operating costs would be greater than most small independent agents, but far less than those of a traditional underwriter.

I do tend to agree that "government offices should just stick to their government functions," but I would say the same for the Realtors, lenders, and builders sticking to their traditional roles. Obviously our inudstry has moved beyond traditional norms - unfortunately. 

As for the reserves, we can only speculate at this point how much they would be required to hold and where those funds would come from.  But, it does seem problematic to do this on a county level.  Obviously it can be done on the state level, like Iowa has done.  I could see this as a pilot program, if it does become a reality, in Wayne county, then expanded statewide.

I'm also not sure about the legality of this kind of program.  It might require new legislation at the state level to create a new quasi-governmental entity to handle these functions. 

It's all to early to tell... but it is an interesting concept.

 http://house.michigan.gov/SessionDocs/2007-2008/Testimony/Committee13-5-23-2007.pdf

The above link is a letter from the State Bar of Michigan Real Property Section to a committee reviewing proposed Michigan House Bills 4515-4519(2007). From what I recall when we were doing business in Michigan, Wayne County was behind on their filings.  It was a mess. The letter indicates that there were pending legal actions against the recorder at the time. Are they proposing issuing insurance to avoid potential lawsuits? If they can't even keep their filing system current how are they going to effectively issue title insurance?

 Perhaps they have adopted the "Don't clean it up, just insure through it" ideology that is becoming pervasive in the industry these days.

This is the same county that just a year ago was SIX MONTHS behind in recording documents.  Yes, you dropped off a mortgage and when they got around to recording it, they would.  So how much mortgage fraud went on in THAT County? 

I also have to wonder if this is an "in your face" gesture because several Wayne County title companies are/have sued Wayne County.

Alix

For those who believe government should compete with private industry, perhaps you will like this concept.  However, it would not appreciably change things for the better, nor has it done so elsewhere.  As noted by another commenter, Torrens in Cook County, Illinois was a disaster.  As for Iowa, the cost of a policy may be low, but that's because Iowa Title advocates never bring up the cost of an abstract of title AND the attorney's opinion, both of which are required.  Iowa land Title likes to say it pays no claims.  That reportedly happens because closing is delayed until all title matters are resolved.  Longer mortgage rate locks are supposed to result in higher interest rates for borrowers, increasing the cost of a loan over its 30 year term.  In addition, if a title problem does arise, the abstractor or Attorney who gave the opinion are the ones who typically resolve the issue - not Iowa Guaranty.  I'm not sure how this works if there is litigation.  With an ALTA policy, the title insurer will cover the cost of the insured's defense on a covered matter.  Does an abstractor or attorney do the same?  What about the losses the county could face, especially if they fall way behind in recording documents again?  Imagine all the fraud and intervening interests that can occur during recording delays.  Will voters want to incur those costs themselves?

Finally, let's not lump the underwriters all together, because they do not have the same business focus or practices.  Old Republic, for instance, has not been fined for setting up sham affiliated businesses.  Nor did Old Repubilc conduct any transactions involving captive reinsurance.  The two underwriters fined in New York for using blended rates did NOT include Old Republic.  Our company is very agent centric and is a huge supporter of the independent agent.  Our underwriting is also known to be more conservative, generally, than our competitors.  This has resulted in our company having unsurpassed ratings since 1992.

I believe the title industry performs a wonderful, needed service for consumers and the economy and we should not tinker with the success and cost savings it brings to American families needing security for themselves and their lenders.

I write for Old Republic and they are great.  I have written for First American, Stewart and Commonwealth in the past.  I liked Commonwealth at the time, too, but that was before they merged into LandAmerica.

Old Republic is very agent-centric and I really don't understand why they don't have more marketshare.  With all the complaints many agents have about their underwriters, I find it hard to believe that more don't make a change.

I am a very small agent, and have gotten smaller since I have been in law school (and of course, the market has slowed significantly) and they have been very understanding.  Old Republic definitely treats their agents very well. 

All states have some concept of sovereign immunity.  If an insured owner is unhappy with the result of the state's decision not to defend their title (e.g. extinguishing competing title interests), do they have any recourse under any bad faith laws?  What motivation does the state run system have to keep losses to a minimum?

In theory private companies have their profit and solvency motive to negotiate claims to minimize losses.  Most government enterprises, no matter how well run in the initial stages, always seem to succumb eventually to massive losses and perpetual taxpayer subsidies.  Poorly run private underwriters will eventually go out of business.  Poorly run government enterprises rarely do.

In a lot of developed countries, title insurance is usually done by the government in some form, but I've never read anything that gives a full analysis of the pros and cons of these systems.  I would say that from watching how quickly a Recorder of Deeds office can go from good to bad and bad to good depending solely on the personality of the person in charge, I would be nervous about any governmental title insuring system run at the county level.

David-

In Ohio, sovereign immunity generally only protects municipalities when they are performing "governmental functions" (O.R.C. 2744.01) If a municipality enters into the marketplace to compete in industry not deemed a "governmental function", then the protection will likely not apply (in Ohio, that is.) Not sure if Michigan has similar provisions, but I think Wayne County would be wise to research this and to look at the claims loss and related expense portion of the balance sheets of any of the major underwriters lately before they embark on this type of endeavor. 

I understand Robert's viewpoint about lowering costs to the consumer and competing with the big underwriters who have monopolized the industry, but I don't think this is the best way to accomplish those goals. I am in favor of enforcement-enforcement-enforcement.  The government should do a better job of enforcing the laws, extinguishing sham afbas, eliminating kickbacks and policing the industry as a whole.