ALTA Issues Statement in Response to Possible Scam

June 17, 2010

The American Land Title Association issued a press release Friday (June 11) in response to an organization’s investigation into the title insurance industry.

Americas Watchdog, through its National Mortgage Complaint Center, falsely claims the title insurance industry is overcharging consumers for several fees. These allegations gave ALTA an opportunity to explain the value of title insurance and warn consumers about groups such as these. It’s interesting to note that Americas Watchdog charges consumers more than $550 to review mortgage documents.

Below is ALTA’s response:


American Land Title Association Warns Consumers about groups that claim to save money on fees associated with obtaining a mortgage.

Washington, D.C., June 11, 2010 — Those who question the cost of title insurance lack understanding of the many detailed steps needed to produce a title insurance policy and the value of the consequent protection offered to homebuyers, lenders and investors, according to the American Land Title Association (ALTA).

“A great deal of work goes into the production of a title insurance policy,” said Kurt Pfotenhauer, chief executive officer of ALTA. “For a one-time fee, homeowners are protected against undiscovered liens on their home or challenges to ownership for as long as they or their heirs own the property. Other lines of insurance charge consumers annual premiums.”

Before a policy is issued, a trained title agent examines the history of a property contained in public records where problems turn up in one out of every three title searches. In order to make sure a homeowner has clear rights to a property, the title agent will scrutinize prior deeds or mortgages, divorce decrees, court judgments, delinquent taxes and child and spousal support payments, vesting, covenants, conditions and restrictions, general encumbrances, and utility or other kinds easements. The majority of the title insurance premium covers the cost to discover, identify and repair any issues discovered during this search.

“You never know when a lien may be discovered on a property and an innocent homebuyer is put on the hook for a previous owner’s debts. Whether it’s a purchase of a home or the refinance of a mortgage, the title insurance industry ensures that never happens,” Pfotenhauer said. “In its home loan shopping guide, the U.S. Department of Housing and Urban Development recommends that consumers purchase an owner’s policy to protect themselves from claims by others against their home.”

ALTA warns consumers about groups that claim to save them money on fees associated with obtaining a mortgage, but fail to mention their own costs. For a simple review of mortgage documents and inspection of existing loans, one group charges more than $550.

“This is just one more scam to fleece consumers by overcharging them with a service they don’t need,” Pfotenhauer said. Consumers have a choice in selecting the provider of their title insurance related services. They can either select their own title insurance company or take the recommendation of trusted third party, such as a real estate agent.

“The American Land Title Association is working to help make fees associated with purchasing a home more transparent and to educate consumers about title insurance so that they can better understand their choices and make informed decisions,” Pfotenhauer said. “We urge homebuyers, regulators and legislators to check out our consumer website,, to learn more about title insurance and the closing process.”

Contact ALTA at 202-296-3671 or