Comments on: Title Insurance: A Totally Legal Scam

By: Grapenut

Grapenut — Sat, 31 Dec 2011 08:10:28 +0000

I am refinancing now, and my (new) lender is informing me that there are 2 types of Title insurance. One for the lender only and a different type that protects the buyer. This was very misleading to me during my initial purchase & loan process. I actually picked the title insurance company and paid their fee; and now they are telling me that I infact do not have title insurance, that all I actually did was pick and pay for the bank’s title insurance. So misleading, that a huge transaction like this could be this way. Absolutely livid.

By: 6alpha

6alpha — Sat, 24 Dec 2011 02:32:34 +0000

How about this one for a legal scam. I bought a new home from pulte/Del Webb, cash,7 years ago.
I recently sold the home to a cash buyer.
The home was vacant for about 2 years prior to the sale. I had to buy her a title insurance policy. MY agent wrote it into the sales contract without pointing it out to me. These things are always done in a big hurry. My fault. This policy,which I read, had an out clause stating if all the I’s and T’s weren’t seen to. the policy was void after 6 months.
This title company did this without a gun and a clear consience. Or no conscience.

By: Ruby Dalton

Ruby Dalton — Sun, 03 Jul 2011 23:54:33 +0000

We have been with the same lender for15 years. they suggested we us First Canadian Title to do the searches on the property. We had to use the equity in our home12 months ago to raise grandchildren. We now want to consolidate line of credit and mortgage, We are being told we have to pay again at the same Bank of Montreal for a title search and a new appraisal with First Canadian Title. We feel this is a rip off.

By: Jeremy

Jeremy — Mon, 27 Jun 2011 14:03:05 +0000

Keep in mind that other things can change in the time period between your 1st purchase and refinance. An entity such as, the county, state, collectors, home owner’s associations can put liens on the property that the title company collects and cleans up for the borrower. So not really a legal scam and most states offer a discount on Title Insurance for refinances.

By: Anonymous

Anonymous — Sat, 18 Jun 2011 19:32:11 +0000

All of the above aside. I have found due to 2 personal experiences that the actual title insurance policy that was bought and paid for was never issued ! Many title companies know that as long as they issue a title insurance “commitment” and that since it is very, very rarely needed or used, they can simply collect the premium but never buy and issue the actual policy. Eight years after i bought a new home I sold it and agreed to provide title insurance for the new buyer. When I phoned the original title company for a “reissue” rate, I was told that they had no record of a policy ever being issued on my property. When I marched into their office with the facts, and the commitment letter, they changed their tune and told me that there was a “snafu”. I demanded and was successful that the title insurance company now immediately issue me a policy. They tried every trick in the book to avoid this but when I threatened them with a complaint to my Insurance commissioner and to the BBB, they quickly changed their tune and issued the policy to me. The average home buyer is not savvy on all of this mumbo jumbo stuff and often do not know or forget that they should receive the actual policy. This is one of the greatest scams there is. If we bought a life insurance policy, why wouldn’t we insist on an actual policy rather than just a “commitment letter?

By: Huge Legal Scam

Huge Legal Scam — Sun, 15 May 2011 03:51:30 +0000

No question this is a scam. Are title companies ever liable for ‘missing’ something? I can understand if handwritten documents need to be tracked back to 1887 that can be a real challenge. But what about a home built in 1987 with only two owners? How muddy can the clue trail get? It is always left to the homeowner to ‘insure’ themselves against these ‘mistakes’ while title companies collect for their ‘services’ without any accountability whatsoever. Pay in advance or pay later. Perhaps I should charge my clients extra to ‘insure’ against me doing a crappy job – I can charge them once for mistakes they might notice right away (lenders insurance) then charge again (owners insurance) to protect them in case it takes them a while realize that I suck at what I do.

By: Vito

Vito — Tue, 19 Apr 2011 09:23:12 +0000

What surprises me is that no one has mentioned the costs of homeowner’s insurance, the commissions earned on the policy, and the fact that it renews annually. The same thing goes for auto insurance. I’ve owned my home for 12 years and paid for owners insurance ONCE. I refinanced once and paid for lenders insurance at the discounted rate. You can do the math. I have paid auto insurance annually for 35 years and have had two claims. Why should I have to pay for auto insurance annually? With homeowner’s insurance, I’ve paid for 12 years and had one claim and still have to pay annually. God forbid I have more than 3 claims in a 5 year period, then the insurer can cancel me and the next company can triple my rates; wow, that sounds fair.

Good luck everybody….

By: Mike

Mike — Tue, 12 Apr 2011 23:53:10 +0000

Sounds like you don’t know how to read/ “titleking” (in lower case). Alex didn,t say he paid the seller for clear title, he paid the seller for the said property. Sure glad I will never have to use you for any thing refering to legal documents, you must have a reading problem and I pretty sure you have to “READ” to search a title. P.S. I’ve bought and sold more than 6 properties without title ins. just title searches, Fortunately never had a mortgage so didn’t have to sucumbe to the rip off. P.S.S. Florida also has public search records and the title only goes back to the last owner, and can’t go back futher for litigation purposes. DA!!! RIPOFF

By: Mike

Mike — Tue, 12 Apr 2011 23:27:23 +0000

Exactly what I think. Even on a new purchase in Florida if I’m not mistaken once a title Sear

By: Joe

Joe — Wed, 29 Dec 2010 16:11:48 +0000

It amazed me to find out that the LENDER on my refinance (the same as the original loan) also has the “opportunity” to purchase or pay for title insurance on the search THEY are commissioning but had refused it. My question is WHY commission a search that is meaningless (title companies are exempt from prosecution/liability) if you don’t intend to hold the grantor to any sort of guarantee? Since a title search is part of the lenders due diligence, why should they not be held to assuming their own risk? In other words, they’ve opted OUT of insuring the search they commissioned and instead expect the consumer to pick up the tab to insure them! BIG ALARM BELLS should be going off here, so why aren’t they?

By: TonyVA

TonyVA — Fri, 22 Oct 2010 04:20:53 +0000

I think now they have to disclose what their commission is. I got my HUD-1 today, and I calculated it’s an 80% commission! Says it clear as day on the form:

1107. Agent’s portion of total title insurance premium $2,171

1108. Underwriter’s portion of total title insurance premium $542

That’s for lender and owner insurance together. I’m probably gonna drop the owner’s policy, just due to the nature of the sale and how poorly the agent answered my question about the commission. I’ve been in Sales for 20 years and have never heard of anyone making 80% commission. Plus the settlement fee ($595), plus the Binder Review Fee ($100). He’s making $3500 for what? maybe (maybe) 3 or 4 hours of work? I’m definitely in the wrong business.

By: Jamie

Jamie — Wed, 22 Sep 2010 20:48:39 +0000

You can put some lipstick on this pig, but at the end of the day it’s a massive scam. Your solution? Don’t participate in the home finance market? Really? To find a better solution, TK, let me suggest this: ask… ANYONE!

By: Nina

Nina — Thu, 09 Sep 2010 18:35:14 +0000

I am a title agent..I know, shocker, but I wanted to add something to all of these discussions that I have not yet seen on this site.

As a title agent, part of my job is to review title from the last time the property was sold until present. In other words, a check of what the seller has done since the date of purchase. I OFTEN find problems. Here is a short list: 1) Legal description in last deed is incorrect. Either a portion is missing, or the lot number is wrong. Something the homeowner never realized. The title company must fix this before closing. 2) A satisfaction of mortgage is missing. The last time the property was sold, the seller’s mortgage was paid in full; however, the lender that was paid off failed to record a satisfaction of mortgage. This means that for the entire time that the current owner has owned the property, this lien has been sitting against the property and now, must be investigated by the title company. 3) Notice of Commencement found recorded in the Public records. This is a normal document recorded by a contractor (Florida law) to protect his lien rights while working on the property. They are only valid for one year from the date of recording; however, if the property is sold or the mortgage refinanced during that year, this “lien” must be removed. 4) Code violations. A homeowner who fails to cut their lawn for an extended amount of time, a garage that was converted into a bedroom without pulling permits, or a homeowner who leaves his car on concrete blocks for a long period of time (which the city or town does not allow..some do allow, some dont), violates certain City codes and are subject to a code violation. A code violation will become a lien on the property if the violation is not taken care of timely.

These are just a few of the examples of liens or clouds on title that a title agent must clear before the day of closing. Common responses from homeowners are…oh, I forgot about that….oh, I thought my husband took care of that…oh, I was never informed about that…etc.

One of the main reasons that the claims rate is so low with underwriters is because title agents must eliminate these liens, or potential for future liens, before the date of closing. An agent that has too many claims that originated from their office, can lose their license to practice…permanently.

We ALL complain about the cost of things. Take hazard insurance for an example. You could easily pay your hazard insurance for 10, 20, 30 years and NEVER file a claim. My hazard insurance is $2300.00 a year. I have owned my home for over 11 years. That is over $25,000.00 that i have paid for a policy that I have never needed. But, I am happy to pay for it for peace of mind.

Your title insurance policy protects you for the entire time you own your home, something you only paid once for, when you purchased the home. So for me, that is over 11 years. I only paid $825.00 for my policy so, right now, it averages out to be $75.00 a year. Well worth the cost.

One other side note is that if I ever did need to make a claim on my policy, my policy is not going to be cancelled or dropped. I am also not limited to how many claims I can make on my one policy. Be happy that you have not needed to make a claim on your policy. Not pissed off that you had to pay for it.

I also agree with many others who have suggested to shop and compare pricing of title agent’s fees. January of 2010 marked the beginning of new legislation that mandates all title agents to charge a single fee (for all closings that include a mortgage). All of their costs must be combined into one fee on the Closing Statement, making it very easy for consumers to shop and compare. Do not let your mortgage broker or real estate agent “make” you use their title company. If they insist, they are most likely getting a kickback…which is illegal by the way.

By: B in Texas

B in Texas — Sat, 04 Sep 2010 03:20:52 +0000

Title Insurance is a scam. I bought it and when I went to sell home (in this market, cash sale) One day prior to closing I found out that there were heir issues. I have PROVED fraud by the seller. Another company (who was closing on my cash sell) had made title on this home with the man I bought from. I have the actual title, he did not disclose it to me, and went to another title company. They showed clear title, and so I never knew about the heirs till I lost a cash sale on my home, and might I add had moved out! Now they refuse to pay title, and today I found out they are doing a quite title, which only lifts the cloud and DOES NOT clear the title. Which means I could be responsible and sued in the future. Now I have had to hire an attorney and pay out of my own pocket, because the title company is not responsible if I want it done right. We need more consumer protection!!!! What a rip off!!!

By: Dave

Dave — Thu, 26 Aug 2010 11:47:48 +0000

Title insurance is complete bullshit – think of it as a loan origination fee, and you’ll feel much better. Unless you pay cash for a property, you will need financing. Title insurance is required for pretty much any kind of loan secured by property. Of course, in the event there is actually a problem with the title, the insurer will not return your calls, and you’ll be the one going to court.