Get own title company or use lenders?

Question

I’m about to refinance a property, does it make sense to go price shopping and find my own title company or just use the lenders? I honestly don’t know the price variance here and if it’s worth the time and effort. Any advice would be appreciated.

Thanks,

Jason

Thanks,

Jason

Jerel Ehlert · Answer

@Kyle Altenau The only reason they have a say is because they traditionally pay for the buyer's title policy. The reality is, most sellers don't care about selection of title company. If they have a preference, it is because their listing agent does.

Different states have different practices. Texas is a title company state, but also has fee attorneys. Others, like New Jersey are fee attorney states. Here in TX, there are title plants that have staff at the county courthouse or datafeeds to get a local copy of every instrument. No one "goes to the courthouse" to fetch a copy of anything, certainly not any title company.  Even if needed, title companies would hire a courthouse runner to fetch copies.

Title companies in Texas use underwriters - a lawyer who examines instruments related to tracts and parties to give an opinion on the marketability of title. (psa: most only go back 25 years, but there are oddball files) Like any service, the quality varies by which underwriter is assigned to that title company. Fee attorneys have more freedom to work with files (but must still work within the insurer's guidelines). Difficult files require either a skilled escrow agent or fee attorney, and that's why people have preferences.

As an attorney that drafts lots of lender's closing docs for PMLs and HMLs, I've seen the range of quality. Good title companies make difficult files "not as bad" and easy files "hard as hell".

Erica Larence-Penna · Answer

@Jason Lam prices can vary from company to company.  The title insurance premium will be the same, but settlement charges and other fees may vary.

Jerel Ehlert · Answer

Traditionally, that's a decision between the buyer and seller. Lender usually has no control or say in which title company to use - nor should they really care.

Chris Mason · Answer

Sure, you can do this. I'm a loan officer, from my perspective a few strong suggestions:

1) Identify that you are doing this EARLY in the process - before we've locked the rate, before disclosures go out, before the appraisal is ordered. I have good working relationships with the folks I use, and by default (unless otherwise told), I'm going to get the ball rolling with them. It's not very nice for them to do a bunch of unpaid work just to be told that my client wants to switch to try and save a buck (assuming what you find will beat the volume based savings I get by default, unlikely but not impossible). Trying to save a buck is fine, making folks work for free is not.

2) No call centers in the developing world. They need to be in the same time zone that we are in.

3) If I say 'hey we need to fire them or this simple transaction is going to go sideways,' please take that at face value. Loan officers work with all sorts of settlement service providers (called "escrow officers" in Northern California) all the time on purchase transactions, we RARELY invoke this claim, it causes a whole bunch of drama, etc, so if we do invoke it then it's for a reason. Assuming competence all around, generally loan officers are completely indifferent to who the SSP is, but when that assumption fails we get very picky.

4) No yelling at me if, in spite of all that, stupid frustrating things are introduced into the transaction. Generally I do not pick SSP on purchases (so I assume very little), and generally I do pick SSP on refinances, so I model a whole bunch of assumptions, etc, into how I set refinances up.

Ronald Rohde · Answer

I'd always select my title if I can. Better control and relationships to benefit me or my client.

Kyle Altenau · Answer

@Jerel Ehlert I actually disagree. The buyer and the lender are the two parties being insured. So if anything the seller shouldn't care much.

I am a lender and as long as the title company is licensed and insured, I am happy to close with them. That being said, a few of the points that @Chris Mason brought up are absolutely true. Especially the one about call centers, or even just title companies that try to work nationally. It just doesn't work. When you need to see a deed restriction from 1925 in person because the scanned copy is illegible, you want someone local and familiar with the county to go down and there and get everything taken care of right away.

From my perspective, I also prefer a title company I know and trust to make sure the transaction closes smoothly. I've been involved in a ton of transactions where my attorney has questions or concerns and the title company will not be responsive. Then we finally get an answer a day before the targeted closing date and it's the lender's fault we need to delay closing. There can also be issues with Schedule-B exceptions too, especially with investment properties, that some less sophisticated title companies may cause issues with.

All that being said, most title companies are fine. I doubt you will see too much price variance. The one thing some might try is to add junk fees that you can negotiate. But in most cases, I'd say it's best to go with your loan officer's title company. That title company will want to do right by you to continue getting the loan officer's business.

Jason Lam · Answer

Thanks for all your help. For the sake of ease I’ll just stick to the one my lender is using.

Kyle Altenau · Answer

From my understanding title costs are controlled closely by state regulations. So price may not very. BUT service can greatly vary from company to company. That being said, it's likely the lender wants to use theirs because they have a good relationship and can expect good service from the title company. If you didn't have a different one in mind, I'd just go with theirs.

Wayne Brooks · Answer

Typically, there is no price variance..

Get own title company or use lenders?

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