I was at a closing a little early last week and I read an article in Forbes while I was waiting for my clients to arrive and I have just been thinking about it ever since. The article was about Title companies and how they sell a largely outdated product for an inflated price and consumers are required to use them. It further went on to say that the largest offender (FA) who's market share is about $8 Billion Yearly gives away an exasperating amount of illegal kickbacks to Lenders and Realtors on a monthly basis.
The average Title policy in America, according to the article, costs consumers around $1400. Only $70 of this money goes to pay actual claims. The rest of the money pays for the overhead and sales people and generates a massive profit for these companies on a yearly basis.
The article argues that since Titles and Liens are all well documented by computers the chances of finding an error on Title have dwindled significantly and Title policies have in effect become outdated. The states could provide this service at a much cheaper rate to consumers and create the same amount of jobs. The only benefit from having Title companies, the article suggests, is the plethora of kickbacks it generates for the Real Estate Industry and for the profit of shareholders.
The article was compelling at worst and the more I think about it the more I agree. Anybody else out there feeling this way?
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