House Hunters & Home Flipping Shows: How Freakin Old Are They

So my wife watches all of those home flipping shows and real estate shopping shows like House Hunters. Since I like to work on my laptop in the living room I generally catch them when she is watching them. I wonder if they are ever going to start showing episodes that were made in the last few years?

Every episode I have seen shows people shopping for a house in a "HOT" real estate market. The buyers must put their offers in right away or risk losing the opportunity to buy the home. On the flipping shows the flippers are buying houses for an extremely high price and turning them around and getting an even higher return. This may have been the case a couple of years ago but todays real estate market is markedly different.

I would like to see some new episodes showing the reality of the current real estate market. Will they ever do it. The buyers have control now and flippers are not able to make insane profits. Would it be as popular? These shows are not providing buyers and sellers with accurate information about the reality of the real estate market and it would be interesting if they joined is in 2008 or even 2007. Does anyone agree with me or am I out in left field in this one?

Scott Wilson Tells it Like it Is

A recent interview on Marketplace at publicradio.org again highlights the biggest issues in the title insurance industry. In the interview Tess Vigeland talks to LA Times reporter Scott Wilson about the problems in title insurance. Some of the highlights.

Discussion on Pricing

"Vigeland: So, what do people want to see happen? Should there be some national standard for what we're paying on title insurance?"

"Wilson: One of the key things that needs to be addressed is kickbacks. There's a history in the title insurance industry of paying kickbacks to real estate agents, lenders and builders to bring customers. Those kickbacks can be cash. They can be gifts. Sometimes they're concert tickets, trips and so forth and those actually drive the price up rather than having price competition drive it down, so the consumer ends up paying for all those kickbacks. It's an illegal practice and it's widespread."

And on how it can be fixed

"Vigeland: And that would be, for example, you're using a certain real estate company and when you get to closing on the house, you are using whatever title insurance company they tell you to?"

"Wilson: Exactly. The consumer rarely chooses the title insurance company that they're using. If you're buying an existing house, you use the one your real estate agent chooses. If you're refinancing, it's the lender that chooses. If you're buying a new house, it's the builder."

"Vigeland: You have no legal obligation to go with that title insurance company that works with your real estate company?"

"Wilson: Federal law gives you the right to choose your own title insurance company, though sometimes the pressure is so heavy, it's hard for consumers to realize that."

There are some other good points (as well as a few that I don't necessarily agree with. You can read the transcripts here. The more the mainstream press discusses these issues the sooner the general public will understand that they do have a choice and should exercise that right.

See What Happens When You Charge Less...

Diane Cipa over at Radical Title Talk alerted me to this situation. It would be funny if consumers were not getting robbed but it is typical of the title industry. The state of New York is suing a group of title insurance companies for setting artficially high rates for title insurance. New York, like many other states, allows a consortium of title insurance companies to set title insurance rates. This is designed to protect consumers from outrageous rates but according to the lawsuit that is not what is happening, "They have done so by improperly including unregulated and unauthorized costs within their collectively set rates,".

The State Regulated Rates are Being Used to Overcharge Consumers

Instead of protecting consumers these title insurance groups are deliberately ripping consumers off. These groups are run by the biggest title insurance companies with lot of clout (and money) in the industry. They use this power to keep rates high so they can reap huge profits. I am happy to see the state of New York going after these companies but they need to do more. Get rid of the regulated pricing and allow REAL COMPETITION.

Try Offering Prices Below the Arbitrarily Set Rates

See what happens. By getting rid of these required rates you will introduce real competition. If a title company is able to find a way to offer lower rates while still running their business they should be allowed. And that is the crux of the issue. The reason state regulated rates were created was not to help consumers but to help the huge title insurance companies retain control of the market and continue to reap huge profits in the backs of consumers. The proof is in the pudding. These rates are not maximum charges but instead they are designed to keep any title company from charging less than the set rate. If you don't believe it start a title company and try to charge below the set rate. It won't be long before you have to fight the charges against you. Not because you are harming consumers but because YOU ARE NOT CHARGING ENOUGH. See, they don't really care if you charge more but if you charge less the big title companies will be all over you.

Real Competition is not Allowed

The groups that run these state organizations will do whatever it takes to avoid real competition in the title insurance market. They don't want it and if you try to bring competition you will be attacked. This needs to stop. I applaud the state of New York in this lawsuit and would love to see them take it a step further and dissolve these anti-consumer agencies and bring real competition the the title insurance industry.

Title Insurance Shortcuts Increase Risks....What a Surprise

So as I was perusing Google News for the latest title insurance stories I came across an article in National Mortgage News about First American Equity Loan Service stepping up their fight against fraud. Now I am all for cleaning up fraud in the title and mortgage industry. When fraudulent schemes are allowed to proliferate everyone in the industry (as well as consumers) pays the price. It does not matter if the fraud is committed by mortgage lenders, title agents, real estate agents, or consumers we all end up paying for it.

So First American is Cleaning up Fraud they helped create

I am not putting all of the blame on First American. After all, the actual perpetrators of the crime deserve the blame. BUT First American made it way too easy for them to run this scam. Basically, First American Equity Loan Services developed an alternative title insurance product called FACT. This was done so they could turn the loans around in a much quicker time frame to keep up with the proliferation of home equity loans. This was not real title insurance and while it sped up the loan process it left First American wide open for scammers. And the scammers caught on quickly. People began getting multiple home equity loans in the same day. Since the initial title search was expedited and incomplete this scam was not noticed until was too late. Now First American is trying to clean up this mess but they appear to be heading into another mess. This one will hurt consumers directly.

Automated and Overseas Title Searches

If you follow Radical Title Talk or Source of Title Blog you have probably heard a lot about automated title searches and using overseas "title searchers". I am not going to get too deep into the issues as both of those places have done a great job exposing and discussing the potential problems. What I am more interested in is the fact that First American is trying to clean up problems they helped create on one hand and on the other they are pushing products that will create more problems. It makes no sense to me. Maybe in 3 years we will read another story about First American cleaning up all the problems they helped create with their "Automated Title Searches"....