Home Mortage Closing Costs: Bait & Switch, Is It Legal?

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.

You spitballing that it has a low risk means nothing. I have life insurance. I'm 36 and outside of some heartburn I'm as healthy as a horse. I don't pay the life insurance because of why I don't need it now. I pay for it because there's a chance I may.

You need title work done period. That attorney may be jerking around the costs but you are free to use your own title company. You retain the right of that choice. Anyone telling you different is blowing smoke.

But you have to have that title cleared and that work insured. Regardless of how "low" the risk is in your opinion. shite happens every day. I have dealt with issues where people came back with title claims for all sorts of issues during the curative process for them. Deals that were smoother than silk were total baths for me after weeks of work.

It happens. Like shite.

My advice: shop costs via title agencies. A lot of them know each other so don't make it personal or trash anyone. But stop kicking the tires on a legal process based on your personal assumptions. You're half right here. He may be pumping up costs to build in profit. But title work is necessary regardless of your opinion on the level of risk.

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?

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I have never had the attorney closing the sale alter the terms. Yours did.

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His attorney did not change the terms. He chose to only purchase a lender's policy.

Go to this site for a rate calculator. LINK

Again, if you purchase both at the same time, you get a discount on the lender's policy.

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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.

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I think you are way off base here. In fact, I know you are.

We bought our house 16 years ago (Baton Rouge) and declined owner's title insurance. Price of the lender's insurance did not change.

What title company did this, not that I think they did anything wrong? I do think the attorney could have possibly explained it better since you are obviously confused. Title insurance rates are regulated so you should pay the same rates no matter where you go.

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.

The attorney told me the "doc prep fee" was added due to the increased risk on the company since I declined the owners insurance. I responded by telling him that the premium/policy was mispriced because I should not be forced to pay for "supplemental insurance" in the name of a doc prep fee. Looks like they tacked on a fee because they lost out on some commission. This is the main reason I ask. It seems as though the fee was arbitrary and they charged me because they could.

I'm going through the closing process, and here is how it was explained to me.

The work to be done is basically the same whether you buy lender only or whether you buy lender and owner. The additional cost for an owner policy is minimal - as there really isn't any additional work to be done.

The comment about "additional risk" does not make sense.

What I don't understand is why they don't just list the cost of the lender policy with all costs, and then put a very small cost on the owner policy - since in reality, that's what it is.

I don't think this is a bait and switch. Your GFE isn't a menu of items to choose from... it's a list of costs for a particular situation. Your situation changed.