Owner’s title insurance - to get or not?

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2y

I always say if you get owners title insurance, you will never use it. If you do not get it, you will have a situation where you need it.

I have actually made a claim on owners title insurance before. I purchased a property that was a foreclosure. Years later I was refinancing and they found a title defect. Property had not been properly foreclosed on, so they had to reforeeclose on it like a decade later. Didnt cost me a dime, just time pushing my refinance back. 

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  • Shafi Noss
    Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
    2y

    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

    0Reply
  • Shafi Noss
    Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
    2y

    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. 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    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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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    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 BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    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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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    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 HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    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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  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    2y
    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.

    2Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    2y
    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.

    0Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    2y
    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.

    1Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    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 HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    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 GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    2y
    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... 

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