An interesting article in the Times today about title insurance, Realtors, lenders and kickbacks.    

Sometime, during the late 80’s, I had a brief stint at Pacific Federal (the branch was closed in just a few months, which is another story).   Rates had plummeted from the 20’s to, probably about 13% and there was refi fever going on.  It was a tough time to be a lender: credit reports, which we were previously getting in a few days, were now taking double and triple that, preliminary title reports were now taking weeks, appraisals were taking forever.  We were locking in rates for 30 days and not able to close a loan in 30 days.  But, this is not the point.  

During this time, the loan officer (the loan originator) was selecting the title insurer on these refinances, and the only “kickback” I recall during this period is that one title rep was rumored to be giving cocaine for title orders.  I am fairly certain this was true.  Actually she was really cute, a red head, I still remember her name and the guys loved her!  When I started selling real estate, one title company was giving us free property brochures for our listings.  They had an in-house marketing department that would publish and print the brochures.   This later was decided to be a kickback.  It is a good thing that this business is  regulated. About five years ago, I heard of another title insurer that was paying for a Realtor’s child’s private school, and I think this too was true.  

The Times article is a real eye opener  because the cost of title coverage widely varies.  

Years ago, I worked with a title insurer which one time pulled a recording at the last minute.  This means that escrow is supposed to close and it doesn’t.  Typically this is because the title company waits until “the last minute” to look for tax liens and such. Needless to say, I prefer to work with a company that doesn’t leave my clients hanging… moving vans full of furniture and no where to go.

Yes, your Realtor often selects the title insurer, and your Realtor most likely has a favorite Title Rep.  Hopefully this selection is based on a relationship; someone they have worked with and have a rapport with.  The title rep, will pull permits and tax records for us free of charge.  But in working with one company, we establish a relationship and hopefully when and if there is a title problem, the insurer will honor the claim.