Fed agency: Title insurance too costly

WASHINGTON – May 1, 2007 – The U.S. Government Accountability Office closely examined the title insurance business and came up with some problematic findings. Chief among the government’s criticism of the industry are these points:

• There isn’t much competition in the business, suggesting that prices could be too high.

• Local title agents keep up to 90 percent of the premiums paid by homebuyers and refinancers at closing and only about 5 percent is paid out in claims.

• Besides charging what appears to be an inflated amount for the title insurance, many title agents also tack on extra charges for research fees, analysis and a variety of administrative charges.

• Affiliated business arrangements lock out lower-cost competitors and provide incentive for real estate practitioners to steer customers to title companies in which they have a financial stake.

In response to the report, the American Land Title Association, which represents insurers and agents nationwide, defended the industry. The association says that competition among agents can be fierce and that consumers are free to shop around for the best deal.

Source: Washington Post Writers Group, Kenneth Harney (04/28/2007)

© Copyright 2007 INFORMATION, INC. Bethesda, MD (301) 215-4688

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