A New Win-Win for Title Insurance consumers
Just when the title insurance industry thought it couldn't get any worse....I have heard rumors that the Colorado Department of Insurance (DOI), is cooking up something really special to let the general public know how much (or how little) they are paying for Title Insurance. Whether you, as a real estate broker or mortgage lender, are part of an AfBA (affiliated business arrangement) Title Company or not, you could BE VERY INVOLVED in the future.
It seems that the Colorado Department of Real Estate (DORE) is very pleased with the results of SB 216, Mortgage Loan Acts. Within this bill are new mandated disclosure documents that buyers have to sign. One very interesting document states that the buyer is aware of all mortgage costs and that the loan provides a "tangible net benefit to the borrower". Borrowers have always had to sign Good Faith Estimates on mortgage costs. With these concepts in mind, let's fast forward to another real estate industry product, Title Insurance.
In Colorado, not all title or escrow fees are the same from company to company.
I am pretty sure the DOI thinks that the public needs to know this. Anyone could compare costs at the Department Of Insurance's site, but that assumes they are patient, are aware of industry lingo and are aware of all the possible fees. Needless to say, the user interface of the site is lacking. But, using a site called www.MyTitleIns.com, (a free title insurance shopper site) anyone can obtain very accurate and fast results. The question is, do brokers and consumers really shop? Do they even know that they can shop?
Comprehensive studies were conducted using www.MyTitleIns.com, comparing hundreds of closings ranging from purchases, to
refinances, involving single family, condos and land. What did they find? Well, something
most real estate brokers or mortgage lenders may not know or don't care about.... the "average"
difference in title premiums on any given, almost identical "transaction",
varies on average, from one company to another by about $1,200.
The $1,200 Discrepancy
pretty BIG spread for a product that is priced on nothing other
than "purchase price", "loan amount" and the "last issue date" of an old title policy. For those of you in the real estate industry longer than
say, one day, let's be frank and get our heads out of the sand. In the past and currently (wink-wink), title insurance premiums are used to fund political payoffs, political contributions, holiday parties, highly paid
title reps, dinners, lunches, gifts, sporting events, shared marketing fees, farm packages, coop advertising fees (broker bribe money) as
well as abusively high overhead, over staffing, demanding shareholders,
excessive space, golf tournaments, trips, junkets,
conventions, "Free" education, and who knows what else! Of course, the title insurance
customers (paying the premiums) never get to take any of these free "Junkets" or even enjoy any incentives. Take it to another level. Real estate brokers or mortgage lenders don't have to tell the consumer about these unreported incentives...most consumers just blindly listen to the industry professional and never
shop rates. Incidentally, what's really unfair and deceptive to the consumer is that real estate brokers and mortgage lenders that own, or are a part of, an AfBA (affiliated business arrangement) title insurance company, are required, by Federal
and State law, to disclose the potential of income as a result of
transaction premiums (RESPA). So in one case the public thinks, "Hey, this guy is making some cash form my deal". In the other case, the public has no clue as to what, if anything, the real estate broker or mortgage lender is getting on the other side...wink-wink.
Good Faith Estimate (GFE)
Somewhere down at the offices of the Department Of Regulatory Agencies in Colorado, this new concept has been thought of. Maybe a rider or an addendum that states that the choice of escrow and title services is up to the buyer and seller. Let's say that these regulations will make YOU, the real estate broker or mortgage lender, provide your customer with two items. Number one, "Proof" that you shopped all "of record" title insurance rates and escrow fees, from the lowest to highest, for your client/customer. Number two, a title insurance and escrow cost disclosure, somewhat similar to a lender "Good Faith Estimate" (GFE). All the transaction participants, real estate brokers and mortgage brokers, sellers and buyers will also have to sign off.
Now, I am sure
most sellers, buyers or mortgage refinance consumers won't mind paying
an extra $500 to $1,400 more...after all, they are rolling in the dough, right? And
of course, according to most real estate brokers or lenders, that extra $500 to $1,400 in costs covers that really "special" closer or that really super
secret, five star rated, AAA+, super strong Swiss title insurance policy...or something like
that. Oh, my favorite, "they have a more convenient office location". Hey, at $4.00 a gallon...most consumers could close in Texas and be
money ahead. The transparent Internet, DOI and DORE may make
this new disclosure action a very real possibility. YOU, the real estate broker and mortgage lender will then have to be
THE ADVOCATE for your client!
For Every Door That Closes, Another One Opens
Currently, real estate brokers and mortgage lenders within title insurance AfBA's have been somewhat "handicapped" because they have to give the RESPA disclosure to the consumer to sign (we might make money from your title premium and fees). The non-owner real estate broker and mortgage lender (whom get the junkets and free marketing materials) gives the consumer nothing to sign! Perhaps in the future, and for the benefit of the public, all real estate brokers and mortgage lenders, AfBA owners or not, will have to provide more than just a RESPA disclosure (and what does that really mean to the consumer anyway).
The Times They Are A Changing
Real estate brokers and mortgage brokers, the world is changing. In Colorado, traditionally, the industry professional makes the choice of escrow and title services for their clients based, not on pricing, but on relationships and wink-wink (illegal) type of incentives. Soon enough, maybe the buyer and seller will make the choice based on fees and facts.
AfBA's are very prominent, legal, successful and growing throughout the United States. This is a fact, despite the title industry propaganda lawyers that work on behalf of "Big Title" to perpetuate the status qoe with "Evil Boogie Man" AfBA stories. If you, the industry professional, are going to have to provide cost breakdowns and comparative premium schedules (as you should be doing as an advocate of your client)...why not be selling the lowest cost, highest service product in the market. Why not be an owner in a successful AfBA Title Insurance Company.
Reasonable fees and excellent service along with profits
To excel and succeed in today's market, you should think about becoming an owner in a solid and recognized AfBA Title Insurance Company. The company should be consumer cost driven, service based, successful, and agent producer owned. Meridian Title And Escrow, LLC provides low consumer fees and excellent service. In fact, Meridian Title and Escrow, LLC. is a perfect example of an agent "Producer" owned and operated title insurance company, positioned for the new era of transparent title insurance business.
Meridian Title And Escrow is now underwritten by four National
Southern Title Insurance Corporation
Alliant National Title
Dakota Homestead Title
Not Your Normal AfBA Model
We offer the very lowest consumer title Insurance costs in Colorado, bar none, including a full 10 year "purchase" reissue rates. A ten year purchase reissue rate is almost unheard of in the title insurance industry. Most companies offer only one to three year reissue rates. (reissue rates are a % off of a full price title premium based on the age of the last issued title policy)
Meridian Title and Escrow, LLC offers ultra low cost lender "Bundled Rates" for refinancing, for the consumer.
Meridian Title and Escrow, LLC also a fantastic closing department headed up by Karra Eveleth, with some of the best, professional service, in the industry.
5 closing locations - Primary locations are Highlands Ranch and Meridian International Business Park.
Full paperless transactions and digital signatures integrated with CTM e-contracts and all Documents are DVD based at closing...no paper.
Meridian Title and Escrow, LLC is owned by many different individual agent producers, and not a "Franchise" owned model.
A real estate broker should chose a title company based on the most competitive rates and fees, along with predictable and extraordinary service. If in fact, that happens to be the title company you own, than Amen to that. I feel that providing the consumer with total transaction costs and a comparison of companies will let them consumer make the "Choice".
Here Is Where You Come In
Besides offering extraordinary service, "documented" lowest premium and escrow costs, here is where you, the real estate broker and mortgage lender come in. Meridian Title and Escrow, LLC is still Profitable, even with these lower premium rates. Once again, as of the end of the first quarter, 2008, we will again be paying dividends to Meridian Title & Escrow, LLC owners. Most all of our owners have now earned 100%, 200% or even as high as 300% Returns on Investment (in one year). Hard to believe with all the doom and gloom of the Stock Market and declining real estate values....a 300% return and climbing. Can any of you honestly tell me when you have last obtained any type of 300% return in a year? I am willing to bet most of you have NEVER done it.
How Can We Be Profitable?
No over staffing
No large leases
No sales Reps
No sales bonuses to sales rep
Multiple Insurance Underwriters
No bribe money to brokers
No public shareholders, just our broker producers
No Club Level Sports Seats
Nimble- i.e. we have decreased our employee base by 50% from 4th qtr 2007 to 1st qtr 2008
No marketing costs
No advertising costs
No executive or management fees
No "risky" transactions
No executive salaries or management salaries
Paperless office systems
No redundant systems or hardware
Reduced costs by integrating technology
Effective title examination and staffing
No company car leases
No corporate jets
...and the list could go on.
All these items are common business costs. But, money in, has to be more than money out and what's left over is profit. Meridian Title And Escrow, LLC is efficient, savvy...nimble and consumer driven. A side benefit for a producer, shareholder, owner, is that it can still be a profitable business.
Sometimes You Just Have To Wonder!
I operate a number of real estate offices, filled with real estate brokers and mortgage lenders. Unlike a large real estate franchise owned AfBA, I allow any of my productive real estate brokers and mortgage lenders to be owners in Meridian Title and Escrow, LLC. What I find very humorous is that if I were to tell brokers "I am going to raise your monthly fees... say, $150 a month, they would complain, whine...maybe even leave for a cheaper office venue. But If I say hey "how would you like to invest in a real estate related product, that you already sell, realize a $100-$200 a month dividend and save your clients thousands of dollars?"...their replies are, "must be a sham" or "I really like my closer" and my favorite excuse of all, "well, it's just too far from my client's listing or my office". Ironically, many really concerned, experienced and so called professional brokers never ask me, "will it really save my client money?" Hmm.... "Great Question"!
It's About More Than $30 Bucks
On some transaction somewhere, I have seen real estate brokers complain (during the closing) that the title company (not Meridian) is charging, say a $300 closing fee, and not, a $240 closing fee. So they are acting up like "Big Realtor Hero" over a $60 fee divided by two...or $30? All the while, the transaction consumers are all over paying for a number of title products and escrow services. Funny thing, most these ego "Realtor Hero Types" are the ones still charging the "traditional unspoken industry listing fee" and taking the "wink-wink" title incentives. A true client advocate, if I have ever seen one.
Here's an example:
A Seller is selling their home for $700,000.00
Home is in Douglas County
They Bought the Home in the year 2000 for $425,000 and owe $400,000 on a single first mortgage and have a second for $180,000. They have not refinanced the first since 2001, and completed the second in 2004.
Purchase Price is $700,000 buyer who is putting 20% down
Below are the total of all title and escrow charges for the buyer and the seller involved in the transaction*:
*compiled from www.myTitleIns.com 04-05-08
|Company Name||Total Buyer and Seller Tilte and escrow Fees|
|Meridian Title and Escrow, LLC||$2,343.00|
|Chicago Title of Colorado||$3,496.00|
|1st Denver Title||$3,528.00|
|Stewart Title of Colorado||$3,573.00|
|Guardian Title Agency, LLC||$3,577.00|
|Land Title Guarantee Company||$3,666.00|
|North American Title Company||$3,741.00|
|First American Heritage Title Company||$3,808.00|
|Security Title Guaranty Co.||$3,833.00|
|Paradigm Title Services LLC||$2,268.00|
|Low to High difference||$1,565.00|
From Lowest to Highest...$1,565.00. Wow, that's a lot of cookies and candy at the closing table. I also know everyone is really big on the service issue, but how much more for "service". Disappointingly, most brokers will object to their own $150 a month fee increases, but would have no problem with consumers paying an extra $1,565.00. Frankly, I think most real estate brokers and mortgage lenders don't really know there are these disparities. Just like most consumers don't know this is a pricing difference. Using a mandated "Tile & Escrow GFE" as well as proof of comparative fees, will allow the industry professionals to take their head of the the sand and have full Knowledge.
BUYER'S AGENTS this means YOU too.
DORE has made our Colorado State approved real estate contracts much easier for the buyer and you the
buyer's broker, to
choose the title company of choice for your client. On HUD foreclosure transactions, it is a no brainer for the buyer to chose title. So, working on behalf of a buyer, whom typically pays 20% of the total title fees for their mortgage endorsements and loan closing fees, is also something that can be done on behalf of the client buyer.
AfBA title company ownership is not just for big listing brokers, it's for anyone that cares about the consumer, and is a industry producer. Remember, in reality, your buyer is paying for the title insurance in the total cost of the home and it's THEIR policy. Soon
enough, you will have to provide a"Good Faith Estimate" and a "comparable fees" for
like it or not.
1. Meridian Title And Escrow, LLC has been profitable for two years 2. Meridian Title And Escrow, LLC can compete on price
with any title company in the state 3. We are 100% eco friendly, paperless office 4. We have a fantastic new office location in
Highlands Ranch, Colorado 5. We have one of the most professional, nicest, sweetest and just 100% competent Escrow Officer,
Meridian Title and Escrow, LLC is now accepting additional real estate broker and mortgage lender producers to participant in our AfBA Title Insurance business. We are also including mortgage lenders and real estate brokers outside of our office network. Some of our best new business partners are, our mortgage lenders and they have been helping out immensely with additional title premiums.
Meridian Title and Escrow will now provide for all shareholders and Realty Oasis will now "require", a "Good Faith Title & Escrow Estimate", GFTEE, and a "title comparison fee schedule", TCFS disclosure for all of your transactions. This will be submitted with all transactions along with the required RESPA form. That way you can prove to the consumer and we can demonstrate to the state regulators as well as the real estate community that AfBA's are good for the consumer, good for the broker and good for the business.
This is a perfect business behavior for real estate brokers that really dont' want to "Recommend" any specific business professional. They give lists of inspectors, lists of insurers, lists of lenders, lists of contractors and now they can provide a title insurance list, complete with full cost and fee analysis for their clients.
Meridian Title and Escrow, LLC is not afraid of our fees and we are certainly willing to match anyone in service and technology. So let's lay it on the table.
The Ultimate Wink-Wink
The Real question will be if the State Regulatory Agency follows through with this concept or if they cave in to pressures form "Big Title Insurance" political power and special interest groups (lawyers) that work on behalf of the established title companies.
In the meantime, if you are interested helping your clients, along with becoming an Owner and Shareholder in Meridian Title and Escrow, LLC., please email me at email@example.com.
The time to be a client
advocate in all areas of the real estate transaction is NOW.