Friday, December 31, 2010
Guest Blog: Price Competition Begins in Title Insurance Industry Today for the First Time in New Mexico Since 1985
This is a guest blog by Fred Nathan, Executive Director of Think New Mexico.
Title insurance companies may offer customers rates that are lower than the single rate schedule promulgated by the state Superintendent of Insurance, under rules that take effect today. Title insurance, which is required by banks before they will approve or refinance a mortgage, is one of the largest elements of closing costs.
Under the New Mexico Title Insurance Law enacted in 1985, the Superintendent of Insurance promulgates a single rate schedule for title insurance prices. This law, which was drafted by the title insurance industry, eliminated price competition by prohibiting companies from charging rates lower than the state-promulgated rate. Only two other states, Texas and Florida, prohibit price competition in the title insurance industry.
In 2009, after a two-year effort, Think New Mexico successfully championed the enactment of a law reforming the title insurance industry. The new law allows title companies to charge rates lower than the state-promulgated rate schedule if they file their proposed rates with the Superintendent of Insurance and receive prior approval to offer them. However, the law could not take effect until the Insurance Division implemented regulations establishing the process for prior approval of lower rates.
The regulations that take effect today allow title insurers to file their proposed lower rates with the state Insurance Division, which has 60 days to approve them before they can be offered to homebuyers.
This is a big win for New Mexico families, who will soon have lower cost options for title insurance when they buy or refinance their homes. Price competition in the title insurance industry can only help New Mexico’s struggling economy and housing market.
The 2009 title insurance reform law also increased and extended the discounts available for title insurance policies purchased with mortgage refinancings, a provision that required no regulations and took effect in May of 2009. The enhanced discounts are available to any New Mexican refinancing a residential mortgage who provides the title company with the settlement or HUD statement from their home purchase.
Think New Mexico is a results-oriented think tank serving New Mexicans. The new title insurance regulations are published in the most recent edition of the New Mexico Register. For more information, contact the Title Insurance Bureau Chief Kenny Ortiz at (505) 827-4528.
This is a guest blog by Fred Nathan. If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.
What great news! Do the new regulations also make the Insurance mean something? I heard that under the old ones, the Title Ins. Co. wasn't responsible for their errors, which sort of negated the whole purpose.
Posted by: Michelle Meaders | Dec 31, 2010 9:33:15 PM
Your perception is not correct, Michelle. The policies cover certain title defects regardless of title company errors. The issue was whether title companies should be liable in negligence, ABOVE AND BEYOND the policy for matters it fails to find in a title search. The search is done for the benefit of the company, in order to underwrite the policy. The title commitment developed from the title search tells the customer what the title company is willing to insure. It is not meant as an abstract of title to disclose all title defects, but rather, again, to outline the parameters of the insurance. If the title company misses something in its search that is a covered title defect, there is always coverage for that. You have been the victim of misrepresentations and scare tactics. Title insurance continues to save Americans about $16 billion annually in lower mortgage payments since lenders need not worry about title risks as they do in other developed countries. Title insurers also discover and fix problems in nearly 40% of all residential transactions, usually without consumers ever realizing they would otherwise have had a claim. This is because title insurers are in the business of avoiding claims - as if your homeowner's insurance company would cut your tree branch BEFORE if fell through your roof or your auto insurer would fix your brakes before a car could crash. This avoids the difficulty and heartache of most claims and provides an amazing service to consumers.
Posted by: George F. | Jan 3, 2011 9:40:41 AM
very interesting article, i always wanted to write my own blog but i don't have mucj time
Posted by: okresowe szkolenia bhp | Jan 19, 2011 3:58:27 AM