House Subcommittee to Survey Title Insurance Industry
April 25, 2006
The Subcommittee on Housing and Community Opportunity, chaired by Rep. Robert W. Ney (OH), will convene on Wednesday, April 26, at 2 p.m. in room 2128 of the Rayburn House Office Building for a hearing on competition, pricing, and recent investigations of illegal activity in the title insurance marketplace.
On January 24, in response to the state and federal investigations, Committee on Financial Services Chairman Michael G. Oxley (OH) asked the General Accountability Office (GAO) to conduct a comprehensive study of the title insurance marketplace. In the letter to the GAO Chairman Oxley wrote,
“The Financial Services Committee is concerned about recent investigations by state regulators revealing that title companies have made payments for referrals to developers, mortgage lenders, and real estate agents in violation of the Real Estate Settlement Procedures Act. Other investigations have revealed abuses of reinsurance agreements that have forced title companies to pay millions of dollars in settlement, and have uncovered anti-competitive practices within the title industry.”
Subcommittee Chairman Ney said, “In today’s dynamic real estate market, title insurance plays an important role in the home buying process. For this hearing, we have brought together a balanced panel of witnesses that will focus on the title insurance marketplace and the need to create more competition and efficiency for consumers.”
Title insurance is designed to protect homeowners and lenders from potential claims to their property. It helps protect against the risk that the property may be encumbered at the time of sales by unknown rights and claims asserted by others. Title problems can limit a homeowner’s future use of their real estate and threaten the security interest that a mortgage lender holds on the property.
Title insurance is sold primarily through title insurance agents and is a required element in almost all personal real estate transactions. Even with its prevalence, consumers generally do not have the knowledge needed to research title insurers and compare services. Instead, most consumers use the title insurer and agent selected by whomever is arranging the closing.
Chairman Oxley said, “Thanks to strong economic growth and historically low interest rates, the real estate market has boomed during the last several years. It is important that this vital area of growth is opened to competition and that consumers get fair value for the services they purchase.”
Scheduled to testify:
- Erin Toll, Colorado Deputy Insurance Commissioner of Compliance and Market Regulation; Co-Chair of the National Association of Insurance Commissioners’ Title Insurance Working Group
- Gary M. Cunningham, Deputy Assistant Secretary, Office of Regulatory Affairs and Manufactured Housing, U.S. Department of Housing and Urban Development
- Orice Williams, Director of Financial Markets and Community Investment, Government Accountability Office
- J. Robert Hunter, Director of Insurance, Consumer Federation of America
- Douglas Miller, President and CEO, Title One, Inc., Bloomington, MN
- Arthur Sterbcow, President, Latter & Blum Realtors, New Orleans, LA
- Thomas M. Stevens, President, National Association of Realtors
- Rande K. Yeager, President, American Land Title Association 2006; President and CEO, Old Republic National Title Insurance Co.
Source: House Financial Services Committee