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TitleWizard
by Robert Franco
 | 2007/10/11 |
California Insurance Commissioner Steve Poizner joined the California Land Title Association (CLTA) to announce TitleWizard on October 9, 2007. TitleWizard allows consumers to enter some basic information regarding their closing, such as location, purchase price, and loan amount, and provides them with a list of title insurance companies and their rates.
"CLTA has answered the call to develop a high-tech solution in a first step to infuse competition into the Title insurance industry," said Commissioner Poizner. "Too often, consumers have to rely on a middle man to select their Title insurance. Now, consumers will be empowered to compare prices and services online with the touch of a button."
I tried the Website and found it very user friendly. I entered Monterey County as the location. I spent some time in Monterey in 1990-91 and absolutely loved it! So, if I am going to price title insurance in California, that is as good a place as any. Next I selected the purchase option, a $450,000 sales price, with a $400,000 loan amount, and indicated that I would be the purchaser. Lastly, I told the wizard that it was residential property, a single-family resident.
Here is what TitleWizard quoted me for a rate:
Results
Location: Monterey County
Transaction: Purchase
You Are: Buyer
Value: $450,000
Loan: $400,000
Type: Residential, Single Family
$531 to $604 based on the title company issuing both the Homeowner's Policy as well as the Lender's Policy.
What!? Could that be right!? Most of what I hear from the Department of Insurance in California is how consumers are paying too much for title insurance. Steve Poizner wants to see more direct marketing to consumers so they can better shop for title insurance. With these rates, should that really be a primary concern?
Source of Title Blog ::
Just to be sure, I tried the same parameters in Los Angeles and the quotes ranged from $533.60 to $601.04. Looks about the same. I next tried Monterey County again, but increased the sales price to $800,000 and loan amount to $750,000 and the quotes ranged from $747 to $872.50. I guess on an $800,00 sale, the consumer could save up to $125.50.
I am in Ohio and I know nothing about how things work in California, however, I have heard that the title insurance rates in California include the title search. (If anyone knows otherwise, please post a comment.) In Ohio it doesn't - yet the rate for the same policy in Ohio would be $2112.50 ($450,000 purchase with a simultaneious issue).
I have to wonder, with a mere $73 difference in premiums, is this really going to help consumers? Is $73 even going to be noticeable in a $450,0000 closing?
Title insurance premiums in California seem extremely low, in my opinion. Perhaps this is the reason that there are so many claims of kick-backs paid by the title companies. The only way to offer these rates, is to make up the difference in volume. Volume cannot be offered by individual consumers - it can only be obtained from lenders and Realtors referring their business.
TitleWizard also has a "Learning Center" with some basic information about title insurance. There is some mention of "reissue" rates which could help consumers ensure they get the discounts they may be entitled to. One thing I find lacking is information on Affiliated Business Arrangements (AfBAs) to let consumers know of the special hazards that may be associated with those entities. However, the site does mention that "you have the right to choose your title insurance provider."
There is also a section about escrow which explains the role of the escrow (also called closing or settlement) agent. It describes the general responsibilities this provider.
- Holding financial deposits in trust
Writing detailed closing instructions based on the purchase agreement
- Gathering all legal documents related to the transaction
- Ordering a title examination or preliminary report on the property
- Clearing all title issues discovered during the search
- Securing title insurance
- Collecting documents from the buyer's lender
- Making sure all terms and conditions of the purchase contract are met
- Recording the deed and other necessary documents
- Ensuring that the process moves along smoothly and that the transaction closes on time
This section also mentions common closing costs that may be encountered if the buyer is financing the purchase.
- A closing fee for the escrow or closing agent
- Preparation of legal paperwork
- Appraisal review fee
- Credit report fee
- Underwriting fee
- Mortgage insurance
- Survey fee
- Termite inspection fee
- Notary fee for authenticating signatures on legal documents
- Homeowner's insurance
- Courier and overnight delivery fees
- Tax service fee
- Recording and transfer fees
With all of these additional fees involved in the process, and what amounts to a relatively nominal difference in premium, is it really worth all of this to compare title insurance rates? The only comment to help consumers shop in this regard is: "Fees for these services vary. Some banks and other lenders use their own closing agents. Some title companies offer special rates that may include escrow or settlement services, home warranty and title insurance at a "bundled" rate, so it pays to shop around."
In my opinion, too much attention is focused on the title insurance rates and not what you get for your money. Much like the ALTA site, homeclosing101.com, there really isn't enough information on marketable title, or the standards that the title companies adhere to, or should adhere to. Shopping on price alone is not really a wise move for the consumers. Consumers should be informed about other aspects that may make one company worth more than another; such as who is going to do a thorough title search, who is going to do the best job at clearing the title, or who is going to provide the best services.
When the title companies begin to compete based on their level of service, maybe consumers will really be able to shop for the best deal - not just the cheapest price. All title insurance is the same, they are all ALTA policies. However, not every title company, or agent, takes the same thorough steps in issuing the policy. Until there is way for the consumers to shop for quality they cannot truly benefit.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
Categories: Competition, Consumer Advocacy
1554 words
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