Will the Title Industry ever clean up?

Here we go again. It seems like I could this every day. Heck, maybe I will start a daily wrap up of title companies facing fines and prosecutions for ripping off consumers. Until then I want to discuss a few more recent news items that highlight the huge problems in the title insurance industry.

Today's perp walk highlights two different issues.

Missouri Guaranty Title Co.

The first instance is simply theft. A MO title company owner just decided to steal escrow funds and use them for their own benefit. On Friday December 7th, the Missouri Department of Insurance, Financial Institutions and Professional Registration filed a complaint before the Administrative Hearing Commission, alleging that Guaranty Title Co. and its owners had violated state laws. In this case the title company is charged with illegally disbursing money from Escrow Funds.


The sad fact is that this business seems to attract those willing to pillage from their "customers". Is it because of the lax enforcement and oversight from governmental agencies AND the Underwriters? I am sure both are contributing factors. The underwriters are happy to overlook problems until it affects their bottom line. Some are even involved in setting up illegal ABA's that offer kickbacks in return for business referrals. This is bad for business and all the honest title companies should be outraged. This behavior needs to be eradicated.

Reiner, Reiner & Bendett in Connecticut

The second situation is from Connecticut and again highlights the huge problems with ABA's. Connecticut Attorney General Announces Settlement in Title Insurance Kickback Scheme. In this case some of the consumers who overpaid will actually receive a $200 payment sometime in 2008. While this is a step in the right direction it still does nothing to fix the problem. As long as the powers that be do little to curb these business practices they will continue.


The vast majority of perpetrators are never caught. And the fact is it is more profitable to continue to run these illegal schemes and pay the fines. The amount of business generated is enough to cover the fines. I know I sound like a broken record but until something is done to actually impact their bottom line illegal ABA's will continue to chug along while title companies that focus on consumers will struggle. There needs to be a sea change in the enforcement and penalties levied against these schemes before the industry is able to change. Until that happens consumers will continue to be overcharged and our industry will be looked upon with disdain and mistrust.

Kevin Harney breaks it down

Kevin Harney wrote another scathing article about the malfeasance prominent in the title industry and you can find it here. Kevin's article discusses the latest crack down against illegal kickback schemes and continues the call to clean up the industry. IMO the last line in his article is the most important "Bottom line: Before agreeing to direct your title and settlement business to an affiliate of your realty agent, mortgage lender or builder, shop the market for potentially lower fees from independent, non-affiliated competitors."


Nail, meet head.

If more consumers get this message they will exercise their right to shop for and choose their own title insurance. In this market the buyer holds all the power. Make sure you are getting the best price on title insurance. If you are told that you have to use their recommended title company tell them you will find a new representative. This is your right. Nobody can tell you who to use for title and closing and if they really want your business they will respect your decision. After all, when you buy a car you are not required to use an insurance company recommended by the dealer. Title insurance is no different and anyone who tells you that you don't get to choose is lying and probably has ulterior motives.