I do think this law was a good thing for consumers.  I have always thought that this type of protection should be equally available to the buyer and seller.  Why should the lender be the only person protected from dishonest title agents?  However, the way this was implemented, it makes all of us seem a little crooked.

In addition to making the coverage available to the buyer and seller for a fee, the law also requires title agents to carry a bond in the amount of $150,000 or more.  Now that is an additional cost of about $750/year that even the honest agents have to pay out.  I don't much see the point in this - since the Closing Protection Coverage is provided by the underwriter.  In the case of a dishonest agent stealing from his escrow accounts, $150,000 would just be a drop in the bucket.  So... its seems to me that $150,000 bond costs all of the agents more money and will be virtually useless in the case of dishonest agents.

I would have rather seen the underwriters provide the same coverage as before, for free, to all parties to the transaction.  However, I can see why the underwriters would not like that concept.  Why should they take on all of that extra liability with no additional premiums?  It seems to me that what is really in order is a better system for screening the agents and more stringent audits of their escrow accounts.

I guess no system is perfect.  And as usual, its the small agents that get hit the hardest by this type of legislation.

Best,
Robert A. Franco
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