California Regulators Approve Reduction in Title Insurance Cost

The California Land Title Association announced that state insurance regulators had approved new pricing for title insurance products that will cut the premiums of a policy to as low as $275 for a refinance or $85 for home equity line transactions.

So far, the regulators have approved the rate reduction requests from First American Title back in November 2002 and more recently from Fidelity National Financial, Irvine, Calif., and its subsidiary, Chicago Title. Other underwriters are expected to follow.

California is the battleground for Radian Lien Protection, an alternative to title insurance that is in large part aimed at these types of transactions. Radian Group says RLP can save the state's consumers approximately $273 million this year. However, an administrative law judge has upheld a ruling that bars Radian from offering RLP in that state. The judge did not buy Radian's argument that RLP is mortgage insurance pool product.

The judge said RLP is title insurance and Radian is not licensed to offer title insurance. Under California law, if Radian offers a banned product anywhere in the U.S., it cannot do any business in California.

A spokesman for CLTA said the move was not so much a reaction to Radian. Rather, "title companies are reacting to the same pressures and same opportunity that Radian is."

Lenders, especially those not charging points and fees to the customer, are looking at having to pay less of the settlement services costs themselves.

CLTA executive vice president Larry Green said, "Our member companies continue to respond to the needs of the booming real estate marketplace in California by utilizing technology to drive down prices across the board. These new products build upon the discounted rates that title companies have been offering for many years on mortgage refinances and home equity loans."

Cliff Morgan, a senior vice president at Santa Ana-based First American, said the process of reducing rates for refinanced loans and home equity products had been going on for several years at the company. "We've had a number of rate reductions and I'm sure this won't be the last," he commented.

In 1998, the company instituted a 30% premium cut for refinancings. In 2000, it filed a senior citizens discount with regulators and later that year additional refinance discounts. Finally, in November of last year, it filed the rate changes mentioned by CLTA.

First American has filed for reductions in a number of other states besides California.

He said there are a number of items that are considered when setting rates for different jurisdictions. This includes the ease of access to the data, the depth of the database and the use of technology in the record keeping process.

For example, in New England, in most cases the record keeping is archaic, and the records are kept by each individual town and can be difficult to access. This makes the process more expensive for that area.

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