I think the best solution would be, as mentioned before, better screening of agents and stricter oversight over the escrow accounts. Build the closing protection coverage into the standard policy form. The underwriters offer the CPLs to lenders at no charge anyway. I don't see a whole lot of additional risk.
I think the bond purchase requirement is intended to give the underwriter some recourse in case a good agent goes bad. However, in my opinion, the underwriters are making a pretty good buck through their agents, and with relatively low risk and labor.
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