In the world of real estate closings and title insurance lurks an oft misunderstood concept we call the "Reissue Rate."� Simply put, a reissue rate is a homebuyer discount on the cost of an owner's title insurance policy. To obtain a reissue rate discount, the transaction must satisfy certain conditions from the title insurance underwriter.
The following sets forth the requirements along with the most common questions we encounter from homebuyers. (Our title insurance underwriter is First American Title Insurance Company, so for this discussion we will focus on their reissue rate discount guidelines. The reissue rate guidelines of other national title insurance underwriters may vary.)
How Do I Qualify for a Reissue Rate Discount?
A reissue rate is available to a homebuyer when:
1)�� �The seller has owned the property for less than ten (10) years; and
2)�� �The seller purchased an owner's title insurance policy within that ten (10) year period
Does Federal Title seek out a reissue rate discount on behalf of the homebuyer?
Yes. If the seller has owned the property for less than ten (10) years, Federal Title will search its underwriter's database for a prior policy and/or request evidence of a prior policy from the seller
Do I have to use the same Title Insurance Underwriter?
No. If the title company you selected underwrites through a different title insurance underwriter than the title insurance underwriter that issued the seller's policy, you still qualify for a reissue rate.
�
What is the Amount of the Reissue Rate Discount?
In Maryland and the District of Columbia, the homebuyer receives a 40% discount based on the prior policy (seller's policy) coverage amount.
For example, let's say a homebuyer needs a policy to cover a $500,000 purchase, while the seller's existing policy coverage amount is for $400,000. The 40% reissue rate discount would apply to the first $400,000, and the homebuyer would pay full price for the remaining $100,000.
On standard owner's coverage for a Maryland property, this would amount to a savings of approximately $504. Here is a breakdown of the dollar amounts using Original Title Insurance Premium rates on a $500,000 purchase in Maryland and Standard Owner's Coverage:
Reissue rate discount
| Total
| NO reissue rate discount | Total
|
Policy coverage for first $400,000
| $1,397.50
| � | � |
Reissue rate discount (40%)
| ($559.00)
| � | � |
Policy coverage for first $400,000 w/ reissue rate discount
| $838.50
| � | � |
Policy coverage for remaining $100,000
| $370.00
| � | � |
Policy coverage for$500,000 with reissue rate discount
| $1,208.50
| Policy coverage for $500,000 without reissue rate discount
| $1,712.50 |
Assuming the homebuyer qualifies, what is the average reissue rate discount?
Of course the answer to this question depends on the purchase price (new coverage amount) and the seller's original purchase price (prior coverage). However, according to Federal Title's internal analysis of nearly 20,000 transactions over a 15-year period, the average reissue rate savings by purchase price point is as follows:
Purchase Price
(New coverage amount)
| Average Reissue Rate Savings
(District of Columbia)
| Average Reissue Rate
Savings (Maryland)
|
$300,000
| $373.00
| $266.00
|
$400,000
| $546.00 | $390.00
|
$500,000
| $705.00 | $503.00
|
$600,000
| $864.00
| $616.00
|
$700,000
| $998.00
| $712.00
|
$800,000
| $1,132.00
| $807.00
|
$900,000
| $1,265.00
| $903.00
|
$1 million
| $1,400.00
| $998.00 |
�
How often is the reissue rate applied to real estate transactions in the DC Metro Area?
The reissue rate discount is applicable in approximately 65% of all transactions. The other 35% of the time, the homebuyer doesn't qualify for the reissue rate at all (since seller has owned for longer than 10 years).
Federal Title's REAL Credit™ is applicable in 100% of real estate transactions.
�
How does Federal Title's REAL Credit™ stack up against the average reissue rate savings?
Federal Title always provides homebuyers with the most savings. More often than not our REAL Credit™ gives higher savings compared to a reissue rate discount. In cases where the reissue rate savings exceeds the REAL Credit™, we apply the reissue rate savings.
Below is a comparison of the average reissue rate savings vs. our REAL Credit™ for purchases in the District of Columbia.
The comparison we provide between REAL Credit™ v. Reissue Rate is a comparison ONLY of those transactions in which the seller owned for less than 10 years. In other words, if we were to use an average reissue rate savings of ALL transactions, the dollar amounts would be much lower.
Purchase Price
(New coverage amount)
| REAL Credit™ savings
(District of Columbia)
| Average reissue rate
savings
|
$300,000
| $700.00
| $373.00
|
$400,000
| $900.00
| $546.00 |
$500,000
| $1,000.00
| $705.00
|
$600,000
| $1,100.00
| $864.00
|
$700,000
| $1,100.00
| $998.00
|
$800,000
| $1,100.00
| $1,132.00
|
$900,000
| $1,100.00
| $1,262.00
|
$1 million
| $1,100.00
| $1,400.00
|
Below is a comparison of the average reissue rate savings vs. our REAL Credit™ for purchases in the Maryland.
The comparison we provide between REAL Credit™ v. Reissue Rate is a comparison ONLY of those transactions in which the seller owned for less than 10 years. In other words, if we were to use an average reissue rate savings of ALL transactions, the dollar amounts would be much lower.��
Purchase Price
(New coverage amount)
| REAL Credit™ savings
(Maryland)
| Average reissue rate
savings
|
$300,000
| $500.00
| $266.00
|
$400,000
| $600.00
| $390.00
|
$500,000
| $800.00 | $503.00
|
$600,000
| $800.00
| $616.00
|
$700,000
| $900.00
| $712.00
|
$800,000
| $900.00
| $807.00
|
$900,000
| $900.00
| $903.00
|
$1 million
| $900.00
| $998.00
|
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While the coverage under the Standard policy is broad, the policy form excludes coverage for certain matters that are traditionally outside the scope of a title search of the public records.� One of those excluded matters concerns existing encroachments of structures or encroachments created subsequent to the date of the policy.� In other words, the Standard policy includes an exception for survey matters.
As a homebuyer, you should familiarize yourself with the concept of mortgage fraud in its many forms. 
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