Reuters has an interesting, albeit confusing, article referring to a Fix for the Housing Crisis by reinventing or getting rid of the title insurance industry. It is a great example of just how misunderstood the title industry is. (Thankfully, Reuter’s says the views expressed are the author’s own.)
The author, Elena Panartis, an institutional economist states:
The United States has a broken registry system, and instead of ever fixing it allowed a title insurance industry to arise as a substitute. Title insurance is non-transparent and (at best) inconsistently regulated, yet it is the main system through which information about property valuation flows. Plus, you have to pay for the information. This leads to all sorts of problems, and fuels speculation.
Some examples of the author’s confusion:
· She confuses the Australian and Canadian Torrens Systems with the U.S. recording system. Only a few counties in the U.S. have the state sponsored Torrens indemnity program
· She does not recognize there are 50 separate state recording systems for both land title and liens against people that affect title, and that title companies simplify these into a single, understandable title product for the secondary market
· She suggests that title companies set values for property rather than insuring market values established by willing buyers and sellers or an appraiser. Not true.
· She seems to think information obtained from public offices is free. Not only not free, often difficult to obtain from the myriad of places to search.
It seems we need to do a lot more education with economists to explain what title insurance does and how it makes the housing market safer for the public and better for the economy. The author is a teacher at the university level. She should be more careful in what she says. She does not know the product , nor does she how the systems work.