Posted by Hugh Nations Signing Agents of Austin on 12/8/07 2:15am
Msg #225008
Title insurance fees
I haven't seen this issue raised before in my infrequent visits here. If it has been, please forgive me and move on to something else.
In all of the current fee-cutting for signing agents, has there been any reduction in fees for title insurance? That's a w-a-a-y bigger apple to take a bite out of than the signing agent fee. Is there some sort of systemic reason that such fees can't be reduced, or can't be easily reduced?
| Reply by Kevin/Ct on 12/8/07 5:07am
Msg #225010
In Connecticut Title insurance premiums are approved by the State. The title insurance agents are required to be attorneys. Their commission is 60% of the premium. Changes in the structure require approval by the State.
| Reply by DianeCipa on 12/8/07 5:30am
Msg #225011
We're regulated in PA. We have an all-inclusvie premium to which additional refinance discounts were added last year. We also have some optional fees which until last year, most collected. Competition has caused many to reduce those optional fees while at the same time joint venture captured business title agencies have actually raised fees. They are paying the extra back to the joint venture partner who sells the consumer on the "one stop shop" mentality.
I started an optional program for consumers in our office called Choose & Save. If they agree to put up a deposit of $300, we waive all optional fees.
| Reply by Lisa Prestegard on 12/8/07 5:39am
Msg #225012
Florida Title Insurance rates are promulgated. In my experience, all TC's charge the lowest possible promulgated rate to stay competitive with one another. There is a reissue credit available on a refinance if the homeowner can provide the TC with a copy of his original Owner's Title Policy. The commission of 60% is standard here, too.
That being said, a TC insider told me just last week that Lenders were looking for savings everywhere, and that included within the Title Insurance premium. I was also informed that my formerly decent fee of $200+ would be abjectly cut in half to keep the Lender as a client.
Mind you, I've done hundreds of closings for this company and don't wish to end our relationship, but I'm going to have to stop the bleeding.
| Reply by Kevin/Ct on 12/8/07 8:53am
Msg #225019
That is kind of interesting since the premiums are filed and approved by the State, and the commission is a fee paid to the agent by the Title insurance carrier. I would question whether the TC's pressure to reduce your commission constitutes a "kickback" in violation of RESPA.
| Reply by Julie/MI on 12/8/07 6:28am
Msg #225013
The fees are regulated by the state. I used to calculate premiums way back in 1983.
A smart consumer then and now would save their policy to turn in for credit. You could slash up to 40 percent within a certain amount of years of the issue date because the search which is normally 30 years only had to go back to the issue date of the policy.
A smart borrower, even though they are not purchasing an owner's policy for themselves, should I N S I S T on a copy of the policy they purchased for the lender so they can get credit if they refi---especially those with ARMS.
I blew the LO out of the water a few years ago, when I had a copy of the lender's policy and insisted on credit for my premium. 
| Reply by Sharon Taylor on 12/8/07 8:50am
Msg #225018
Julie, could you please explain further?
That is a new one to me and certainly would greatly benefit borrowers who refi after only a couple of years.
I know that if a borrower has an OWNER'S title insurance policy, he/she can save on the cost of the LENDER'S title insurance policy, but I was not aware that there could be a credit for the unused portion of the LENDER'S title insurance policy.
Are you saying that if, for example, a borrower takes out a 30-year mortgage and of course pays for a LENDER'S title insurance policy, but then does a refi in 2 years, and of course has to pay all over again for another LENDER'S title insurance policy, the borrower could turn in the first loan's policy and get back a portion of the premium paid at the time the first loan was funded????
It makes sense since the borrower would only be receiving 2 years of coverage instead of the 30 years they paid for, but if that is what you are saying is correct, then it's one of the most hidden secrets of this business!
| Reply by BobbiCT on 12/8/07 9:22am
Msg #225021
Title Insurance Refinance Discount ...
A personal CT example:
I refinanced a few years ago. I had a copy of my lender's policy for the mortgage that I was paying off. It was issued by CATIC. My attorney called CATIC and received a "re-issue discount" on my new lender's title insurance policy for my new loan. The discount, calculated by the company under a set formula, was based on the amount of insurance on the old policy and the amount of insurance required for the new loan. Depending on the age of the lender policy, loan amount, issuing title company, and your state insurance regulations, there's a 99% chance of getting a discount.
Factors to consider: In CT, attorneys issue and sign the title insurance policy. Always ask whoever is "representing your interests at the closing" if s/he can get your a re-issue discount. If the attorney represented you before, s/he has a copy of the old policy and can determine if you qualify for a discount. If your refinance title exam and new policy is through the same title insurance company, the company will have a record of the policy and should automatically check to see if a re-issue discount applies. Even if you don't use the same title insurance company to issue the policy, see if you can get a copy from your original lender (you paid for the policy). Some title companies, upon review of an existing lender's policy from a different title company MAY agree to give a discount on the new policy that they issue. The "re-issue" discount is commonly applied when it is THE EXACT same real property, same owners and same borrowers who are re-financing for higher loan amount within X years.
| Reply by Loretta Reed on 12/8/07 9:54am
Msg #225026
Re: Title Insurance Refinance Discount ...
What I have noticed about title insurance, unless the broker knows his stuff, the borrowers (at least here in MD), do not tell the borrowers that they can get a re-issue rate on their title insurance. That is $250 or more back into the borrowers pocket.
| Reply by PAW on 12/8/07 10:12am
Msg #225027
Re: Title Insurance Refinance Discount ...
FYI ...
Reissue rates are discounts off the standard premiums charged on title insurance policies. Though the discounts vary from state to state and from title insurer to title insurer, they average 50 to 60 percent. Reissue rates are normally available only on refinancings, but in some areas they can be obtained on home resales where a title search was performed relatively recently for the seller.
Here's how it works. Say you bought your home five years ago. Now you see mortgage interest rates in the mid-6 percent range and you decide to refinance. Should you pay full price for another title search and insurance policy? Given the fact that a comprehensive search of the public records on your property was performed just five years ago, there's no reason to have to pay for another full search.
That's why the title industry offers special discount pricing for situations such as yours. Rather than paying $1,200 for a new title policy, for example, why not take advantage of a reissue rate at $500 or $600?
Why not, indeed? Why isn't the concept of discount pricing more widely known among American homeowners? Because it is not widely promoted to the general public, as even the industry's national trade organization admits. James R. Maher, executive vice president of the American Land Title Association (ALTA), says that he is "aware that not all of our members disclose" the existence of reissue rate discounts.
But the association's own Website recently posted an advisory for consumers referring to the "good news" from the title industry. The good news, put bluntly, is that you don't need to pay more—provided you know to ask for a reissue rate when you apply for a refinancing.
Title insurers' policies sometimes severely restrict the eligibility period to obtain reissue discounts. Others have strict rules requiring presentation of the prior title policy to the title agent, to prove that insurance still covers the dwelling. The rules and discounts also are regulated by state laws in most cases, so consumers need to ask what rules apply to their specific situation.
Generally your mortgage broker or lender can make the arrangements for a reissue rate at the time of selecting the title coverage or closing agent. Some brokers say that they routinely ask for reissue rates on refis as an additional service to their customers. But others admit that unless an applicant asks, they don't mention the reissue rate option.
Some title, escrow or settlement attorneys also routinely mention the existence of a lower cost option. But the financial incentives for them are heavily weighted to non-disclosure, as ALTA confirms. The smaller the premium that is charged for the insurance coverage, the smaller the compensation to the title agency or settlement attorney. The avarage national "split" of the premium charged at closings, according to ALTA's Maher, is 70 to 72 percent to the title or settlement agency, and the balance to the title insurance company. The splits go as high as 92.5 percent to the agent or attorney and just 7.5 percent for the insurance, says Maher.
ALTA's Website posting is intended to dispel some of the mystery about reissue rates. Although it offers little in the way of practical details, its fundamental message is one that homeowners should heed: Say the magic words. Ask for a reissue rate when you go to refinance. Don't pay full price if you don't really need to.
(Originally published in Realty Times a few years ago. Lately, here in FL, the reissue rate has been less than 10%, and for a while, it was actually more costly.)
| Reply by DianeCipa on 12/8/07 11:14am
Msg #225037
Pennsylvania got radical on the refi discount issue
We must give the discount if we see an unsatisfied mortgage on record with an institutional lender. We have to assume that a title policy was issued.
Our reissue rate is 90% of basic. This is available if the mortgage is within 10 years.
If within four years, we have to cut the rate to 80% of reissue.
If within two years, we have to cut the rate to 70% of reissue.
| Reply by noteclub/MD on 12/8/07 2:37pm
Msg #225068
Re: Title Insurance Refinance Discount ...
I am wondering are those of us that are title producers obligated to inform the borrowers of this?
Thanks
| Reply by DianeCipa on 12/8/07 6:26pm
Msg #225097
Re: Title Insurance Refinance Discount ...
In PA you are. We have a special disclosure and if the insurance department finds a violation they can charge a $500 penalty.
| Reply by Julie/MI on 12/8/07 12:54pm
Msg #225051
Nice catch, Sharon!!
See normally in a purchase both a lenders and owners policy are gleaned. The owners policy is for the purchase price, while very often the lenders policy is only for the mortgage amount.
So if a lenders policy is purchased for a refi, the borrower is entitled to a copy of it, and yes they can turn it in for credit.
I have mentioned this in the past, but no one ever commented on it before.
I cannot remember off the top of my head, but the reissue rate used to be 95% in the first year, 60% in the first two years, 40% in 5 years, and then I cannot remember it.
I find it interesting that my Ohio title companies have a disclaimer that the borrower could purchase a policy (someone from Ohio help me here, as I'm going to cut down our Christmas tree) for a really reasonable fee and they have to sign an affidavit at closing as to whether or not they decline the offer. I think it's misleading to our Michigan folks as they ask me to make heads or tales out of it, which I obviously don't like to do.
| Reply by Lisa Prestegard on 12/8/07 12:11pm
Msg #225041
Can't speak for other states, but my experience here in FL has been that an original OWNERS policy is needed for the reissue credit... a Lender's policy won't do.
| Reply by Shannon_Va on 12/8/07 3:57pm
Msg #225074
As a title company, I have published rates I must charge through who I underwrite for, which is Lawyers Title. If I have a prior policy on the same parcel we are insuring and is not older than 10 years, I am required to give a 30% discount off the published rate. We even have to have a form signed at closing that tells the borrower that they may be entitled to a reduced premium if they have a prior policy.
Virginia's premiums are not regulated by the state, but we must charge the published rates set by who ever it is we underwrite for.
PS, as acting as a notary, even though you are a title producer, I would not think you would be obligated to disclose that they can get a rate reduction on the premium, unless you are actually working for the company as an employee issuing the title insurance. JMHO
| Reply by CopperheadVA on 12/8/07 4:11pm
Msg #225076
Shannon, I have seen this form numerous times, but I thought it was offering a discount on the owner's policy only, not the lender's policy. I don't have one in front of me, but my recollection is that it is informing the borrowers that they can purchase an owner's policy, and they can possibly get a discount if they can produce a current policy.
This form is not in all packages (at least that's my experience).
| Reply by Loretta Reed on 12/8/07 4:52pm
Msg #225085
Hey CopperheadVA, there is a form that is signed offering the borrowers the option to buy an Owner's policy and there is a second letter that states they may be entitled to a reduced premium on the Lender's policy if they meet the criteria. Sometimes the title company omits these letters at closing. I don't know why.
| Reply by PAW on 12/8/07 9:13pm
Msg #225108
Interesting artice from last year
The following article is from Blank Rome LLP (a real estate law firm) newsletter.
----- ----- ----- ----- -----
Title agents and others involved in loan closings, e.g., mortgage brokers and lenders, must be sensitive to the need for consumers to be educated about title fee discounts to which they may be entitled. Florida’s largest title insurer, Attorney’s Title Insurance Fund, recently agreed to a $2.5 million settlement of a class-action lawsuit in which it was accused of overcharging Florida customers because it did not provide the reissue rate for title insurance to customers who refinanced their mortgages or made other real estate purchases, such as buying unimproved property or existing homes where the seller had purchased title insurance from Attorney’s Title within the previous three years. These customers would have received up to 40% premium discounts on their title insurance if they had been offered the proper reissue rate.
Florida, like many states, has a mandated reissue rate for borrowers obtaining title insurance on refinancings or purchases of unimproved real property where title insurance was issued by the same title insurer on the same property within the previous three years.
As part of the settlement, Attorney’s Title agreed to provide refunds, ranging from $15 to $180, to customers who were eligible for the reissue rate but were still sold insurance at a higher rate between February 1999 and September 2005. Attorney’s Title has also agreed to prominently disclose the discount reissue rates to customers in the future, and will train its title agents on when to provide discounted reissue rates. These new practices will be detailed in the firm’s insurance handbook.
Title agents, mortgage brokers, and mortgage lenders should also be aware that courts have held that, when a reissue rate should have been charged but was not, the difference between the reissue rate and the rate actually charged to the borrower for title insurance should be included in the finance charge under the Truth in Lending Act.
| Reply by Hugh Nations Signing Agents of Austin on 12/8/07 10:02pm
Msg #225111
Re: Interesting artice from last year
I am going to display the abysmal depth of my ignorance, I fear, with this posting.
To summarize what I understand all of you knowledgeable folks have been saying:
1. Borrowers have an option to buy an owner’s title policy, which is (except for the payout amount and the payee) identical to the lender’s title policy.
2. Upon refinancing, if the title insurer is the same company for the refinance as for the original loan, and if the refinance is within a specified time period that varies by state, the borrower is (may be; I’m not sure which) entitled to a discount on the new title insurance policy. However…choose one:
a. The borrower must have a copy of the lender’s policy; or
b. The borrower must have a copy of the owner’s policy; or
c. It doesn’t matter what the borrower has, as long as it’s not contagious.
Does that sum it up?
| Reply by JK/TX on 12/9/07 11:37am
Msg #225152
Title Insurance..... opinion in TX
IMHO
1. The OTP and MTP are 2 completely different policies.
2. If the borrower's lender was purchased a MTP (at time Bo purchased property or at time Bo refi'd) then the borrower refi's w/in 7 years of the MTP the new MTP will be discounted, it does not matter who the underwriter is on the existing MTP (i.e. new loan does not have to close at the same title co that issued the MTP). The discount is based on the payoff amt of the existing loan and starts at 40% (?) and then the percentage is reduced the older the existing loan becomes. This discount is not given on the OTP.
The borrower can prove that the existing lender has a policy by producing a copy of their closing statement.
You can go to TDI's website and search Rate Rules (R-8) and procedural rules to verify my opinion.
"I am not an attorney and this is not legal advise"
| Reply by Shannon_Va on 2/25/08 9:58pm
Msg #237152
Re: Title Insurance..... opinion in TX
The borrower must produce the actual policy, not just proof that they paid for one, to get the discount, and you are correct, it can be a policy written by any insurer to be eligable for a discount.
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