This has been an issue for a long time and many underwriters have had consumer complaints and lawsuits filed against.  I don't have any statistics in front of me, but I think the real culprit to these overcharges may be some of the title agents and not the underwriters.  That has been my experience at least and that is what most of the articles I have read indicate.

When I was representing buyers, especially during the boom, I was frequently given a HUD-1 that did not have the correct premium for title insurance (always higher of course).  Sometimes this was because the person preparing the HUD-1 was inexperienced, but I often suspected that laziness and squeezing a few extra bucks out of each deal played a role in most of those transactions.  The problems seemed to be more frequent with recent start-up agencies who were there to cash in on the refinance and sales boom.

That being said, the underwriters are given enough information on each transaction they insure to be able to smell a rat.  If certain agents are doing a lot of refinances and 90% of the time they are charging the full rate when most agent only charge the full rate on 20% of their deals, the underwriter should know that the agency is not charging the proper rates.  I don't know what their exact legal duty may be, but they at least have a moral or ethical obligation in my mind to investigate.  When they don't, the lawsuits follow and sully the reputation of the whole industry.

to post a reply: login - or - register