10.03.07
Where is Your Title Insurance Underwriter Leading You?
I was talking to a very seasoned contract title examiner recently (one who has been in the business of doing overflow exams during the refi-season as well as difficult sale exams for many years.) He works for a variety of Title Agents, who underwrite for each of the major underwriters. He was saying how difficult it is to keep track of how each Agent wants their title commitments done. Apparently each claims that their Underwriter has different standards on how to examine title. Some never examine behind a recorded plat. Others go back 2, 3 or 4 owners. Some want 40 years on a sale, but only 2 owners on a refinance. Others just categorically ignore easements and restrictions (even on a sale) and only look for and show liens.
What has the industry come to? In talking with Title Insurance Agents across the country, and with independent contractors for those agents, it is clear that liberal shortcuts are being taken (I am told, with the sanctioning of the major title underwriters) when examining titles and almost everyone is confused. I personally think that the search standards have become too weak, and that Underwriters and Agents alike will likely pay a price for the lack of quality coming out in title policies. A few years ago, ALTA said that one in 6 files had title problems, and then it changed to 1 in 4, then to 1 in 3. (They no longer declare how many files have problems.) When is the last time you picked up a file without a title problem?
There is clearly confusion among Title Agents – where do the Underwriters stand? There is no consistent message. What do you think is most important to you and what do you think is most important your Underwriter: Bringing in every possible deal so you have enough volume to keep your Agency Contract (even though your gut says “should I really be doing this or working with this customer?”); Turning the product out within 24-48 hours (regardless of quality?); Keeping fees low but high enough to make a profit(and what about RESPA and fee mark-ups?); Cutting long-time seasoned staff and contracting out exams to perhaps less competent staff to keep expenses volume-related(Ouch)? It’s a conundrum.
The Underwriters have been slow to tell us their long-term wishes and plans or us. Some wonder if the Underwriters aren’t trying to force out small Agents and replace Agents with Super-inexpensive contract staff from overseas – it is certainly happening.
I think it would be most helpful if the Underwriters would admit that in this day and age they are no longer trying to find and eliminate problems. Title Insurers have rather become a risk-underwriting type of insurance. The Underwriters’ real focus seems to be keeping expenses as low as possible. But tell us, please, if that means we should take short-cuts in abstracting and change the way we old-timers were taught to do business. And tell us, please, that if you will be using off-shore staff to post title plants, what does that mean? We need to know where we fit in.
It is clearly incomprehensible that with the 3,000+ counties in the U.S. and the hundreds of thousands of places to search (with probate, taxes, assessments, Courts, Cities, Townships, hundreds of types of judgments found in all sorts of locations, that the classic American abstractor that we have known for decades will be obsolete. No, I can’t believe that.
But we are scared and confused. We don’t understand. Please Explain.
Your Thoughts and Comments Appreciated….