Tuesday, September 1, 2009

10 Things You Should Know about Title Insurance: Referral Fees Increase Premiums

Referral fees increase the cost of title insurance. The General Accounting Office recently reported that 5 percent of title insurance premiums went toward insurance claims. A far greater percentage (some reports claim 50 percent or more), went to real estate agents and mortgage lenders for referral fees. This practice is illegal and punishable by imprisonment and/or a fine, yet it's very difficult to regulate.

Home buyers' best protection against exorbitant title costs is education, simply knowing they have the right to choose their title company, asking about discounts and learning about what options are available . Not all title companies shell out referral fees, or kickbacks. In fact, some title companies cut out the middle man and credit the home buyer instead when he/she orders settlement services online directly from them.

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