08.06.07
The News Media Mirrors Title Industy Problems
What we hear from the news media (and we hear it every day) is:
Title Agent X is being sued for RESPA violations;
Title Agent Y has closed its doors after stealing millions of dollars from homeowners;
Title Agent Z was set-up fraudently by an Underwriter to capture business from a large builder – the builder gets 80% of the premium without doing any work!
Underwriter A agrees to pay the State $10,000,0000 for illegal…
I believe most people think Title Underwriters don’t pay claims – they just “insure over” problems. How is the Public to know about claims? Certainly, the Underwriters are not forthcoming in telling the Public, or even their Agents, what those legitimate claims are. What is the consumer to think? What are the insurance commissioners and regulators to think? That’s outrageous! We are all being overcharged! The latest book about title insurance is “The American Title Insurance Industry: How a Cartel Fleeces the American Consumer” is just another daily example.
The news media is telling sad, but true stories of our industry comrades. The last we heard from ALTA, one in three files have title problems. What does that say about the quality of our work?
Where are the Underwriters in all this? I don’t understand how they can be so slipshod both in signing up any Agent who can bring is business and in not monitoring their Agents. Not only will the Underwriters suffer from this news media hacking. The small, honest, hard-working mom-and-pop abstractors and title agents will also bear the brunt of this debacle.
Title Underwriters, Agents, and Abstractors all need to re-evaluate where we are going with this. Are we hearing the whole truth from the media? Are there some stories and statistics to show we are an honest, ethical industry? From what I read, it seems to me we are flushing the industry down the sewer.
mndoug said,
August 6, 2007 at 2:36 pm
Oh I believe we deserve what the media is saying and a lot more. The real estate industry is fraught with fraudulent practices. Paying anything of value to a fiduciary to influence the advice they provide to their clients is commercial bribery in most states - forget about RESPA. We’re talking criminal conspiracy theories on a RICO scale. ABA’s, One Stop Shopping…sorry, call it what it really is - Sophisticated Captured Audience Marketing (SCAM).
Since when is it ok for a fiduciary to exploit that special relationship to engage in self-dealing. There’s a criminal name for that too - theft by swindle. Since when is it ok for Realtors to divide up and allocate the entire title insurance market among themselves? That’s called a per se horizontal Antitrust violation. And when they use commercial bribery to make it happen, we’re talking RICO.
We’re just seeing the beginning of the problem being exposed. I think you can blame most of the mortgage fraud and foreclosure issues on our industry too. In Minnesota I’ve heard from officials that most of the mortgage fraud problems involve ABA’s.
When we clean up our industry is when we’ll see favorable press again. Personally, I won’t be happy until we throw someone in jail. And these so-called RESPA defense attorneys who told Realtors that it was ok to engage in this conduct… I think some malpractice claims should be forthcoming against them. But that’s another post.
Doug Miller
Title One, Inc.
Minnesota