The American Title Insurance Industry: How a Cartel Fleeces the American Consumer |  | Authors: Joseph Eaton, David Eaton
Publisher: NYU Press
Category: Book
List Price: $41.00
Buy New: $36.90
as of 9/9/2010 12:16 CDT details
You Save: $4.10 (10%)
New (11) Used (8) from $20.60
Seller: Amazon.com
Rating:  7 reviews
Sales Rank: 1,248,152
Media: Hardcover
Edition: illustrated edition
Pages: 304
Number Of Items: 1
Shipping Weight (lbs): 1.2
Dimensions (in): 9 x 5.9 x 1.1
ISBN: 0814722407
Dewey Decimal Number: 368.8800973
EAN: 9780814722404
ASIN: 0814722407
Publication Date: August 1, 2007
Availability: Usually ships in 24 hours
| |
| Also Available In:
|
| Similar Items:
| |
| Editorial Reviews:
Product Description
"In this important and fascinating book, the authors expose a scam that has fleeced Americans of billions of their hard-earned dollars since World War II. The title insurance industry, they show, has captured its regulators, and imposed exceedingly high costs on American homebuyers by means of a cartel-like arrangement. If that arrangement can be broken, price gouging would end and all American homeowners would enjoy what Canadians and Iowans do-reasonably priced peace of mind."
--Robert E. Wright, Stern School of Business, New York University After World War II, banks and other mortgage lenders began requiring insurance to protect them against flawed or defective real estate titles. Over the past sixty years, the title insurance industry has grown steadily: policies are available for both lenders and property owners and many title insurers offering an array of other real estate services, such as escrow and appraisal. In The American Title Insurance Industry, Joseph and David Eaton argue that improvements in recordkeeping over the last sixty years-particularly the advent of computers-have greatly reduced the likelihood of a defective title going unnoticed in a property transaction. But they go on to charge that, beyond mere obsolescence, the title insurance industry is guilty of anticompetitive pricing, overcharging, and possibly fraud. Among the findings in this meticulously researched study are instances of insurers charging premiums well above the amount necessary to compensate them for assuming the risk of defect and identical policies with identical risk that vary in price by as much as 300 percent for different geographic locations. A landmark study for policy makers, elected officials, and all those involved in the insurance and real estate industries, The American Title Insurance Industry brings to light a long-neglected issue.
|
| Customer Reviews:
Showing reviews 1-5 of 7
 Nice to see those with a vested stake in the status quo chime in... September 23, 2009
P. D. MARTIN
0 out of 1 found this review helpful
Let's face it: Any form of insurance that pays 4% of claims to insurance premiums is "horribly inefficient," which is a nice way of saying that the insured is being bilked.
There is no getting around the math here; the fact that the rates are set by many states simply indicates, as is set out in the book, the degree to which the regulators have been co-opted by those they are regulating.
It is a hustle, played by people who live in the suburbs, and have been drinking the cool-aid for so long that they don't recognize their role in what amounts to a scam.
The book sets this all out; I'm sorry for those of you in the industry who suffer from delusions.
Fleecing Of America Exposed For What It Is February 2, 2009
Aaron Layman
1 out of 3 found this review helpful
Don't be fooled by the negative reviews from industry insiders! This book provides meaningful discussion for a corporate scandal that needs to be exposed for what it is.
I am a practicing real estate broker in Texas, and yes, Texas will be a very important test case for reforms that need to take place within the industry. It's no surprise that the title insurance industry would use the open door for lobbyists in Austin to its collective benefit. Texans are paying through the nose for an insurance product that is rarely, if ever needed. The Real Estate Center's own data show that premiums collected in 2007 were over $1.6 billion, while losses paid accounted for only 3.3%, or roughly $55 million of that sum.
The question Texans should be asking is, What happened to the other $1.5 billion that we paid? The title insurance industry is just another example of corporate greed in America, and it's time for voters to demand reform. Let the title companies open their books (all of them) and have them explain the administrative and marketing expenses and how these expenses benefit consumers.
There is no reason I should have to pay $1400 for a refinance title policy when Iowa can do the same thing for $90. What we have in Texas is promulgated price gouging. Our state legislators and insurance commissioner are simply turning a blind eye. The paltry rate reductions we have received over the past decade will pale in comparison to the cost savings that can be achieved if voters will take a stand and demand transparency in the title insurance industry.
Spread the word!
Aaron Layman
Aaron Layman's Katy Texas Real Estate Forum
 Broadstrokes...too broad for meaningful discourse August 2, 2007
E. Anania (Katy, TX United States)
9 out of 10 found this review helpful
1. I am positive there are abuses taking place in the industry
2. State regulation and pricing are WIDELY varied. Having purchased homes in Indiana, title insurance was cheap, efficient and valued. The same cannot be said in Texas. The cost is ABSOLUTELY BURDENSOME.
3. Reform and greater oversight are absolutely required.
Having worked outside the US in real estate, the author must address the comparative costs of home acquisition in the US compared to other countries. Though a consumer is charged for title insurance benefiting both the lender and purchaser at the time of closing; the long term cost of money in the form of interest rate is lower as a result of credit enhancements, such as title insurance, widely available in the United States that allow money to be available at a lower cost to consumer.
Lenders that cannot access credit enhancements at a low cost to the consumer, price the title risk into their loans. So, as an example, instead of a loan being available at 6% for 15 years; lenders will add a quarter point to the loan for title risk and make the funds available at 6.25% for 15 years. To have a truly meaningful review of the title insurance industry, there must be a discussion of the long-term cost of additional interest consumers avoid by paying a one-time premium.
Maybe one of the key reforms that should be undertaken is to significantly reduce the cost of title premium paid at the time of a refinance. This is one of the most objectionable practices I see daily in the title industry.
The author mistakenly argues that title agents retain too much of the title premium when issuing a title policy, especially when compared to property and casualty insurers. Such a sweeping statement cannot be maintained when comparing states and the wide disparity between percentages retained by agent and amounts remitted to underwriters. There are many states in which the agent ultimately takes the risk of writing the policy and justifies the agent keeping more of the premium.
If an agent makes a mistake in searching the property that causes a loss, by contract the underwriter will settle the loss with the insured. However, if the agent's negligence is the cause of the loss, the agent will have to pay the underwriter back for actual loss and expenses associated with the claim pursuant to their agency contract. This fact alone makes meaningful comparison to property and casualty insurers impossible. To quote loss figures of $.47/$10.00 as evidence of overcharging laughable and misguided.
I am confident that figure is close to accurate for underwriters, but is net of the underwriter's salvage from agents and those individuals who actually are responsible for paying the loss. To accurately gauge the claim ratio, the author must look to the amounts paid by agents as loss to gain a clearer picture of how much goes out in the form of loss and loss adjustment expenses paid by the industry to claimants.
Again the author shows why his lack of any meaningful experience in the industry is a glowing weakness in his book. Texas, cannot be used so widely to condemn the industry in the other 49 states.
There are many other instances to point out the author's lack of understanding of the function title agent's play...but that is the topic for another book.
Biased and one-sided September 17, 2007
B. Terry
2 out of 2 found this review helpful
Clearly the author has an agenda and skews his facts to justify his view. Someone just looking for the next industry to demonize.
Biased and Uninformed December 10, 2007
Louis Weltzer (Colorado, USA)
2 out of 2 found this review helpful
In their introduction, the authors state that this book is different from others written about the insurance industry because the others are by people who have some knowledge of the industry. These authors are experts in social policy and natural resources management; but they do not understand even basic concepts of title insurance, and it shows.
There are numerous footnotes and an extensive bibliography to give the impression that thorough research was undertaken. It seems, though, that the authors used (or "twisted") any information they could find to fit their preconceived notion that there are large title insurers making too much money. There is not even much pretense of objectivity.
It would be easy to present an extensive list of the misinformation contained in this book. It seems more useful to advise others to save their time and money and avoid the book. I checked it out from a public library, so it didn't cost me any money. I continued reading after the first two chapters primarily so I could repeatedly tell my wife, "You can't believe what this says now."
Showing reviews 1-5 of 7
|
|
|
