GazetteXtra.com reports, "The cost of title insurance is based on the price of the property being bought or sold or the amount of the mortgage being refinanced. It starts with a base fee and then goes up based on the value, with specific price points along the way."
"The Web site www.bankrate.com said that in 2006 the average cost of title work in Wisconsin was about a half percent of the loan value."
"Profitability for the title insurance industry is cyclical. The booming housing market of the early 2000s, coupled with increased mortgage refinancing, benefited title insurers. In fact, the industry posted $16.6 billion in revenue in 2006, up from $5.1 billion 10 years earlier."
"But the housing pendulum has swung, and revenues are shrinking and costs rising as home prices have decreased and increases in foreclosures have lead to more title disputes. Several local title insurance companies have laid off employees or cut hours and benefits."
"The profits of the good years are expected to cover the lean years, when fixed costs driven by evolving technology continue with little regard to revenues."
"Competition in the local marketplace also has increased. Many companies with no real ties to the community have entered the market in search of real estate agents and mortgage lenders to send title insurance business their way."
"The result has been a drop in prices and quality, long-time Janesville title agents said."
Friday, March 14, 2008
A necessary evil: Confusion clouds title insurance
Gazette Xtra writes, "Whether the discussion is mortgage foreclosures, consolidation in the banking industry, declining auto sales or struggling retailers, the nation’s housing market has been a hot topic in the last 18 months."
"Often absent from the discussion, however, is title insurance, a $16 billion industry that consumer advocates and government regulators say few people understand yet blindly feed whenever they buy, sell or refinance a home or property."
"Consumer groups say buyers aren’t clear on what title insurance is, rarely question how much it costs and routinely follow the recommendation of their real estate agent or banker on whom to buy it from."
"Title insurance covers claims and legal fees for homebuyers and lenders if problems arise over ownership of the property. It often covers errors in deeds, boundary disputes, fraud and forgery, liens for unpaid taxes or bills and missing heirs who may appear with a claim to the property."
"Often absent from the discussion, however, is title insurance, a $16 billion industry that consumer advocates and government regulators say few people understand yet blindly feed whenever they buy, sell or refinance a home or property."
"Consumer groups say buyers aren’t clear on what title insurance is, rarely question how much it costs and routinely follow the recommendation of their real estate agent or banker on whom to buy it from."
"Title insurance covers claims and legal fees for homebuyers and lenders if problems arise over ownership of the property. It often covers errors in deeds, boundary disputes, fraud and forgery, liens for unpaid taxes or bills and missing heirs who may appear with a claim to the property."
MyClosingSPACE.com Announces Nationwide Expansion of Its Title Insurance and Closing Services Business
The Earth Times reports, "MyClosingSPACE.com, the country’s first online title insurance and closing services company, has announced it is now available to new homebuyers, mortgage refinancers, attorneys, lenders, and realtors nationwide. The decision was made after the title company successfully test marketed its innovative online business in New Jersey, Florida, Pennsylvania, and New York."
"MyClosingSPACE.com opened in November of 2006, offering title insurance and closing services in New Jersey and Florida as a test for what it called a revolutionary new title industry business model committed to the lowest rates allowable by state and federal laws, the absence of junk fees, and faster service. The company expanded into Pennsylvania several months later, and six months ago, the move into New York was made."
"Company president, Gregory Schmidt explains why myClosingSPACE.com’s expansion comes at the right time. 'Obviously, this is a challenging time for the housing industry, and no one really knows what changes will come as a result. But, one thing is certain – real estate professionals and consumers will have to become more efficient and smarter, and that certainly includes buying title insurance and closing services.'"
"MyClosingSPACE.com opened in November of 2006, offering title insurance and closing services in New Jersey and Florida as a test for what it called a revolutionary new title industry business model committed to the lowest rates allowable by state and federal laws, the absence of junk fees, and faster service. The company expanded into Pennsylvania several months later, and six months ago, the move into New York was made."
"Company president, Gregory Schmidt explains why myClosingSPACE.com’s expansion comes at the right time. 'Obviously, this is a challenging time for the housing industry, and no one really knows what changes will come as a result. But, one thing is certain – real estate professionals and consumers will have to become more efficient and smarter, and that certainly includes buying title insurance and closing services.'"
Tuesday, March 11, 2008
Suit accuses title companies of breaking antitrust laws
The Seattle Post Intelligencer reports, "Washington resident sued four groups of title insurers Monday in federal court in Seattle, alleging that they violated state and federal antitrust laws by agreeing not to compete based on the price paid by consumers."
"Plaintiff Timothy Lubic bought title insurance from one of the 12 defendant companies, which operate as four groups. Together, the companies account for more than 85 percent of title-insurance premiums consumers pay in Washington, the suit alleges."
"Title insurance protects property buyers against claims that could interfere with their rights to use and resell their property. The choice of a title insurer is typically made for buyers by their lawyers, brokers or agents, and most buyers don't know how much they will pay, or to which company, until closing."
"Plaintiff Timothy Lubic bought title insurance from one of the 12 defendant companies, which operate as four groups. Together, the companies account for more than 85 percent of title-insurance premiums consumers pay in Washington, the suit alleges."
"Title insurance protects property buyers against claims that could interfere with their rights to use and resell their property. The choice of a title insurer is typically made for buyers by their lawyers, brokers or agents, and most buyers don't know how much they will pay, or to which company, until closing."
Title insurance outlook turns negative
Forbes reports: "Fitch Ratings said the outlook on US title insurers has turned negative due to a sharp decline in revenue and profits for the fourth quarter and full year 2007, as well as expectations for further deterioration in 2008 and 2009."
"Fitch said the continued unfavourable credit and property market conditions spurred by the subprime mortgage crisis support the revised forecast."
"As title insurance is a cyclical business, ratings are assigned at a level that can withstand a normal industry cycle. However, the downtrend may be unusually severe and longer in duration than past cycles, and create significant pressure on some company ratings, the agency said."
"Fitch said leading indicators of future title insurance revenues, including mortgage origination and title insurance order flow, reveal that further challenges lie ahead."
"Fitch said the continued unfavourable credit and property market conditions spurred by the subprime mortgage crisis support the revised forecast."
"As title insurance is a cyclical business, ratings are assigned at a level that can withstand a normal industry cycle. However, the downtrend may be unusually severe and longer in duration than past cycles, and create significant pressure on some company ratings, the agency said."
"Fitch said leading indicators of future title insurance revenues, including mortgage origination and title insurance order flow, reveal that further challenges lie ahead."
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