Are we brave enough?

Patty Baber — Mon, 21 Aug 2023 18:59:53 EST

Can we (should we) reform the title insurance industry?

I bumped into this book on line the other day. This book is fascinating.

“The American Title Insurance Industry: How a Cartel Fleeces the American Consumer” by Joseph W Eaton, David Eaton

(be sure to glance down and read the underlined portions)

After World War II, banks and other mortgage lenders began requiring insurance to protect them against flawed or defective real estate titles. Over the past sixty years, the title insurance industry has grown steadily in size, power, and secrecy: policies are available for both lenders and property owners and many title insurers offer an array of other real estate services, such as escrow and appraisal. Yet details about the industry’s operational procedures remain closely guarded from public exposure.

In “The American Title Insurance Industry”, Joseph and David Eaton present evidence that improvements in recordkeeping over the last sixty years—particularly the advent of computers—have reduced the likelihood of a defective title going unnoticed in a property transaction. But the industry’s flaws run deeper than mere obsolescence: in most states, title insurers are allowed to engage in anticompetitive business practices, including price-fixing.

Among the findings in this meticulously researched study are instances of insurers charging premiums well above the amount necessary to compensate them for assuming the risk of defect and identical policies with identical risk that vary in price by hundreds of percentage points for different geographic locations.

The authors also examine the widely ignored role that the federal and most state governments play in perpetuating the title insurance industry’s unfair practices. Whereas most private industries prefer as little government intervention as possible, title insurers welcome it. Federal statue exempts title insurers from anti-trust liability, opening the door for price-fixing and destroying any semblance of free-market competition or market power for consumers.

Let’s build up the NALTEA membership. Let’s campaign to have States start their own title insurance company such as what they did in Iowa, which has resulted in significantly lower title insurance fees to homeowners. Let's campaign to get abstractors, examiners, searchers licensed and demand title insurers only use licensed people. Should we? Could we?

Are we brave enough?

https://books.google.com/books?id=wqUMhTb9u9gC&printsec=frontcover

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Patty Baber's Blog

Are we brave enough?

https://books.google.com/books?id=wqUMhTb9u9gC&printsec=frontcover