really high title insurance quote

[Anonymous]

Ooops, sorry OP, just saw in your original post that $5K is for both policies. So, your quote does seem a bit high relative to ours, which is about $500 less than yours for both policies, but on a house that costs $200K more. But not sure the quote is that far out of wack, for a good title company.

[Anonymous]

agree with the pp that it could be for both policies.

also, wondering whether you're working off the HUD-1 or something else?

You can also shop for your OWN title insurance. Don't have to use the one your settlement attorney offers (b/c 80 percent of the cost is commission to the lawyer).

[Anonymous]

Ooops, sorry OP, just saw in your original post that $5K is for both policies. So, your quote does seem a bit high relative to ours, which is about $500 less than yours for both policies, but on a house that costs $200K more. But not sure the quote is that far out of wack, for a good title company.

PP, is your quote for a house in DC?

[Anonymous]

PP here -- no, it's in Montgomery County, MD. Not sure what the difference in rates is, but there may be one...

[Anonymous]

DC rates are higher. MD is cheapest. Virginia is in the middle.

[Anonymous]

DC rates are the highest in the nation - MoCo quotes are not comparable.

[Anonymous]

Anonymous wrote:DC rates are the highest in the nation - MoCo quotes are not comparable.

DC's title insurance rates are not even in the top 10 of the highest. The formula is incredibly complicated. Your title insurance company can provide you a copy of the manual. It is probably 20-40 pages long and varies by state. The formula is tiered (ie you pay $x/ thousand dollars of coverage from $0-$250K and a slightly lower amount for $250-$500K, so on and so forth)

$5K sounds about right, for an enhanced policy. A basic policy is 18% less expensive. Basic is a good policy, enhanced is typical for this market. There are 20 differences between the policies. Ask the title insurance company for a list of the differences and you can decide which is right for you.

Title insurance is regulated, but not set in DC. Title insurance underwriters set rates (which may not be lawfully deviated from). All of the companies in DC underwrite through the same large 4 title underwriters- the underwriters are literally within dollars of each other. There are some others that are less expensive. They are generally internet companies or those that don't operate regularly in DC. The insurance is just as good, but there is a high probability of error (you decide whether a covered mistake is worth your time for a few hundred dollars). They have drastically less reserves and are not experienced in the market. Personally I wouldn't accept a policy from them. I would accept a policy from the following (the list is more than 4 since the 4 own subsidiaries: Fidelity, Commonwealth, Chicago, First American, Stewart, Old Republic,

No one tries to sell an owners title insurance at a refinance. And DC law requires buyers to sign a written disclosure as to whether they want title insurance and the cost difference between basic and owners. Title insurance in DC for the major underwriters is split between owners and lenders coverage. However the formula is set such that an owners policy costs $x based on the sales price. Any loan amount is $150 unless it is greater than the purchase price. For example everyone buying an $800K house with any mortgage less than $800K will pay the same total for lender's and owner's title insurance, but the allocation will be different. $800K cash will cost $150.

Not buying title insurance really is stupid (in fact I would say it is the dumbest legal mistake, after not having a will, that the average person could make). It is like people not buying health insurance. You will save money in the short term and might save money in the long term, but it is truly stupid. While significant claims are very unlikely you could be entirely divested of the property if it happens and it does happen. Ask any title company and they will tell you stories of massive claims, where without a policy the seller would have had complete loss of their home.

Finally, on pricing. The settlement attorney makes between 70-85%, depending on the size of the company (larger companies make more). But title insurance is not a pure insurance product. It is substantially an attorney opinion letter for all discoverable title errors, coupled with insurance for undiscoverable items. The attorney's work pre-settlement prevents and fixes most of the title problems. It would be like paying your homeowner's insurance company to fireproof your house before purchasing fire insurance from them. For the record, over 99% of buyers purchase title insurance. No corporate buyer would forego title insurance. Only a complete idiot would.

And one PS, if you purchased an owner's title policy you get a discount (generally 30-40% depending on the state) when you refinance on the required lender's policy. So for the idiot who thinks he saved $10K over the years. If you refinanced as much as most people did in the last 12 years, it actually was more expensive than not purchasing it (admittedly at 4% rates that might not be true today).

[Anonymous]

We have used FederalTitle.com - a local company that provides the lowest settlement/title charges in town AND they were very efficient. They pride themselves on being independent and not kicking back money to referral sources (real estate companies) and instead, they give a large credit back to the homebuyer. They also didn't try to upsell us on the enhanced title insurance and gave us full disclosure and clear choices. You can get an instant fully transparent quote from their website.

[Anonymous]

Im the idiot that does not believe in title insurance. I dont think we ever used it. This involves at least 4 properties off the top of my head. I dont even think weve used it owners title off the original purchase. Granted 3 of those 4 were brand new so the odds of there being a title problem has to be even lower. Even still, the fact that a title company is still on the hook due to the lenders policy to the lender means they arent more likely to overlook something on the owners side. For an insurance that pays out about 5% of all the money it takes in where most insurance pays out about 70%, we wont be intimidated by those on here justifying this nonsense.
http://blog.franklyrealty.com/2007/01/optional-owners-title-insurance-part-2.html
If interested, I would recommend reading the comments section of the blog above.

[Anonymous]

Brand new construction is just as likely to have title problems, actually. You know someone owned the land before you did, right?

[Anonymous]

Ahhh, the self-proclaimed "idiot" who doesn't believe in title insurance turns out to be grossly uninformed. It's easy not to believe in something when you've never explored it. As it turns out, there is a title problem in nearly 40% of all transactions which is discovered and fixed prior to the closing ever taking place. Most parties to the transaction don't even know about these "claims," because most can be fixed quickly and without the parties ever having to be bothered. Title insurance pays for these investigations and corrective actions before closing - not just the clamis and issues post-closing. When you add in the approximate 8% claims rate after closing, you get nearly 50% of all properties having an issue. If "idiot" decides not to buy the insurance, a 1 in 2 chance of a problem truly seems to be rolling the dice.

As for those who think a lender doesn't need title insurance on a refinance, why should a lender risk its lien when an owner might have affected title to the property by taking out a second mortgage, having work done that wasn't paid for or failed to pay its real estate taxes? That's why they require title insurance on a refinance. Ignorance about a product is not a reason not to get it. Speaking about it when you're ignorant about it is something that should not be done.

[Anonymous]

I agree with a lot of Frank's blogs, but he has it wrong on title insurance.

The lender's policy only protects the lender. It is an indemnity policy, so it only comes into effect when they suffer a loss. Follow it through -- you go to sell your home, get a great contract, the title attorney finds out the the new construction home you bought was actually built on a County easement for a water maintenance faciity that isn't there, but the County has the right to build one in the future. So you certainly have a title problem. The lender only gets the opportunity to make a claim when they suffer a loss. So basically, you have to stop paying them and your credit goes down the toilet, and they foreclose on you. Then the lender can make a title claim for the amount left on your loan. You lose the contract on your house, you spend tens of thousands trying to sue the builder who is now bankrupt after the market downturn (even though you have a great case, the builder doesn't have any money to give you even if you win). But gosh, saving that $600 at settlement was totally worth it.

I spend a lot on Homeowner's insurance every year, but I still don't hope my house catches on fire.

[Anonymous]

Try entItledirect.com. Don't know I they work for DC.

[Anonymous]

"As it turns out, there is a title problem in nearly 40% of all transactions which is discovered and fixed prior to the closing ever taking place. Most parties to the transaction don't even know about these "claims," because most can be fixed quickly and without the parties ever having to be bothered."

First off Im not even going to ask you to cite where your numbers come from. Again I just cited that the title companies keep 95% of the money they collect in regard to title insurance as opposed to most insurance companies keeping about 30% of what they take in.
Now to your quote that these claims are fixed without parties ever having to be bothered, every closing already has lender title insurance so whether or not an individual buys owners title insurance, these issues you bring up that are taken care of before the closing are already found during the lenders title insurance. Its the same amount of work to search the records for owners/lenders insurance together or just the lenders insurance. Your contention is not going to convince someone owners insurance is going to benefit them.

"When you add in the approximate 8% claims rate after closing, you get nearly 50% of all properties having an issue. If "idiot" decides not to buy the insurance, a 1 in 2 chance of a problem truly seems to be rolling the dice. "

Again, based on the fact that you have to buy lenders title insurance at the least, I would still only be looking at an "8% risk rather than the "50%" you mention here. I dont see any title company ignoring an obvious title problem as they would only have to cover the lender for their amount.

[Anonymous]

If there is a problem, the title company won't issue an title insurance policy for lender or owner. Title insurance is for the risk of the unknown.

For the example above regarding the water maintenance facility -- the easement might be buried in huge subdivision plat, and the title attorney and the surveyor miss it. Or it might be buried in deed four owner's ago when the Owner's gave the County an easement so they could build a driveway on another part of the lot, and a copy of that deed isn't forwarded by the abstractor.

If you don't buy Owner's title insurance, you are taking a risk that nothing bad will happen when you go to sell your house. Most of the time, nothing bad happens. But when the S does hit the fan, it goes everywhere.

You seem to be (like Frank) be focusing only on the amount of money the title company keeps. There is a lot of up-front work that isn't found in other types of insurance. For example, for auto insurance does your company come out to inspect your brakes to make sure they are in tip-top condition? Nope, they just insure the car and spread the risk among the masses.