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Nana Sefa
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Owner’s title insurance - to get or not?

Nana Sefa
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Posted Jan 3 2024, 13:02

Which of you get owner’s title insurance? And who doesn’t get owner’s title? Why do you get or not get? Thank you. 

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Ken M.
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Replied Jan 20 2024, 17:10
Quote from @Jay Hinrichs:
Quote from @Ken M.:
Quote from @Peter Walther: YUp thats correct and people are paying you guys big money for this sub to advice I have to think you already knew this or for sure should have.. 

@Jay Hinrichs: Think of it this way. There is something called the Socratic method where Socrates (who was a pretty bright fellow) would ask his students questions. It wasn't that he didn't know the answers, but he wanted his students to think rather than blurt back memorized facts.

When I say things, it's self serving. I coach Subto and Seller financing, safely and legally but anything I say, is tempered with that fact.

So, On this subject, who has more credibility @Peter Walther:, @Tom Gimer: or me? They are far beyond me on Title Insurance for sure. They don’t directly benefit from explaining so much for our consumption. I've actually learned some things. So, doesn’t it make sense to ask the questions to them, questions that anyone considering using Subto & Creative Finance should be asking, but don’t know to ask?

A great coach is ever learning and is not a “know it all”. People base their investing on the coach, so a great coach has to be coach-able, too.

However, the people considering joining the SubPar, Subto community don't have a clue what they are getting themselves into and it isn’t being taught.

For instance, They are taught that Executory Contracts solve the Due on Sale call. Well, they don’t.

In fact, it affects a whole chain of events (title, insurance, etc) and has serious ramifications the Subto community doesn’t even bring up, let alone address.

So, back to Socrates, if I can ask questions that make investors think about what they are doing and why they are doing it, I have succeeded. Tom & Peter are providing the expertise.

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Peter Walther
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Replied Jan 22 2024, 09:01
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Billy S.:
Quote from @Tom Gimer:
Quote from @Billy S.:
Quote from @Tom Gimer:
Quote from @Peter Walther:
Quote from @Tom Gimer:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Fun read. I read each post. ;-) Okay, maybe not "fun" but very informative.

However, As I was reading through, I came to realize I don't actually understand some of the terms. Could someone please explain:

Is the "Preliminary Title Report" simply a list of what comes up on title but has no insurance effect? (This is what I've been lead to believe)

But, Are "Owners Title Insurance" and "Owner's Extended Coverage" and "Extended form policy" all the same thing, just different names or is there more to it?

What does ALTA do/or is for?


You'll probably get different answers here. 

A preliminary title report to me is simply a document showing who owns the property and what encumbers it (mortgages, judgments, liens, etc.). Also known as an O&E -- owner and encumbrance report. It has nothing to do with title insurance. 

Owners Title Insurance = basic owners coverage (liens, adverse claims, marketability, etc.)

*Owner's Extended Coverage = Extended Form Policy (everything in basic plus many additional coverages including post-policy matters, subject to different limits)

*not available for investment properties in many states

ALTA = American Land Title Association ... it's a trade association for the title industry. They create standardized forms, conduct lobbying activities, etc.


That helps.

This is from a Settlement Statement of a property I’m selling

Title - Lender's Title Insurance to xxxx Title $857

Title - Owner's Title Insurance to xxxx Title $1590

Why is the Owner’s Title Insurance almost twice the price of the Lender’s?


Coverage for an insured owner lasts as long as an insured has an interest in the property or liability for a breach of warranty given if the insured conveys the property.  Therefore, the policy liability "tail" can continue on forever.  Practically, the risk of loss diminishes over time and might effectively be extinguished some time years down the road.  In addition, the amount of insurance is fixed as the amount shown on the policy.

With a lender's policy, liability lasts only so long as the insured has a lien on the property.  If the loan is refinanced and paid off after 3 years, the policy liability is extinguished.  In addition, the amount of insurance is limited to the amount of the debt outstanding.  So, if a loss occurs after 5 years and a $100k original loan has been paid down to $75k, that is the maximum amount the insured can recover and of course the maximum loss the insurer can experience, even though the amount of insurance shown on the policy is $100k.

Also, if a lender's policy is issued simultaneously with an owner's policy, the premium is generally substantially less than if the policies were purchased separately.  That's partially because an owner's policy contains a provision that any payment for loss paid under a simultaneously issued loan policy, will reduce the amount of coverage under the owner's policy.

That would imply, that if he sells on "Subject To" or on an "Executry Contract", and no longer owns the property, (the seller just remains on the mortgage), any Owner's Title Insurance they bought would no longer apply? 

If Owner's still applies for some reason, & the owner bought for $100,000 and 
later sells on a Wrap for $150,000 I would guess that the insurance still only covers the $100,000 minus paydown?

If the insured conveys the property by warranty deed and later is sued for a breach of those warranties, assuming the cause of the breach (i.e. easement, lien, restrictions etc.) are not excepted or excluded from coverage, there should be coverage.

If coverage is there because of the above, the insured still has the amount of insurance shown on the policy.

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Replied Jan 22 2024, 09:05
Quote from @Ken M.:
Quote from @Jay Hinrichs:
Quote from @Ken M.:
Quote from @Peter Walther: YUp thats correct and people are paying you guys big money for this sub to advice I have to think you already knew this or for sure should have.. 

@Jay Hinrichs: Think of it this way. There is something called the Socratic method where Socrates (who was a pretty bright fellow) would ask his students questions. It wasn't that he didn't know the answers, but he wanted his students to think rather than blurt back memorized facts.

When I say things, it's self serving. I coach Subto and Seller financing, safely and legally but anything I say, is tempered with that fact.

So, On this subject, who has more credibility @Peter Walther:, @Tom Gimer: or me? They are far beyond me on Title Insurance for sure. They don’t directly benefit from explaining so much for our consumption. I've actually learned some things. So, doesn’t it make sense to ask the questions to them, questions that anyone considering using Subto & Creative Finance should be asking, but don’t know to ask?

A great coach is ever learning and is not a “know it all”. People base their investing on the coach, so a great coach has to be coach-able, too.

However, the people considering joining the SubPar, Subto community don't have a clue what they are getting themselves into and it isn’t being taught.

For instance, They are taught that Executory Contracts solve the Due on Sale call. Well, they don’t.

In fact, it affects a whole chain of events (title, insurance, etc) and has serious ramifications the Subto community doesn’t even bring up, let alone address.

So, back to Socrates, if I can ask questions that make investors think about what they are doing and why they are doing it, I have succeeded. Tom & Peter are providing the expertise.


 I am available for private tutoring.

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Shafi Noss#2 Innovative Strategies Contributor
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Replied Jan 23 2024, 05:54

@Ken M. Hey I have a question for you Ken. One thing that makes me hesitate with subject to's is I'm sure you've heard the argument that capital costs are higher now so lenders would love to redeploy their capital at a higher interest rate. Maybe not last year when nobody was looking for new mortgages but perhaps this year now that applications are back up. 

Some people say "But how will the lender know about the new owner without checking title manually, they have tons of loans and work and don't have time for that."

But when there's a servicer involved, the servicer can detect when the payments start coming from a new source or sending updates to a new email or address, so seems like lenders can easily track that without any work, and should they wish to call the loan, have a big list at their fingertips. 

Does that sound right to you? It's scared me off from looking at subject to's recently. 

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Replied Jan 23 2024, 07:37
Quote from @Shafi Noss:

@Ken M. Hey I have a question for you Ken. One thing that makes me hesitate with subject to's is I'm sure you've heard the argument that capital costs are higher now so lenders would love to redeploy their capital at a higher interest rate. Maybe not last year when nobody was looking for new mortgages but perhaps this year now that applications are back up. 

Some people say "But how will the lender know about the new owner without checking title manually, they have tons of loans and work and don't have time for that."

But when there's a servicer involved, the servicer can detect when the payments start coming from a new source or sending updates to a new email or address, so seems like lenders can easily track that without any work, and should they wish to call the loan, have a big list at their fingertips. 

Does that sound right to you? It's scared me off from looking at subject to's recently. 

I think the biggest tip-off is when a new name appears on the HO's policy.  I've always been curious as to how the sub to purchaser deducts the interest portion of the mortgage payment from their taxes since they don't have any legal obligation to pay?

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Replied Jan 23 2024, 11:01
Quote from @Peter Walther@Tom Gimer:
Quote from @Shafi Noss:

@Ken M. Hey I have a question for you Ken. One thing that makes me hesitate with subject to's is I'm sure you've heard the argument that capital costs are higher now so lenders would love to redeploy their capital at a higher interest rate. Maybe not last year when nobody was looking for new mortgages but perhaps this year now that applications are back up. 

Some people say "But how will the lender know about the new owner without checking title manually, they have tons of loans and work and don't have time for that."

But when there's a servicer involved, the servicer can detect when the payments start coming from a new source or sending updates to a new email or address, so seems like lenders can easily track that without any work, and should they wish to call the loan, have a big list at their fingertips. 

Does that sound right to you? It's scared me off from looking at subject to's recently. 

I think the biggest tip-off is when a new name appears on the HO's policy.  I've always been curious as to how the sub to purchaser deducts the interest portion of the mortgage payment from their taxes since they don't have any legal obligation to pay?

@Shafi NossHere is the short version:

There is actually a lot more to your question than is obvious.
Servicers hire people to process payments. That doesn't require a lot of skill and they are not trained or paid to notice where the money comes from. They do data entry.

@Tom Gimer: listed a few of the identifiers of things that trigger a closer scrutiny, in one of his posts that I've since lost track of.

As @Peter Walther points out, changing Home Owner's insurance is one of the main triggers. There are a couple of legal ways to avoid that from being a problem. People are very foolish to not address Home Owner's insurance and I believe the "Subto community" avoids discussing the issue because they don't know how to handle it correctly.

A servicer or a lender can very quickly get a list of "Subject To" loans if they cared to do it. This isn't the days of having to go through every file by hand.

Financial institutions, I believe, are starting to get "stressed" and they will be more proactive in addressing this issue. There are solutions, but being all over the internet like a certain guru, bragging that you are buying houses off the MLS at full price using unsophisticated lenders in 2nd position to over leverage the purchase, so you have no money out of pocket as you buy properties is not a lasting proposition and won't end well.

Unsophisticated Subject To "buyers" (wannabes) are apparently taught that having the "Correct Contract" makes it all legal and keeps them out of trouble and cures hemorrhoids. That is like saying you will only be charged for theft if you steal a gun, rob a bank and shoot someone.

The danger isn't the Due on Sale clause, that's the gateway to the other charges. When people don't follow the rules and the law (which apparently is woefully omitted in the Subto community's teachings, bad things happen. I think telling people the truth probably cuts into profits and enthusiasm for “Dear Leader”: (That’s a “cult” term)

Since the Subject To purchaser makes the mortgage payments and owns the property, the IRS deems that sufficient enough to take the deduction, per my recent IRS audit which includes a large portfolio of Subject Tos and various other creatively financed properties. In fact, the IRS auditor granted a refund (based on other issues) that was quite large. He had no problem with how I run things.

So, since I have the breadth of experience, I still buy using Subject To, but I know the trip wires and teach what and where those are. I don't believe that in the current climate, very many investors understand those points.

Those trip wires are what I believe will get a lot of attention. By the way, the "guru" said in a recent video he has had 10 Due on Sale called in the last month and his students a dozen or two themselves.

That should give pause to anyone contemplating joining his “community” or using his methods.

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Replied Feb 3 2024, 06:50

Misguided Attacks On Title Insurance Could Have Grave Consequences (forbes.com)

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Jay Hinrichs#2 All Forums Contributor
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Replied Feb 3 2024, 07:04
Quote from @Peter Walther:

Misguided Attacks On Title Insurance Could Have Grave Consequences (forbes.com)


bottom line is title insurance is a very small % of the investment to go without it to save a 500 to 2500 is just foolish full stop.

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Replied Feb 4 2024, 06:53
Quote from @Ken M.:
Quote from @Peter Walther@Tom Gimer:
Quote from @Shafi Noss:

@Ken M. Hey I have a question for you Ken. One thing that makes me hesitate with subject to's is I'm sure you've heard the argument that capital costs are higher now so lenders would love to redeploy their capital at a higher interest rate. Maybe not last year when nobody was looking for new mortgages but perhaps this year now that applications are back up. 

Some people say "But how will the lender know about the new owner without checking title manually, they have tons of loans and work and don't have time for that."

But when there's a servicer involved, the servicer can detect when the payments start coming from a new source or sending updates to a new email or address, so seems like lenders can easily track that without any work, and should they wish to call the loan, have a big list at their fingertips. 

Does that sound right to you? It's scared me off from looking at subject to's recently. 

I think the biggest tip-off is when a new name appears on the HO's policy.  I've always been curious as to how the sub to purchaser deducts the interest portion of the mortgage payment from their taxes since they don't have any legal obligation to pay?

@Shafi NossHere is the short version:

There is actually a lot more to your question than is obvious.
Servicers hire people to process payments. That doesn't require a lot of skill and they are not trained or paid to notice where the money comes from. They do data entry.

@Tom Gimer: listed a few of the identifiers of things that trigger a closer scrutiny, in one of his posts that I've since lost track of.

As @Peter Walther points out, changing Home Owner's insurance is one of the main triggers. There are a couple of legal ways to avoid that from being a problem. People are very foolish to not address Home Owner's insurance and I believe the "Subto community" avoids discussing the issue because they don't know how to handle it correctly.

A servicer or a lender can very quickly get a list of "Subject To" loans if they cared to do it. This isn't the days of having to go through every file by hand.

Financial institutions, I believe, are starting to get "stressed" and they will be more proactive in addressing this issue. There are solutions, but being all over the internet like a certain guru, bragging that you are buying houses off the MLS at full price using unsophisticated lenders in 2nd position to over leverage the purchase, so you have no money out of pocket as you buy properties is not a lasting proposition and won't end well.

Unsophisticated Subject To "buyers" (wannabes) are apparently taught that having the "Correct Contract" makes it all legal and keeps them out of trouble and cures hemorrhoids. That is like saying you will only be charged for theft if you steal a gun, rob a bank and shoot someone.

The danger isn't the Due on Sale clause, that's the gateway to the other charges. When people don't follow the rules and the law (which apparently is woefully omitted in the Subto community's teachings, bad things happen. I think telling people the truth probably cuts into profits and enthusiasm for “Dear Leader”: (That’s a “cult” term)

Since the Subject To purchaser makes the mortgage payments and owns the property, the IRS deems that sufficient enough to take the deduction, per my recent IRS audit which includes a large portfolio of Subject Tos and various other creatively financed properties. In fact, the IRS auditor granted a refund (based on other issues) that was quite large. He had no problem with how I run things.

So, since I have the breadth of experience, I still buy using Subject To, but I know the trip wires and teach what and where those are. I don't believe that in the current climate, very many investors understand those points.

Those trip wires are what I believe will get a lot of attention. By the way, the "guru" said in a recent video he has had 10 Due on Sale called in the last month and his students a dozen or two themselves.

That should give pause to anyone contemplating joining his “community” or using his methods.

Ok thanks, I have another question if you don't mind. I'm looking at a deal right now in Texas that's on a land contract. We want to buy it and then lease back to the current occupants. Since those got regulated to basically behave like seller finance now, we basically have to convert it to an actual seller finance structure (which we confirmed is possible) and then buy and seller leaseback to the current occupants. 

The problem is the lender we want to use doesn't like seller leasebacks. I was thinking about a double close to solve that in a technical sense (lender sells note to capital markets so they may or may not be ok with a technical workaround), but anything else stick out off the top of your head?

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Ken M.
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Replied Feb 4 2024, 09:50
Quote from @Shafi Noss:
Quote from @Ken M.:
Quote from @Peter Walther@Tom Gimer:
Quote from @Shafi Noss:

@Ken M. Hey I have a question for you Ken. One thing that makes me hesitate with subject to's is I'm sure you've heard the argument that capital costs are higher now so lenders would love to redeploy their capital at a higher interest rate. Maybe not last year when nobody was looking for new mortgages but perhaps this year now that applications are back up. 

Ok thanks, I have another question if you don't mind. I'm looking at a deal right now in Texas that's on a land contract. We want to buy it and then lease back to the current occupants. Since those got regulated to basically behave like seller finance now, we basically have to convert it to an actual seller finance structure (which we confirmed is possible) and then buy and seller leaseback to the current occupants. 

The problem is the lender we want to use doesn't like seller leasebacks. I was thinking about a double close to solve that in a technical sense (lender sells note to capital markets so they may or may not be ok with a technical workaround), but anything else stick out off the top of your head?

I've done a lot of higher level techniques, but the one that always burned me was allowing the seller to rent back the property after the sale. That's how I met so many attorney's and judges. ;-)

I won't contemplate doing or give advice, on any techniques that allow the seller to remain in the property after closing.

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Replied Feb 4 2024, 09:51

@Ken M. Ok thanks

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Replied Feb 4 2024, 10:55

Won't derail the topic any longer but for any interested readers here are a couple of the legal challenges:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.41.htm See 41.006

https://statutes.capitol.texas.gov/Docs/FI/htm/FI.342.htm See 342.009

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Replied Mar 9 2024, 14:34

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 

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ModeratorReplied Mar 9 2024, 15:11
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.

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Replied Mar 11 2024, 07:25
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 

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Russell Brazil
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ModeratorReplied Mar 11 2024, 07:28
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


 The unintended consequences of this is it will lead to higher costs on purchases, which further adds to the housing affordability crisis. Currently there are 4 million purchases per year and 8.5 million refinances per year. By cutting off 2/3 of revenue being paid into title insurance, it will simply lead to higher policy costs on the front end to make up the elimination of 2/3 of those premiums.

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Replied Mar 11 2024, 07:48
Quote from @Russell Brazil:
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


 The unintended consequences of this is it will lead to higher costs on purchases, which further adds to the housing affordability crisis. Currently there are 4 million purchases per year and 8.5 million refinances per year. By cutting off 2/3 of revenue being paid into title insurance, it will simply lead to higher policy costs on the front end to make up the elimination of 2/3 of those premiums.


 great point, i did not think of that

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Jay Hinrichs#2 All Forums Contributor
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Replied Mar 11 2024, 07:59
Quote from @Russell Brazil:
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


 The unintended consequences of this is it will lead to higher costs on purchases, which further adds to the housing affordability crisis. Currently there are 4 million purchases per year and 8.5 million refinances per year. By cutting off 2/3 of revenue being paid into title insurance, it will simply lead to higher policy costs on the front end to make up the elimination of 2/3 of those premiums.


and stuff will get missed and you will have buggered up titles. 

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Replied Mar 12 2024, 07:48
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


I'd estimate, and it's only an estimate, that 25% of the title claims I worked on were created at the time of closing, i.e. incorrect legals on the deed and/or mortgage, failure to pay off prior liens, errors in recording the docs, failures to have the docs properly executed, and on and on and on.

Please also keep in mind many settlement agents are only allowed by law to prepare documents and close transactions where title insurance is being issued.  Take title insurance out of the equation and you'll need to find a lot of attorneys to handle the closing and I suspect they won't do it for free.

Lastly, I believe a good portion of the agent's share of the title premium goes toward overhead, it's not pure profit.  Take the premium out because there's no insurance and again, you'll need to find new people, probably less trained and causing more of the problems I described above.

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Peter Walther
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Peter Walther
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Replied Mar 12 2024, 07:52
Quote from @Russell Brazil:
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


 The unintended consequences of this is it will lead to higher costs on purchases, which further adds to the housing affordability crisis. Currently there are 4 million purchases per year and 8.5 million refinances per year. By cutting off 2/3 of revenue being paid into title insurance, it will simply lead to higher policy costs on the front end to make up the elimination of 2/3 of those premiums.


 In many states premiums are set by the DOI and underwriters can't unilaterally increase them.

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Peter Walther
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Peter Walther
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Replied Mar 12 2024, 07:53
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


Biden also thinks forgiving student loan debt is a good idea.

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Russell Brazil
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Russell Brazil
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ModeratorReplied Mar 12 2024, 08:12
Quote from @Peter Walther:
Quote from @Russell Brazil:
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


 The unintended consequences of this is it will lead to higher costs on purchases, which further adds to the housing affordability crisis. Currently there are 4 million purchases per year and 8.5 million refinances per year. By cutting off 2/3 of revenue being paid into title insurance, it will simply lead to higher policy costs on the front end to make up the elimination of 2/3 of those premiums.


 In many states premiums are set by the DOI and underwriters can't unilaterally increase them.


 And Im in one of those states. But while the title insurance premium may remain the same, the typical closing fee then will jump from say $1k to $3k as a consequence. 

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Jay Hinrichs#2 All Forums Contributor
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Jay Hinrichs#2 All Forums Contributor
  • Real Estate Broker
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Replied Mar 12 2024, 08:56
Quote from @Russell Brazil:
Quote from @Peter Walther:
Quote from @Russell Brazil:
Quote from @Chris Seveney:
Quote from @Russell Brazil:
Quote from @Shafi Noss:

Noteworthy: 

Biden announces intention to eliminate title insurance on federally backed mortgages in 2024 State of the Union Address. 

Not sure if the link renders on BP but it is at 28:05 on the video from Global News. 


 It is on refinances, not all mortgages.


 I know many in the title industry do not like this, but I 100% agree with this. I assume the bank will still run a title report, but having to pay for a new policy every time you refinance does make logical sense. 


 The unintended consequences of this is it will lead to higher costs on purchases, which further adds to the housing affordability crisis. Currently there are 4 million purchases per year and 8.5 million refinances per year. By cutting off 2/3 of revenue being paid into title insurance, it will simply lead to higher policy costs on the front end to make up the elimination of 2/3 of those premiums.


 In many states premiums are set by the DOI and underwriters can't unilaterally increase them.


 And Im in one of those states. But while the title insurance premium may remain the same, the typical closing fee then will jump from say $1k to $3k as a consequence. 


and out here on the left coast we dont have attorneys doing vanilla real estate closings at all its all title companies ( the actual underwriter  Fidelity Fatco WFG etc etc) who has their own escrow department in the same building. And Senior escrow officers do all the closings the only time the company attorney would be contacted is if you had a mess going on.. And since they wont do transactions for you if you dont purchase title insurance what happens then?  Point that was made above. Some one is going to get paid and I highly doubt things will be cheaper for the consumer just like all the BS around building industry.. WE need affordable housing with all the mandates but the cities counties are forever changing the rules and not making it easier or cheaper every change requires something more  more expenditures of capital to get to the same place.. affordable housing biggest Oxymoron in all of Real Estate..

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Tom Gimer
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Tom Gimer
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Replied Mar 12 2024, 12:22
Quote from @Peter Walther:

Please also keep in mind many settlement agents are only allowed by law to prepare documents and close transactions where title insurance is being issued.  Take title insurance out of the equation and you'll need to find a lot of attorneys to handle the closing and I suspect they won't do it for free.

Correct. No TI and it becomes an attorney closing. Congrats, you just took a dump on an entire industry.

Yet another decision made by people who don't have a clue what they are doing.

How pissed will people be when they realize the end result benefits LAWYERS...