When you spent $2,000 to $3,000 to buy title insurance and closing services on your home purchase or refinance, did you really know where your money was going?

Did you shop for competing prices? Or did you end up using the title, escrow agency or lawyer your real estate agent or loan officer recommended?

Consumers’ answers to these questions involve billions of dollars a year — $10 billion in title insurance premiums alone in 2010. Yet buyers and refinancers often don’t shop for the most expensive item on their settlement sheets. They don’t know how little of their premiums are actually paying for an insurance policy, and they’re in the dark about who ends up with their money. These are not idle opinions — they’re among the findings by the Government Accountability Office in a critical study of the industry and its practices. [more]

From the August issue: A law aiming to prevent improper quid pro quos for title insurance agents just got a new set of sharp teeth — causing a furor in the already embattled industry.
In late May, the Office of the General Counsel of the state’s Insurance Department issued an opinion about whether it’s legal for a residential brokerage to place lawyers on “recommended” lists, which are distributed to homebuyers, in exchange for those lawyers referring clients to the brokerage’s title insurance affiliate.
The answer was a resounding no. The state agency ruled that this kind of quid pro quo is a violation of state law. As a result, brokerages are now prohibited from rewarding lawyers for using their firm’s affiliated title agency, or “punishing” those who don’t by removing them from recommended lists. (Until now, industry sources say that lawyers who failed to refer back business to the firms were often nixed from these lists.) Those who violate the law will now be slapped with a $1,000 fine or five times the amount of the financial inducement, whichever is larger. [more]