Monday, March 30, 2009

comment on rate filing

Dear Mr. Romberger:

I am writing concerning the proposed changes to the TIRBOP rate structure. I do hope my comments will be considered as I did not learn of the rate filing until last week, having received no notice from my title underwriters or PLTA.

I am a licensed title insurance agent. I have over 30 years of experience in the fields of real estate, mortgage lending and title insurance. Prior to starting a title insurance agency in 1991, I had worked for 13 years in mortgage lending including as a FHA direct endorsement underwriter and VA approved underwriter. I managed retail and wholesale lending departments for two large Pittsburgh based savings institutions. I was also responsible for regulatory compliance and assisted in the creation of quality control audit programs. Having to train personnel, manage the ever changing underwriting guidelines and regulatory compliance issues gave me a unique perspective when I entered the title insurance field. My first observations were that title insurance agents don't read guidelines, have no clue, handle lots of money and nobody is watching. Frankly, I was astounded.

I have since realized that state insurance regulators rely mainly on title companies, underwriters, to self police their agents. This would seem logical and probably did work for many years, as a company responsible for the acts of its agents, you would think, would be motivated to maintain quality. I have learned, however, through repeated observations that title companies work hard at maintaining the APPEARANCE of quality in its written procedure manuals and the TIRBOP manual while in reality the day to day business of title insurance largely ignores these standards.

Title companies, it seems to me, took a calculated risk that increased revenues generated by creating more agencies, mostly through affiliated businesses with real estate brokers and mortgage lenders, and generally tossing credible training and underwriting out the window to close and insure more transactions would make up for increases in claims. It was a bad bet. Judgment day has arrived.

I know from first hand experience that the TIRBOP manual is rarely covered in continuing education. The fact that title agents have trouble getting the premium correct and have left title companies exposed to class action law suits and regulatory penalties is NOT because the rules are too hard to understand but rather that title companies do not teach agents or monitor compliance in any way that would be effective.

I sit in continuing education sessions in which I am one of very few paying attention to the instructors. Most people in the room are reading newspapers, novels, working on their computers, texting or talking on their cell phones. It seems to me that CE credits should be worth more than simply showing up. I'm certain you agree, however, know that the instructors in charge of most of these sessions are title company attorneys. They are salesmen for their title company and afraid of enforcing discipline because the people in these classes are their CUSTOMERS or perspective customers.

The solution, if you want to make training meaningful, I think would be to have a moderator charged with enforcing discipline who is in the room. Sounds ridiculous, I know. I've never seen anything like it.

As to the SALE versus NON-SALE rate change, I don't care because other than the PHFA borrowers losing their discount, making the system easier because title agents are ignorant and title companies refuse to teach and monitor, I guess it's sort of revenue neutral and not a big deal.

I do STRONGLY object to the increase of the cost of the Closing Services Letter to $75. Losses covered under the CSL, defalcations and failure of an agent to follow lender instructions, can and should be reduced by legislative changes that introduce quality oversight where none exists.

Defalcations are largely self created losses by title companies who have failed to police and monitor their agents. Once again, because agents are perceived to be referral sources and, hence, customers of title companies, there is an inherent conflict of interest that I believe cannot be surmounted by title companies. I RECOMMEND LEGISLATIVE changes to create rules for the management of title agent escrow accounts including independent annual audits by a CPA. This way you prevent mismanagement of funds and likely defalcations and you do it without the reliance of the title companies and without increased cost to the consumer.

Failure to follow lender instructions - well you might be interested to know that in many cases, the title agent isn't the one receiving or signing the instructions. Many title agents in PA use independent, unlicensed contract closers who received these instructions and make the delivery to the mortgage lender. I am appalled that this system has evolved and RECOMMEND LEGISLATIVE changes to bring the performance of the closing, the actual signing and delivery of documents to the lender, under the umbrella of licensing by creating the requirement that the closer is an employee of the title company or agent.

I do not object to the extension to the consumer of the CSL coverage, however, charging $40 per insured transaction to me is highway robbery unless steps are taken to solve the REAL problems causing these claims.

I read with interest the Attorney General's press release and comments concerning title insurance premiums in PA. I, too, would love to see public hearings and would welcome an opportunity to testify.

Consumers in PA are not well served by the system. I follow the underwriting guidelines and earn the portion of the title insurance premium I retain. I have a full search performed by an expert abstractor. I do my own professional title examination and prepare the title insurance commitment myself. Closings are performed by trained employees. We spend much of our time searching and identifying potential title problems and resolving them prior to the issuance of the title policy. Even after the issuance of the policy, we work hard to resolve title problems that surface before they turn into formal claims, those that show up in the title company reports. We, as a TRADITIONAL title agent, earn every penny in our split of the all inclusive rate.

NON-traditional title agents, on the other hand, are nothing more than referral sources for the title company and, in my opinion, are not performing core services of title agency. These non-traditional agents take a title order and transmit it to the title company who then obtains the abstract and electronically delivers to the agent a fully examined and prepared title insurance commitment. Most of these non-traditional title agents don't even perform the closing or delivery to the mortgage lender, they contract that job out to independent closers, often hired again, by the title company.

If we were to compare only value added to the transaction TRADITIONAL versus NON-traditional title agents, we could argue that consumers are paying for services they are not receiving from NON-traditional agents even if we looked only at promulgated rates, however, if you look at the HUD-1 forms you will find that consumers are being robbed in the OPTIONAL fee category as well.

Take a close look at closing fees and settlement fees and you will find NON-traditional title agents who give the consumer no choice but to use a mobile notary, contract closer and that consumers are paying big bucks for these closers. If the all-inclusive rate would purport to include the services of closing and preparation/copying and stacking of documents to the lender, then how do you view situations in which the consumer has no choice but to use an out of office closer? Are consumers in PA well served by remote title agents who NEVER have the option of closing without paying the extra fees?

If you are looking for a way to give consumers a better deal in PA, I would eliminate or cap optional fees. We can argue over a $40 average increase to the consumer in this rate filing but it seem ludicrous when consumers are routinely charged hundred of dollars over the promulgated rates in optional fees. Title companies don't keep this money and so they aren't talking about it, but it's a major source of income to many title agents and one that flies under the radar. You can fix it.

I welcome an opportunity to discuss title insurance at any time.

Diane Cipa
General Manager

204 West Main Street, Ligonier, PA 15658
888-680-5177 x104
724-238-7830 fax

link to PA title insurance rate filing


PA title insurance rate increase in the news

Fees for some documents, such as a home closing service letter, would more than double under the proposal. Discounts for such things as home refinancings — where previous title searches were completed for the initial home purchase — would be eliminated.

Title rates are subject to approval by the Pennsylvania Insurance Department.

The industry contends its revenues declined 16 percent during a recent one-year period, claims it paid rose by nearly 20 percent, and reserves for unpaid Pennsylvania claims increased by 42 percent.

"All of these factors support the increase in title insurance rates proposed in this filing," Ronald Chronister, a Harrisburg consultant representing the title companies, wrote to the insurance department. "At the same time, as stated above, the Rating Bureau believes that the increase will have a minimal impact ($40 per closing) on the cost of title insurance for consumers."


Sunday, March 29, 2009

Closing Services Letter and defalcations

Let's fix the problem instead of charging consumers a higher fee for coverage.

When a consumer or a lending institution hands money over to a PA licensed title agent, they do so under the perceived umbrella of regulatory oversight. You may be surprised, however, to know the our insurance regulations contain no guidelines for the management of the title agent's escrow account. In fact, it's the PA Dept. of Banking that seems to have jurisdiction over these escrows and that seems like a HUGE disconnect to me.

If the title insurance underwriters can't get it together to set up rules, train and monitor agents, then I say it's time we amend our title insurance law to pull title insurance escrows under the umbrella of the PA Dept. of Insurance and set up guidelines, then police the industry.

We ought not to be putting multiple millions of dollars into the hands of people who are untrained and unqualified to manage it .

Saturday, March 28, 2009

There's a filing for a title insurance rate increase pending in PA.

I, for one, hope the PA Department of Insurance will hold public hearings on the issue. I'd sure like to testify. Here are two questions to ponder:

1. Why should PA consumers pay title underwriters an increased fee for a Closing Services Letter to cover all the defalcations when defalcations are largely caused by poor selection, training, and monitoring of agents, all of which title underwriters control, not consumers?

2. Why get rid of the TIRBOP rate discount options just because agents can't seem to follow the TIRBOP guidelines and consumers are mad enough to file class action suits when title underwriters could easily teach and test agents, then monitor compliance?

I have sat through so many continuing education training sessions in which the title underwriters allow agents to read the newspaper and talk on their phones rather then listen. The so-called trainers often get the TIRBOP material wrong. They have never had a TIRBOP manual on site to refer to and once when I asked a specific question, the trainer admitted to not having read the manual.

Why, tell me, WHY should consumers in PA pay higher rates for title insurance and reward this abrogation of responsibility?

Thursday, March 26, 2009

restrictions...for heavens sake, get a copy and read them!

I've had a nice e-mail exchange this week with a reader who wondered why her title insurance agent had never told her about the restrictive covenants for the housing plan in which she lived.

The lots in this plan are large and were meant to be used for residential purposes only. A neighbor, unaware of the restrictive covenants, started farming on their lot and added livestock. Our reader, also unaware of the restrictive covenants, has suffered for years battling with the neighbor over noise, smell, and general degradation of their use and enjoyment of their real estate. Only recently did our reader discover the restrictions and realize that the homeowners in the plan had legal standing all along to deal with the farm problem.

Read this, please, so you can understand how very important it is to select a title insurance provider who will give you a copy of the title commitment prior to closing along with copies of restrictions. Ask for these copies when shopping for services and then follow up to make certain you are getting a full and complete report BEFORE you close.

We found out last year that there are legally filed deed restrictions on our property that can be enforced by the property owners at the county building (we have a defunct Association) the restrictions effect all the other properties where we live (39/10 acre parcels) the deed restrictions run with the land and keep going every 10 years unless the majority of land owners vote them out etc which has not happened so people owning the land can enforce them. We were not given any of this info. when we bought our property by either the title company, the realtor nor the people we bought from - we bought it in 1998 and started building our house.

Last summer we had more continued issues with our neighbors who have livestock and poultry and started their farm after they moved out - about a year after us (improper disposal of manure is what they did last year), when they first moved out in 1999 we had issues too with them letting their sheep run all over the place and on our property (they have 30 acres we have 10) we found out about the deed restrictions by a friend who told us about such a thing when I was complaining about their farm. We had no idea there even was such a thing as we had never owned like this before. Well, I did the research and within one day I found the documents filed legally at the county building and they have been there since the 70's -our neighbors should never have put a farm in and had we known we could have stopped it right at the beginning and not be in this horrible situation where we have to smell manure, listen to roosters and cows and sheep and see their cows and barns (that they shouldn't have either) from our living room window. We do not know if they were told about the deed restrictions. Others who bought property way before we did received the deed restrictions when they bought their land. I've been told we could have a suit against our title company for not giving those to us and that we could get them to pay for all the harassment and loss of enjoyment of our property, the decreased value we now face due to the farm practically in our back yard and the cost of making our neighbors abide by those restrictions and remove the farm they shouldn't have. (we should not have to pay thousands to do this!) We have had a huge hassle to endure due to this, we were even told that we may have a suit against our neighbors title company if they didn't tell them.. our neighbors tried to file a harassment suit on us because we called the MDA on their improper disposal of manure, (yea they considered us calling the MDA harassing them of course the sheriffs dept told them they had no grounds for their attempted charges the MDA found them in violation and made them clean up the manure) they were putting bob cats buckets full of cow, horse, sheep manure right next to the property line in view of our back deck. (they were mad cause we and another neighbor filed a complaint with the health dept due to their garbage bags ripped open and garbage all over the place, which is also a violation of the deed restrictions) there's more to tell here if you find this a case your interested in. They are not nice people and retaliate if you turn them in for any violations. If we had known about these deed restrictions we would have stopped them years ago when they got their first cow!! I even called the title company and asked if they look for deed restrictions and they told me no.

Bottom line, I suggested they hire a good real estate attorney to sort the mess out. She found her owner policy and has hired an attorney. It will be interesting to see how the case is resolved and I do hope we hear the end of the story. ;)

Friday, March 20, 2009

working on a mystery, a title agent mystery that is

We're working with a consumer buying a commercial property who also planned to use their residence as collateral for a line of credit to make improvements on the new building. Routine process, their bank asked for a copy of the deed to their house and they can't find it. They called their mortgage lender who starting acting kinda weird and would only provide an unexecuted copy of a mortgage, so they asked me to look into the situation.

Guess, what? There is no deed on record for their residence or a mortgage.

Long story short, they were working with an out of state title agent who I'm not even sure was licensed in PA, who has since gone out of business and nobody, not even the seller has copies of a signed HUD-1 or any other documents from closing.

Thankfully, and for what reason I don't know, the seller's attorney had a copy of the signed title insurance commitment so this consumer has some basis for a title insurance claim.

Oddly, though this out of state title agent handled the entire transaction, including receipt of lender funds and disbursement, the unsigned HUD-1 has the name of a different company as settlement/title agent, supposedly a PA company that I can't find anywhere either.

In retrospect, these folks are kicking themselves for not being more diligent about getting copies and knowing who they were working with. They sort of went on automatic pilot and just trusted that they were working with professionals.

Please, folks, choose your title agent wisely. Know who they are and where they are and make certain you get a title insurance commitment to review prior to close, make certain you get a signed HUD-1 at closing, and then follow-up after closing to confirm receipt of the recorded deed and issuance of your title insurance policy.

Friday, March 13, 2009

PA escheat deadline coming up.

Just a reminder to PA title agents that our deadline for filing unclaimed property reports with the Pennsylvania Treasury Department is April 15th. A copy of the Unclaimed Property Act is available at

We are being reminded by the Department that a compliance report is to be filed, even if we have no unclaimed property.

Friday, March 06, 2009

I'm kinda blown away.....I had no idea Tanta died.

A few months ago I stopped following all the title blogs and all the mortgage blogs. I just couldn't take it anymore. So, this is a belated.....

RIP Tanta.

You really knew your stuff and you knew how to teach. I see a guitar in your hands and that makes me smile.

Wednesday, March 04, 2009

just thought I'd post that there's a whole lot of normalcy going on

Most mortgage lenders have lots of money to lend and rates are fabulous.
Most homeowners are not in foreclosure and are making their mortgage payments on time.
Most of the lack of business is due to normal fear mongering by the media, BUT

...surprise, surprise, life goes on and we the people eventually just go about our business living life and in the process the recovery is happening with or without the government and the media.