Saturday, February 09, 2008

open response to Scott J. Wilson of the LA Times

Who wrote a very nice article, Title Insurance Buying Tips. Please take a moment to read it.

There is no comment option on the web site and so I'd like to respond here.

I like the article. I believe Mr. Wilson is helping consumers understand the value of shopping. I do hope consumers would not rely on Title Wizard for more than just an opening peek at rates. Calling several title agencies or escrow agencies will allow the consumer to check more than just the title premium. You need to ask about other fees related to the closing. Get a full quote and get it in writing.

I was shocked - absolutely shocked by the advice offered by the Consumer Federation of America.

The risk of a title-related problem is so low that J. Robert Hunter, insurance director for the Consumer Federation of America, said people should think about not buying an owner's policy.

Mr. Hunter doesn't apparently understand the possibilities here. Ok, so the risk of a total failure of title of even a devastating lien are low, but do you want to be a homeowner faced with that situation and NO title insurance coverage? Come on, folks, you buy fire insurance very year. How many houses have you owned that burned down? Even with the low risk of total devastation by fire, you fully understand that buying the insurance is a wise investment. WHY? Because you don't want to face a total loss and wonder why you didn't pay a few hundred dollars for coverage. An owner policy is a one time premium and it is money well spent.

Finally, I 'd like to add that I am very concerned - VERY concerned about consumers buying property that has been foreclosed upon and allowing the seller to select the title insurer.

My office finds numerous, sometimes devastating, errors in foreclosure transactions. A seller of REO property has a motive to move the closing through without a hitch. They do NOT want professional eyes looking at their work product. Humans make mistakes, especially when they are handling large volume. There are so MANY foreclosures moving through the system that BUYERS SHOULD BEWARE and BUY YOUR OWN TITLE INSURANCE.

Hire your own professional to review the title and the work of the foreclosing attorney to make certain you are not buying problems.

I have two transactions we received just this month that are on hold while the foreclosing attorney tries to fix their mistakes.

One might go through. It's just an IRS lien that they mishandled. They SHOULD be able to get the IRS to agree to service and waive their redemption period. We are hopeful.

The other transaction is a sale of roughly $290,000. We found over $300,000 in judgments and an IRS lien that were wholly missed by the foreclosing attorney. None of these liens were divested. Our homebuyer is livid. He was so happy and so excited about buying this property and at first he was angry with us because we were the bearers of bad news. It took him a few minutes to realize how very close he came to buying a lawsuit nightmare.

From the perspective of this consumer, the statement from the seller that they were selling the property "free and clear of all liens" made him feel safe. Well, they THOUGHT the property was free and clear although how anybody could have missed these liens is a mystery to me. I think they had a less than thorough search performed and now they are going to pay big for it.

This is such a shame.

Anyway, back to Mr. Wilson. Thank you for writing a helpful article. Maybe you can do a follow-up and look at the hazards of buying foreclosed property and WHY a consumer would be well served to have an experienced professional vet title before closing.


sfvrealestate said...

Great post here and great comment on, too! One thing, tho -- here in California we don't use attorneys in closings. Title and escrow officers do the reviews. If you like, you can check my site at and visit the definitions page for a better description of the process.

dc said...

We use non-attorney title agents here in PA, too. I am not an attorney, though I am a licensed title agent.

Thanks for the link and thanks for the kind words! :)

APL Warranty Title said...

Perhaps Mr. Wilson has not hear about the mass exodus of our title records to overseas "title plants" and the "experienced" title abstractors who are performing these core title functions to insure our homes. We need to get the word out more of the necessity of experienced abstractots in the US!

Greg Knowles said...

DC there was another article in the Times over the weekend. It was more poor coverage of an industry that truly needs someone to start giving it some good coverage. Here is the link,1,1642902.story?page=1&ctrack=2&cset=true

Diane Cipa said...

Thanks, Greg. I wonder what's up at the LA Times. Why the sudden interest?

Diane Cipa said...

Hey, I just had a nice e-mail from Mr. Wilson. In my opinion he is really trying to understand what's happening in our industry. Let's have patience. It's hard from the outside to get a handle on things. ;)