Real Estate Social Networking

Amidst a flurry of activity and discussion a new social media site dedicated to Real Estate professionals has been launched. It is called Real Estate World. Bill Gassett invited me to join yesterday and began digging into it today. It is a bit different than Active Rain and other Real Estate social sites in that it is more in the mold of Facebook. If you are a real estate professional you might want to give it a try. I have just started exploring it but there seems to be some potential here.
You can visit my profile and look around at what I have done here.

Fraud & Malfeasance in Real Esate

OpEdNews.com has a harrowing article about mortgage fraud and the potential harm it could cause the entire economy. It offers some great information from Ed Rybczynski of the Title-Opoly blog. The article places the blame on everyone in the industry for contributing to the fraud including title companies. It is a good read and a fair warning to those who would put short term benefits in front of long term success and stability.

Ask The Title Expert: Part 2

It's Back. Ask the Title Expert: Part 2

It has been a while but myClosingSPACE.com is back with the second installment of the Ask the Title Expert Series. These questions represent some of the more common queries we hear in our daily work. If you have any questions that you would like to see reviewed and answered please feel free to leave them here. We want to help everyone understand title insurance and the closing process.

myClosingSPACE.com Director of Customer Service Annette Leoncini again helped with this by providing the following questions she commonly hears.

Question 1: Does the quote I received include a new survey?
Answer: No, obtaining a survey is outside the scope of title insurance, however, we can order the survey for you. Some of you may be wondering what a survey is exactly. A survey is a professional examination of a property. A survey usually will reveal the size of a property, its boundary distances, ground contours and where improvements or alterations have been made.

Question 2: When should I order title insurance?
Answer: If you are purchasing your home, you should order title insurance approximately 2-3 weeks prior to your estimated closing date. If you are refinancing, you should order title insurance when you have been pre-approved for a mortgage. Waiting too long to order title insurance can delay your closing and add additional tax and interest liabilities.

Question 3: I am refinancing my home. Why do I need to purchase a new owner’s policy?
Answer: You don’t. What you are purchasing is a lender’s policy. This policy protects the lender's valid mortgage lien on the subject property against any undiscovered liens or title issues. This policy is issued for the original amount of the mortgage. The fee for this policy is state regulated. When refinancing, a discounted re-issue rate is charged based on the prior mortgage or original purchase price. A Lender's title insurance Policy is issued in the amount of the mortgage loan to assure the lender's priority position on the lien and expires when the loan is paid off. When you are refinancing the new mortgage lender has paid off the original loan thus rendering the lender's policy expired. The new lender requires a new policy to cover their loan. A policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against, or unmarketablility of the owner's title. An Owner's title insurance Policy protects the owner's investment in the property for as long as they or their heirs have an interest in the policy.

We really want to keep this series going and answer all of your title insurance related questions so if you have a question please ask it here or email me here.

More Title Company Rip Offs

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.

Don't Believe the Lies

Here at myClosingSPACE.com we talk to consumers all day long. Some are fairly well educated about title insurance while most are just learning about it. Even the most educated may be lead to believe a common lie told by real estate professionals involved in illegal ABA's. We hear it all but one common lie we are hearing is that a lender, builder, or other professional who is referring a title company can charge you more for their services if you don't use their referred title company.

This is an Outright Lie

Well, in a sense it is. They can charge you more but the law states that you have a right to choose your own title company. If someone is telling you to use the title company they referred of face a higher price they should be avoided. The most common reason they want to charge you more for using a different title company is because they are getting an illegal kickback to send consumers to their title company. The end result is that the consumer will end spending more for title insurance to pay that kick back. So while on the surface it may appear that you are paying less to the lender or builder that savings is all but eradicated when you overpay for title insurance.

Don't Get Ripped Off

An honest lender or builder will want to help you save money and offer you the best service. If they are unwilling to offer you the same rate for their service whether you use their title company or one that you chose they obviously do not have your best interest at heart. They simply want to get that kick back from the title company. Is that person worthy of your trust? IMO no, because they are more concerned about making a few extra dollars at your expense than giving you the best service and price they can.

Exercise your Rights

Shop for title insurance. If a lender is balking at you using a title company that you chose you may want to look at a new lender. In this market the consumer holds all the power. If a lender or builder wants your business they need to work for you. Exercise your right to shop for title insurance and use the company that you want. Not the company that is paying your representative for their business.