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Started By
Message
Home Mortage Closing Costs: Bait & Switch, Is It Legal?
Posted on 2/24/15 at 5:39 pm
Posted on 2/24/15 at 5:39 pm
I think I had the wool pulled over my eyes by the title company's closing attorney involving fees associated with title insurance. The company issued the original estimate that included both the borrower and lender title insurance at the rate of $1250 for owner's title insurance and $325 for Lender's title insurance. I declined owner's title insurance and they raised the rate of Lender's title insurance by $800 and added a fee of $250 for "Doc Prep Fee". The lawyer told me he had to charge me this fee "due to the increased liability assumed for performing the work without a Owner's policy". This fee was not previously disclosed.
Is this legal?
Is this legal?
This post was edited on 2/24/15 at 5:50 pm
7
Posted on 2/24/15 at 6:05 pm to nhassl1
Isn't title insurance fees a regulated thing? The price is the same no matter what company you choose.
I was told that if you did both, then the costs would be pretty split, but if you only did lenders, than most of the cost would be on that one. In other words, the same amount of work is done, whether you do both or just lender coverage. So, in effect, despite how the price is laid out on the GFE, it only costs a little more to get owners.
I'm curious why you are turning down owner coverage, though.
I was told that if you did both, then the costs would be pretty split, but if you only did lenders, than most of the cost would be on that one. In other words, the same amount of work is done, whether you do both or just lender coverage. So, in effect, despite how the price is laid out on the GFE, it only costs a little more to get owners.
I'm curious why you are turning down owner coverage, though.
Posted on 2/24/15 at 8:29 pm to nhassl1
Lender's title insurance is more expensive if you buy it alone. If you do both lender's and owner's the lender's is a flat figure plus any required endorsements.
ETA: I don't think you really understand the concept of bait and switch. Quotes were given and then the particulars of the insurance product being purchased changed. Another quote was given. That's not bait and switch.
ETA: I don't think you really understand the concept of bait and switch. Quotes were given and then the particulars of the insurance product being purchased changed. Another quote was given. That's not bait and switch.
This post was edited on 2/24/15 at 8:31 pm
Posted on 2/24/15 at 8:31 pm to nhassl1
First, when you buy both an owner's policy and lender's policy together, you get a simultaneous issue rate. Not sure of the underwriter, but for one of the big national ones, if you buy them together, you pay the cost of the owner's policy plus $100 extra for the lenders. It's a major discount and an incentive to buy both.
Second, many title attorneys eat some of the cost of doc prep and other costs they incur when they issue a title policy. When they don't issue the policy, they need to make up for those costs.
Third, the cost of the policies are regulated by the department of insurance in Louisiana. You can check the rate tables for most national companies online.
Finally, your second post states that it is in a subdivision and a "straight line title" owned by the seller. This means nothing in regards to clear title. Sure, there may not be any issues with regards to the dimensions or servitudes affecting the property, but you have no idea what judgments or liens have been recorded against the seller. Also, he may have granted and option or right of first refusal, a donation, or a usufruct that affects the property. Also, how did he acquire the property? Was it through a succession? Was there previous title work done?
The attorney can rely on the public record, but what if there is a lawsuit down the road that invalidates the previous acquisition by the seller? Then you have a claim against your property that the title attorney is not responsible for. Are you ready to defend that claim?
Second, many title attorneys eat some of the cost of doc prep and other costs they incur when they issue a title policy. When they don't issue the policy, they need to make up for those costs.
Third, the cost of the policies are regulated by the department of insurance in Louisiana. You can check the rate tables for most national companies online.
Finally, your second post states that it is in a subdivision and a "straight line title" owned by the seller. This means nothing in regards to clear title. Sure, there may not be any issues with regards to the dimensions or servitudes affecting the property, but you have no idea what judgments or liens have been recorded against the seller. Also, he may have granted and option or right of first refusal, a donation, or a usufruct that affects the property. Also, how did he acquire the property? Was it through a succession? Was there previous title work done?
The attorney can rely on the public record, but what if there is a lawsuit down the road that invalidates the previous acquisition by the seller? Then you have a claim against your property that the title attorney is not responsible for. Are you ready to defend that claim?
Posted on 2/24/15 at 8:34 pm to nhassl1
I have purchased 5 homes thus far and never bought title insurance for my homes.
I believe you may have a case. The form you were given as a quote is a federal form (look at the top corner of the form) and you should check further to see what rights you have.
I have never had the attorney closing the sale alter the terms. Yours did.
I believe you may have a case. The form you were given as a quote is a federal form (look at the top corner of the form) and you should check further to see what rights you have.
I have never had the attorney closing the sale alter the terms. Yours did.
Posted on 2/24/15 at 8:46 pm to nhassl1
Rates for the title insurance premiums are set by statute and are based on the purchase price or loan amount. Other costs can be padded but not the premiums. Mortgage company will make you buy lender's insurance but not owner's insurance. Set into the rate is a discount if you buy both. Lender's ins. will be more than $325.00 if you don't buy it with an owner's policy. Might as well just buy both. Some people take the attitude that if the title is good enough for the bank it is good enough for me, but strange things can happen. Doc prep fee can be expected. If you decline the owner's policy, they will make you sign a waiver and hold harmless clause.
Posted on 2/24/15 at 8:52 pm to nhassl1
We bought our house 16 years ago (Baton Rouge) and declined owner's title insurance. Price of the lender's insurance did not change.
Posted on 2/25/15 at 6:37 am to nhassl1
Next time text me and I'll refer you to a good title atty that will explain it better to you. That said I have no idea if you got screwed.
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