Title Insurer Group In Talks With GAO

A trade organization that represents title insurers, whose practices have come under scrutiny from state regulators and lawmakers, said they have been meeting with federal officials to clarify any “misunderstanding” about their business.

The American Land Title Association held one session with the Government Accounting Office last month and another will be held shortly, said Lorri Ragan, a spokesperson for ATLA.

In January, House Financial Services Committee Chairman Rep. Mike Oxley, R-Ohio, asked the GAO to investigate alleged improper pricing and anticompetitive practices in the title insurance.

The congressional inquiry follows probes by state regulators in Colorado, California, Florida, Hawaii, Michigan and, late last month, New York into alleged title insurance company kickback payments for referrals from developers, mortgage lenders and real estate agents.

Regulators as a result have secured more than $37 million from title insurers to return to customers who may have been hurt by their activities.

James R. Maher, ALTA's executive vice president, in a statement released earlier, said his group views the meetings with GAO as “an opportunity to educate them about our business.”

“Because of the complexity of our business, and the fact that rules and regulations vary by state, there has been a lot of confusion in the marketplace leading to misinformation and misunderstanding,” he continued.

“We see this as an opportunity to help clear up the confusion that exists, and to foster a better understanding about title insurance and the value it provides. We will continue to work with the GAO and look forward to the release of its report.”

Ms. Ragan said that ALTA's meeting last month with GAO dealt with a series of questions they had sent to the group. She said after the session, which was “informal and educational in nature,” GAO had decided to come up with a revised set of questions.

Rep. Oxley, in his letter to GAO, said the referral fees violate the Real Estate Settlement Procedures Act (RESPA). In the past, ATLA has said that when it asked the U.S. Department of Housing and Urban Renewal (which administers RESPA) to provide guidance concerning acceptable practices, they had been “left in the dark.”

Rep. Oxley said in his letter he had a particular concern over title fees because “as housing prices have soared in various parts of the country, the cost of title insurance has become an increasing burden on many consumers.”

His letter asked the GAO to investigate the title insurance market to determine what factors impact the price of product, including the associated claims, title search, overhead and marketing costs.

The letter also asks for an examination of the relationship between title insurers, realtors, lenders and home builders for anticompetitive practices and an investigation of potential barriers to entry into the market.