Thursday, we told you about the high cost of closing on a home in Texas.
And realtors say, the biggest factor is the high cost of title insurance.
Title insurance guards against an unexpected claim against your new home title or fraud on the part of the seller.
It is a very lucrative business, raking in $1.6-billion in 2007.
And since it’s insurance, there are claims.
In auto insurance, claims eat up 55% of the premiums you pay.
In title insurance, it’s 3.3%. the remaining 1.5-billion in 2007 was pure profit.
“And the reason for that is we do our homework before issuing the policy of insurance,” says Steve Dement is with Landmark Title Company. “Prior to closing, we do a very thorough search of the land records, and any other records we can get our hands on, to try to determine if there are any problems. And those problems that we find prior to closing, we will try to cure.”
So, why is the title policy on a $150,000 house cost…
$850 in Florida and Michigan
$769 In New York
$713 in Los Angeles
$435 in South Carolina
And $1110 in Texas
“Did you look at the settlement statements in those states to see if that amount, does it include everything?” Dement asked. “The title insurance premiums are set by the Texas Department of Insurance.”
But the Insurance Commissioner appointed by Rick Perry, Eleanor Kitzman, is a former lobbyist for Goldman Sachs Insurance Division.
And the industry spent $14-million in lobbying last year.
“Our closing costs overall may be high,” he said, “but I don’t think you can point the finger strictly at title insurance. But yes, I do think title insurance is a bargain. I would never purchase a piece of property without it, because you never know what lurks in the background, in the history of that land.”