What New Mexican Are Saying What the National Media is Saying What National Experts Are Saying

What New Mexicans Are Saying About Title Insurance

Our son, a college student, sold a property October 26, 2007, in order to move to Las Cruces to finish a college degree to make a better life for himself and his two children. The Title Insurance charges of $711 [on a $106,000 house] are more than the in-state tuition for a full-time student for a semester at Doña Ana Community College in Las Cruces. -Ann Baumgarn, Dec. 12, 2007, Las Cruces

New Mexicans would save millions every year if the title insurance law was reformed and allowed title insurers and agents to compete on product and price. We are no longer in the Middle Ages, we have computers and it only takes seconds to research a title. -Eileen Sopanen de Vigil, Oct. 26, 2007, Española

It has been personally very frustrating to me to have to pay such
high fees every time I have been able to refinance my home at a lower
rate. Hundreds of dollars wasted over the past 25 years! Title insurance
needs to to be priced more competitively and people should not have to
pay it every time they refinance their home! -Dr. Kathleen Maley, Oct. 13, 2007, Hernandez

I am a licensed Real Estate Broker and Certified Residential Appraiser who is acutely attuned to the influence (mostly negative, in my opinion) Title Insurance Companies wield over the Real Estate Market. This is certainly a situation that needs attention nationally as well as locally. -William W. Gray, Nov. 2, 2007, Albuquerque

I’m thinking of refinancing my home in Santa Fe to get a lower mortgage. Why should I pay all these extra closing costs, including title insurance, when my title search was done just two years ago when I got my 6% mortgage? This is a rip off. -Sondra K. Match, Feb. 2, 2009, Santa Fe

I have witnessed over a dozen people in my neighborhood be
adversely affected by high rates and poor service by the title
industry. At the Commons, where I live, over 12 neighbors have title
insurance claims that title insurance companies refuse to negotiate or
settle. -Rich Schrader, Santa Fe

We are retired and purchasing another home. We do not need additional unnecessary costs. -Virginia Ebinger, Oct. 13, 2007, Los Alamos

Having owned many rental properties over the years and paid title insurance premiums on each property, each time at the closing I felt that I was being ripped off for title insurance, especially after reading the list of exclusions from liability. After learning of the 5% payout ratio, I now know I was ripped off. -Al Stevens, Dec. 13, 2007, Albuquerque

I support title insurance reform. The title insurance company missed a property tax lien on my property that is now costing me $1,000 a year as long as I own the property, which I cannot afford and may cause me to have to sell the property. The title company refuses to pay, even though it is clear that they missed something that had been
properly filed. The title insurance business is nothing but a money machine, and they never pay when they make a mistake. -Mary Bradshaw, Nov. 14, 2007, Santa Fe

This topic could not be more timely with the home mortgage market crisis. And the ability to buy a home translates into jobs, stability of families and improvement of neighborhoods.”
-Kathy Blake, Oct. 21, 2007, Albuquerque

Title insurance is overpriced. We need low cost alternatives. The high cost of title insurance only hurts the poor and middle class. -Ruth Butler, Oct. 19, 2007, Santa Fe

I was shocked when I moved here and learned how the title insurance industry was operated. For the benefit of consumers there must be competition and the industry must not be shielded from actions caused by their own negligence. -Steve Brooten, Oct. 20, 2007, Silver City

Why does the title insurance industry enjoy a quasi-monopoly? The free
market does not apply to them because the state sets the rates they can
charge. They manage to pay out only 5 percent (or so) of the premiums
they collect. If it were an oil company receiving 90 percent profit,
some one would accuse the oil company of gouging the consumer. Please
let the free market work by calling for action in the upcoming
legislative session. -Bob Wells, Oct. 20, 2007 Roswell

Please make title insurance a topic. It is in need of a ‘fairness’
update. -Lorna Dyer, Nov. 7, 2007, Santa Fe

I’ve just purchased a house, and I was outraged to learn that title insurance in NM is not subject to free-market pricing, but that the price is pre-set. The price for this service is proportionately high for New Mexico’s economy, when home ownership is out of reach of many people, and closing costs are a significant barrier.
To add insult to injury, if the title insurance company is negligent, it is not accountable for damages resulting from negligence. How many other businesses get this sweet deal?
It’s time for NM legislators to be accountable to the voters who elect them, not lobbyists who want excessive and unfair protection from the free market. -Richard Malcolm, Oct. 9, 2007, Albuquerque

The Title Industry’s Response

Any attempt to have [title insurers] compete financially, by offering lower rates, would be contrary to the best interest of the public. -Ed Roibal, Executive Director of the New Mexico Land Title Association, in a December 13, 2007 Albuquerque Journal Business Outlook article

Quotes are taken from letters that were sent to Governor Richardson after Think New Mexico released its policy report on title insurance reform in September 2007, and obtained by the Rio Grande Sun through an Inspection of Public Records Act request. They are reprinted here with the permission of the authors.

What the National Media is Saying About Title Insurance

Forbes Magazine, Inside America’s Richest Racket: Title insurance firms rake in $18 billion a year for a product that is outdated, largely unneeded – and protected by law: But the title industry’s halcyon days owe much to antiquated state laws that thwart new competition, allow prices to soar despite declining costs and force almost every home buyer to pay for insurance that most of them will never need. -November 13, 2006

Kiplinger’s Personal Finance Magazine, Cut Your Title Insurance Costs:
“Who would be foolish enough to shell out several thousand dollars for an overpriced product that they knew little about and would most likely never need? Just about everyone who has ever bought a house. So this is title insurance in a nutshell: You, the homeowner, pay a premium to the title company to protect your lender from mistakes made by the company when it does a title search. Are you a sucker, or what?” December 2005

David Kay Johnston, Pulitzer Prize-Winning Reporter, in Free Lunch:
“Americans paid $16.4 billion for title insurance in 2005, double what they paid five years earlier and four times what they paid in 1995.
Yet title insurance remains an expensive mystery. Why must you buy it? Who exactly is being insured? For what? Why does it cost so much? And why do you have to pay again when you refinance even with the same lender?
Answering those questions takes us inside a business that owes its riches entirely to the government. The product itself costs next to nothing but, because of the way the market is organized, competition pushes prices higher instead of lower and government regulations help hide the true cost. Here it is not Adam Smith’s invisible hand of the market producing unexpected benefits through competition, but instead the manipulative hand of government helping the regulated insurers fleece the consumer.” Published December 2007

What National Leaders Are Saying About Title Insurance

California Lt. Governor John Garamendi (D), Former Insurance Commissioner:
California homeowners and home buyers are being systematically overcharged because title insurers refused to compete with one another on the basis of low prices. These overcharges operate like a tax on home purchases and refinancing, pricing people out of the market and acting as a drag on the economy.” December 15, 2005

U.S. Senator Phil Gramm (R-TX):
I know how we can cut the initial, up-front cost of buying a house by between a quarter and a third for people participating in federal programs aimed at lowering the cost of buying a house. And the way to do it is to do something about title insurance. We could probably do more to promote home ownership by fixing this than by any increase in appropriations for housing that will be made in the next eight years combined.” December 13, 2001

Missouri Governor Matt Blunt (R), days after extensive title insurance reform legislation took effect in Missouri:
“This bill enacts important provisions to protect Missourians purchasing a new home or investing in their future and cracks down on loopholes to put a stop to unscrupulous insurance agents and ensure all agents protect their customers’ best interest. The new title insurance reforms I signed provide for better disclosure to consumers and more accountability to companies and agencies to ensure they give Missourians consistent and fair prices for title insurance.” January 3, 2008

U.S. Representative Barbara Lee (D-CA):

“Title companies really should have to compete and consumers should have choices – that’s the bottom line.” April 26, 2006