Title insurance is one of the largest expenses when closing on a purchase or refinance, yet your members typically won't have a very good understanding of what it covers or costs.
Title insurance is required by virtually all lenders, Fannie Mae, Freddie Mac and the FHA on almost every real estate transaction, whether it's a purchase or a refinance. It protects the financial institution and homeowner from losses due to mistakes when deeds were filed in the local property office, unreleased liens, unknown relatives or others claiming ownership, to name a few.
When members are completing what's most likely the largest financial transaction of their lives, they want to know they are receiving value for every dollar spent. In the past, there has been very little price competition so there wasn't much point in shopping for title insurance or explaining it to members. However, now you and your members can comparison shop for title insurance and gain significant savings as a result.
By providing members with the best service at the lowest price, credit unions will have a competitive advantage. Take a few minutes to explain the importance of title insurance to each of your members. Let your members know that shopping for title insurance can save them hundreds if not thousands of dollars in closing costs. Help them look for a combination of low price and great service-after all, your members want their loan to close on time too!
These days, it's quite easy to shop for title insurance. To get started, just search on Google or another search engine for "title insurance" or take a look at www.Closing.com (but remember to sort by price-the default sort is location). You can also go to Bankrate.com's new site at www.FeeDisclosure.com. At these sites, you will find providers along with the ability to get quotes and compare for yourself (and for your members!).
Explain the difference to your members between a title insurance company and a title agency. If the provider is an agent, find out what insurer issues the policies. Then, research the companies to make sure they have a favorable Financial Stability Rating with Demotech, Inc., the leading title insurance rating company. Their Financial Stability Ratings® are accepted by Fannie Mae, Freddie Mac and HUD. Speak with the provider you choose before ordering. Also be sure to ask about service levels, geographic coverage and any other details that you or the lender may need to know.
Remember, according to RESPA your members have the right to select their own title insurance provider. You can provide the best service by offering your members choices. Keep in mind that the pricing in each state is different, as are the criteria for discounts. In addition, Texas currently offers no price competition as their rates are set by the state.
Members often arrive at their closing, never having seen their HUD1 and other mortgage documents. Jack Guttentag, the "Mortgage Professor," refers to the problem as "Pile of Paper Shock" or POPS. He explains, "POPS results from consumers being presented with a pile of documents at closing, most of which they have not seen before, and which they are expected to sign while the other participants tap their fingers impatiently." Share as much information with your members as possible. Some title companies offer web-based consumer friendly platforms for reviewing documents on line. This helps relieve consumer anxiety and creates an environment in which there are far less surprises at closing.
Set yourself apart from your competition by shopping for title insurance on behalf of your members. You'll save them money and have happy members which will lead to more referrals and closings for you.
Tim Dwyer is CEO of Entitle Direct Group, Inc., parent company of EnTitle Insurance Co. and ENTITLE DIRECT, a provider of title insurance and closing services sold directly to consumers. He can be reached at tdwyer@EntitleDirect.com or 203-724-1150.