June 6, 2009
Commissioner Joel Ario
Pennsylvania Insurance Department
1326 Strawberry Square
Harrisburg, PA 17120 RE: final comment on public hearing for title insurance
Dear Commissioner Ario:
The give and take in the public hearing on title insurance was insightful and certainly raised some ideas that were outside of the box for me. Thank you for creating the thoughtful forum and shaking things up a bit in our creaky old industry.
DEREGULATING THE TITLE AGENT PORTION OF THE TITLE INSURANCE PREMIUM: It is clear to me that maintaining fixed pricing of title premiums has not helped to foster better quality in product or service. I don’t think breaking down that wall of price regulation will make much of a difference in quality. We have lots of crappy title agents with high prices so we might have lots of crappy title agents with low prices. On the other hand, if prices come down through competition, maybe some of the crappy operators who are only there for the big bucks will find some other easy money scheme and get the heck our of our once honorable profession.
SET AUDIT STANDARDS AND REQUIRE TITLE AGENTS TO HAVE AN ANNUAL CPA AUDIT: I believe we can achieve better quality in product and service by stiffening oversight of licensees. Key oversight has got to be escrow account related. This is where defalcations take place and is one of the largest sources of claims for title companies. An annual audit, perhaps similar to that performed for FHA mortgage lenders which looks at more than simply the financial records but also tests a random selection of files for adherence to regulatory guidelines, paid for by licensees, would help separate those who are serious title insurance professionals from those who are in the business for a fast easy buck.
CONSUMER DISCLOSURE: Teaming with other licensed persons in a position to make title insurance referrals, such as licensed real estate brokers and licensed mortgage lenders, so that consumers receive good disclosure BEFORE their title insurance order has been processed would help break up title agency steering relationships.
ANCILLARY FEES: Consumers are most confused when shopping by the ancillary fees charged by one title insurance agent versus another. The difference can be hundreds of dollars on the same transaction but if the consumer doesn’t know to ask for a thorough quote, they will make their shopping decision without having full disclosure of costs. Whether or not you move to deregulate the title agent portion of the premium, I believe we need a better way of helping consumers shop and consider these ancillary costs.
NOTARY SIGNING AGENT/INDEPENDENT CLOSER: I see the notary signing agent as sort of like an untested or unlicensed dental hygienist who is out there working on the public but not under the supervision of a dentist. I don’t know anything about dentist operations but as a consumer of dental services I presume a dental hygienist is tested or licensed and works under the supervision of a dentist. I have to think consumers of title insurance services make the same presumption about a closer who comes to their home and handles their very private information and very important transaction. The fact is that we presently have no official standards for closers in a title insurance transaction. I’d like to see the department require that closers in a title insurance transaction be either licensed title agents or employees of a licensed agent.
Should you have a question or concern, please feel free to contact me.
THE CLOSING SPECIALISTS
204 West Main Street, Ligonier, PA 15658