The owner of a New York-based title agency said members of his industry being vetted by a third party is an issue some in the community have not taken very lightly. There are firms going around to lenders promoting that they will check out their title agents and make sure they are in good standing.
“Mind you this is something that is already done by the (title) underwriters. The underwriters go into the title agent’s offices and they do audits. They do audits of recordings, they do audits of escrow and banking records, make sure that all of the mortgages and all of the other instruments get recorded promptly and properly, and they run credit reports on the people who work in the office,” Rafael Castellanos, the owner of Expert Title said.
For the most part, the underwriting companies are responsible for the actions of their agents. So why would a lender outsource that process to someone who is not familiar with the title process and is a function that is totally redundant, he asked rhetorically.
He said if anything, the lender should be contacting the underwriters of these title agents and asking them for that kind of information.
It is no secret there are title agent defalcations and situations where the agency abruptly closes shop. “Every time there is a tile agent that goes under, to me there is a huge black eye on the rest of the industry that makes us all look bad.”
But it is more of title industry issue for these kinds of audits of agents to take place, not a banking issue, Castellanos said.
Meanwhile, he said consumers should be leery if they are dealing with an affiliated business arrangement joint venture title producer because of possible conflicts of interest.
Such ventures are “unified in interests” between the owners and they have a financial reason to get the transaction closed, even if there is an issue on the title report that should be clean up first.
Another issue, he said, is how the report is actually being produced. The production is being outsourced to an off-shore location and things could be overlooked.
From the title agent’s perspective, companies like Expert are seeing less business for its services and the joint ventures are one factor.
Castellanos said that in the past, consumer used to go to their personal attorney when they started the refinance process and the attorney would order the title search. Nowadays consumers do not use lawyers.
“Then the bank would say, ‘Do you want us to order the title insurance for you, to make your life easier?’ And the homeowner is like, ‘oh yes, please do.’ Unfortunately, the independent title company is seeing a lot less business as a result of that,” he said.
On top of which some lenders have limited the number of title agencies they will do business with, he added.
The relationship between title agents and loan officers was better in the past because they were free to recommend the work be done by someone they knew would service the lender in a good way.
But now that discretion is out of the hands of the loan officer and instead being done out of a central location, and instead of a service mentality, convenience and costs became the buzzwords.
“Everybody likes one-stop shopping because it is easy. It is not necessarily better, it usually much worse,” Castellanos said.