Title Insurance continues to be characterized as a scam, even for attorneys who issue title policies. Once again, the media (this time a Huffington Post article) gives a bad rap to the title industry as just another get-rich-quick-and-scam-the-consumer product. The author has clearly buried his lack of expertise in a convoluted oxymoron concept he calls the “fraud of honest service.” I read this as saying, while title insurance is technically legal, the product is bogus and it’s really all just about a big kick-back.
If you’ve ever purchased a house or a condo, your closing attorney urges (if it’s an all-cash deal) and the lender requires that you buy something expensive called title insurance, which essentially covers your attorney’s liability in case he erred in conducting the title search. But what no one knows is that the title insurance company, whom your attorney has hired, kicks back a large undisclosed referral fee to your attorney. (In a sense, you unwittingly pay your attorney’s fee twice.) Although it’s all perfectly legal, it would also appear to be a blatant example of private honest-services fraud, for which no closing attorney has ever been charged.
What do legitimate title professionals have to DO to explain our product and services? To show there is value and the product is important to the consumer. Obviously the title industry is just not doing enough to get the message out. Will there be a demise to the industry as we know it, because of the flippant and erroneous attitude toward title insurers? And what are YOU going to do about it? Look in the Mirror, it’s up to us.