09.03.07
Title Insurance: Think tank joins push for reform
By Wendy Brown | The New Mexican
September 2, 2007
See article
The people at Think New Mexico have written a report that calls for the state of New Mexico to stop regulating title insurance rates and let the market set the rates.
That and other reforms could save New Mexicans $40 million a year on title insurance costs, the report says.
The report adds another voice to the chorus of people asking for title insurance reform in New Mexico. Among them are state Public Regulation Commission Chairman Ben R. Luján and Victor Marshall, an Albuquerque lawyer who has filed several lawsuits concerning title insurance on behalf of New Mexico consumers.
People buying real estate must purchase title insurance to assure lenders that the title on their property is free and clear.
Fred Nathan, executive director of Think New Mexico and an author of the report, said the organization plans to propose a bill in January’s legislative session that would call for three main reforms.
The first would be to repeal the law that allows the PRC to set title insurance rates, Nathan said. The second would encourage banks to buy title insurance policies for their clients, Nathan said. The banks would pass the cost of the policies on to their customers, but having banks buy the policies would help keep prices low because bank officials would be knowledgeable about the policies and could buy them in bulk, Nathan said.
The third would be to repeal a 1999 amendment that prevents consumers from suing title insurance companies who act negligently or fail to disclose problems with a title, Nathan said.
Marshall said he agrees with the recommendation to let the market set title insurance rates. “Absolutely,” he said. “Price regulation just means the consumer is getting ripped off. They’re setting the price too high.”
Jim Sitterly, president of the New Mexico Land Title Association, said he does not think rate deregulation would be a good idea for consumers. It would cause fly-by-night title insurance companies to come into the state when conditions were good and leave when they were bad, he said.
Most of the state’s title insurance companies are mom-and-pop operations, Sitterly said, and the people who run them care about the communities they serve. Sitterly is president of Curry County Abstract & Title in Clovis.
Currently, the PRC’s insurance superintendent sets the state’s title insurance rates after formal hearings. The price is the same for all the title insurance companies in the state, and there is no price competition among the companies.
Title insurance savings would go a long way to helping people afford houses, since title insurance is a large component of closing costs, according to the Think New Mexico report. A title insurance policy for a $300,000 home in New Mexico would cost $1,248 under this year’s rates, which became effective Saturday.
Jeanne said,
September 3, 2007 at 1:25 pm
Any thoughts on this???
Brendan said,
September 5, 2007 at 11:49 am
In my experience, lenders do not even have a clear idea of what title insurance does, much less where to get the best price and quality of work. I receive requests from lenders where it is obvious that the lender is using the title comitment instead of a credit report.
In addition, I have sent out title commitments showing the insured lender as “[Lender Name], its successors and/or assigns, as their interests may appear” and a representative of the lender calls me upon receiving the commitment to require that the commitment be changed to read “[Lender Name], ISAOA/ATIMA”.
I think that before the lenders can be trusted with shopping for a title agent, a great deal of education is needed so that the lenders will understand exactly what title insurance does and what it does not do.