OVERPRICED TITLE INSURANCE

If you recently refinanced your mortgage loan, you may have been overcharged for title insurance.

When obtaining the initial mortgage loan on a new property, lenders typically require borrowers to purchase a title insurance policy for the lender, insuring the lender against any risk of loss from title defects. While a comprehensive title insurance policy is required for the initial mortgage, the price of a title policy when refinancing should be much less. In a refinancing situation, borrowers should qualify for what is typically called a "reissue rate" title insurance policy that can often be less than half the cost of an initial title insurance policy.

Despite the availability of the policy at the reissue rate, title companies and their agents often fail to inform borrowers that they can obtain the cheaper policy. The consequence is the homeowner pays higher and unnecessary fees while the title company makes a higher profit. In fact, sales commissions on title insurance can range from between 75% and 90% of the total premium price. Thus, most of what a borrower pays for title insurance goes directly to the insurance agent as a sales commission, rather than to the title insurer. The greater the premium is, the greater the sales commission, and hence, a potential financial incentive not to disclose the availability of the cheaper policy is clear.

Zimmerman Reed P.L.L.P. currently represents homeowners in several lawsuits challenging lenders' and title companies' practices of overcharging for title insurance. If you recently refinanced your loan and were charged a title insurance premium, you may have been overcharged. If you would like us to investigate your possible claim for a refund, please contact J. Gordon Rudd at 1.800.755.0098 or Hart Robinovitch at 1.800.493.2827.