New Title Insurance "GFE" Could Bode Well For AfBAs And The ConsumerNew Title insurance GFE Could Bode Well For AfBAs And The Consumer
A New Win-Win for Title Insurance consumers Just when the title insurance industry thought it couldn't get any worse....I have heard rumors that the Colorado Department of Insurance (DOI), is cooking up something really special to let the general public know how much (or how little) they are paying for Title Insurance. Whether you, as a real estate broker or mortgage lender, are part of an AfBA (affiliated business arrangement) Title Company or not, you could BE VERY INVOLVED in the future. < read more>
In Colorado, not all title or escrow fees are the same from company to company.
I am pretty sure the DOI thinks that the public needs to know this. Anyone could compare costs at the Department Of Insurance's site, but that assumes they are patient, are aware of industry lingo and are aware of all the possible fees. Needless to say, the user interface of the site is lacking. But, using a site called www.MyTitleIns.com, (a free title insurance shopper site) anyone can obtain very accurate and fast results. The question is, do brokers and consumers really shop? Do they even know that they can shop?
Comprehensive studies were conducted using www.MyTitleIns.com, comparing hundreds of closings ranging from purchases, to refinances, involving single family, condos and land. What did they find? Well, something most real estate brokers or mortgage lenders may not know or don't care about.... the "average" difference in title premiums on any given, almost identical "transaction", varies on average, from one company to another by about $1,200.
The $1,200 Discrepancy
That's a pretty BIG spread for a product that is priced on nothing other than "purchase price", "loan amount" and the "last issue date" of an old title policy. For those of you in the real estate industry longer than say, one day, let's be frank and get our heads out of the sand. In the past and currently (wink-wink), title insurance premiums are used to fund political payoffs, political contributions, holiday parties, highly paid title reps, dinners, lunches, gifts, sporting events, shared marketing fees, farm packages, coop advertising fees (broker bribe money) as well as abusively high overhead, over staffing, demanding shareholders, excessive space, golf tournaments, trips, junkets, conventions, "Free" education, and who knows what else! Of course, the title insurance customers (paying the premiums) never get to take any of these free "Junkets" or even enjoy any incentives. Take it to another level. Real estate brokers or mortgage lenders don't have to tell the consumer about these unreported incentives...most consumers just blindly listen to the industry professional and never shop rates. Incidentally, what's really unfair and deceptive to the consumer is that real estate brokers and mortgage lenders that own, or are a part of, an AfBA (affiliated business arrangement) title insurance company, are required, by Federal and State law, to disclose the potential of income as a result of transaction premiums (RESPA). So in one case the public thinks, "Hey, this guy is making some cash form my deal". In the other case, the public has no clue as to what, if anything, the real estate broker or mortgage lender is getting on the other side...wink-wink.
Good Faith Estimate (GFE)
Now, I am sure most sellers, buyers or mortgage refinance consumers won't mind paying an extra $500 to $1,400 more...after all, they are rolling in the dough, right? And of course, according to most real estate brokers or lenders, that extra $500 to $1,400 in costs covers that really "special" closer or that really super secret, five star rated, AAA+, super strong Swiss title insurance policy...or something like that. Oh, my favorite, "they have a more convenient office location". Hey, at $4.00 a gallon...most consumers could close in Texas and be money ahead. The transparent Internet, DOI and DORE may make this new disclosure action a very real possibility. YOU, the real estate broker and mortgage lender will then have to be THE ADVOCATE for your client!
The Times They Are A Changing
AfBA's are very prominent, legal, successful and growing throughout the United States. This is a fact, despite the title industry propaganda lawyers that work on behalf of "Big Title" to perpetuate the status qoe with "Evil Boogie Man" AfBA stories. If you, the industry professional, are going to have to provide cost breakdowns and comparative premium schedules (as you should be doing as an advocate of your client)...why not be selling the lowest cost, highest service product in the market. Why not be an owner in a successful AfBA Title Insurance Company.
Meridian Title And Escrow is now underwritten by four National
Underwriters;
I have read all the rants on ActiveRain about the evil AfBA companys, like Coldwell Banker Burnet . Well, Meridian Title and Escrow, LLC, is not the traditional AfBA.
We offer the very lowest consumer title Insurance costs in Colorado, bar none, including a full 10 year "purchase" reissue rates. A ten year purchase reissue rate is almost unheard of in the title insurance industry. Most companies offer only one to three year reissue rates. (reissue rates are a % off of a full price title premium based on the age of the last issued title policy)
Meridian Title and Escrow, LLC is owned by many different individual agent producers, and not a "Franchise" owned model
A real estate broker should chose a title company based on the most competitive rates and fees, along with predictable and extraordinary service. If in fact, that happens to be the title company you own, than Amen to that. I feel that providing the consumer with total transaction costs and a comparison of companies will let them consumer make the "Choice".
Besides offering extraordinary service, "documented" lowest premium and escrow costs, here is where you, the real estate broker and mortgage lender come in. Meridian Title and Escrow, LLC is still Profitable, even with these lower premium rates. Once again, as of the end of the first quarter, 2008, we will again be paying dividends to Meridian Title & Escrow, LLC owners. Most all of our owners have now earned 100%, 200% or even as high as 300% Returns on Investment (in one year). Hard to believe with all the doom and gloom of the Stock Market and declining real estate values....a 300% return and climbing. Can any of you honestly tell me when you have last obtained any type of 300% return in a year? I am willing to bet most of you have NEVER done it.
No large leases No sales Reps No sales bonuses to sales rep Multiple Insurance Underwriters No bribe money to brokers No public shareholders, just our broker producers No Club Level Sports Seats Nimble- i.e. we have decreased our employee base by 50% from 4th qtr 2007 to 1st qtr 2008 No marketing costs No advertising costs No executive or management fees No "risky" transactions No executive salaries or management salaries Paperless office systems No redundant systems or hardware Reduced costs by integrating technology Effective title examination and staffing No company car leases No corporate jets ...and the list could go on.
It's About More Than $30 Bucks
On some transaction somewhere, I have seen real estate brokers complain (during the closing) that the title company (not Meridian) is charging, say a $300 closing fee, and not, a $240 closing fee. So they are acting up like "Big Realtor Hero" over a $60 fee divided by two...or $30? All the while, the transaction consumers are all over paying for a number of title products and escrow services. Funny thing, most these ego "Realtor Hero Types" are the ones still charging the "traditional unspoken industry listing fee" and taking the "wink-wink" title incentives. A true client advocate, if I have ever seen one.
Here's an example: A Seller is selling their home for $700,000.00 Home is in Douglas County They Bought the Home in the year 2000 for $425,000 and owe $400,000 on a single first mortgage and have a second for $180,000. They have not refinanced the first since 2001, and completed the second in 2004. Purchase Price is $700,000 buyer who is putting 20% down
Big-Big Differences!
From Lowest to Highest...$1,565.00. Wow, that's a lot of cookies and candy at the closing table. I also know everyone is really big on the service issue, but how much more for "service". Disappointingly, most brokers will object to their own $150 a month fee increases, but would have no problem with consumers paying an extra $1,565.00. Frankly, I think most real estate brokers and mortgage lenders don't really know there are these disparities. Just like most consumers don't know this is a pricing difference. Using a mandated "Tile & Escrow GFE" as well as proof of comparative fees, will allow the industry professionals to take their head of the the sand and have full Knowledge.
This is a perfect business behavior for real estate brokers that really dont' want to "Recommend" any specific business professional. They give lists of inspectors, lists of insurers, lists of lenders, lists of contractors and now they can provide a title insurance list, complete with full cost and fee analysis for their clients.
Meridian Title and Escrow, LLC is not afraid of our fees and we are certainly willing to match anyone in service and technology. So let's lay it on the table.
The Ultimate Wink-Wink
The Real question will be if the State Regulatory Agency follows through with this concept or if they cave in to pressures form "Big Title Insurance" political power and special interest groups (lawyers) that work on behalf of the established title companies.
In the meantime, if you are interested helping your clients, along with becoming an Owner and Shareholder in Meridian Title and Escrow, LLC., please email me at mark@realtyoasis.com.
Related PostsDon’t Be Naive To New Foreclosure LawsTitle Insurance Is More Than Just Insurance MyTitleIns.com Brings Transparency To Title Insurance Lenders Hold Up The Paperless Transaction http://www.brokeriptv.com/000161 Posted on April 01, 2008 08:04:10 by Mark.Eibner
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