Title Insurance Scam v. 3: Local Service
Anyone following this blog (all 3 of you) has already seen some of my title insurance/settlement company rant. Basically, I believe these companies use deceptive business practices, cozy relationships (some no doubt illegal under RESPA), and scare tactics to keep regional prices fixed far above what they would be in an actual, competitive market. From where I sit, the proof that there's no real competition is that everyone charges the same thing.
Well, one of the arguments that the shills of the unhealthy status quo in title insurance use is the old used car-lot special "customer service." It's followed by the even more laughable "we want to build long-term relationships," side-splitter, but I won't bother poking holes in that one today, since even a grade-schooler knows that as soon as your settlement agency has picked your pocket for a few thousand bucks worth of unearned fees, you'll never see the guy again.
So, on to the customer service. You may recall that the agency that I'm stuck with tried to scare me out of using www.entitledirect.com by emailing me this warning:
xxxx xxxx provided me with a competitor's quote for your upcoming closing. While we are generally willing to match the fees offered by competitors, we do require that they be a local competitor. I went online to reach Entitle (as I've not heard of them) and found only 4 branches, none of which are located in Virginia. While I hate to place an additional burden upon you, their prices are well below even the "discount" settlement service providers who are generally avoided in the area. Just like any commodity -- you get what you pay for, and this is definitely true in the title business.
If you could provide me with a local contact for Entitle, I'm certainly willing to conduct some further research on your behalf. If you are considering another provider, I would highly recommend that you speak with your agent about many of the hazards and pitfalls of using a discount provider.
This was followed by breathless phone conversations where the lawyer representing the settlement agency stumbled over his words, suggested that I had no right to complain about prices, that I should take my concerns about his pricing "to your senator," and finished up by telling me what great service he provides.
It's easier to tell people that you provide great service than to simply provide great service, at least for this bag of donuts. As you may also recall, the estimates this agency sent me were obfuscated, didn't have proper HUD line numbers (making it difficult -- on purpose, I believe -- for me to compare costs) and didn't even include a proper total for the settlement agency's charges.
That was a big contrast with entitledirect.com, which sent me an easy-to-understand, full estimate in minutes.
Now that we're a few days closer to close, is the gap narrowing between those "generally avoided" discounters and the great service provided by the locals?
Big surprise, it's gotten wider. While entitledirect always answered my phone calls and emails promptly, and has an online system that allows you to see how things are progressing toward close, the local guys have been completely MIA.
Worse yet, the local guys are screwing up royal. The first actual HUD-1 estimate they sent me was missing several thousand bucks worth of fees that I know I have to pay the lender. They already had complete loan and lender information, yet somehow they didn't manage to transfer a few line items into their system. How's that for service?
So, 6 days ago, I told them I would need an updated estimate pronto, so I could have my bank (out of state) send me a cashier's check in time for closing. Nearly a week has passed, and not another word from these jokers. These are the guys who tried to tell me that they deserve their $1,000 overcharge because they provide such great service. In fact, their service has been bad, or nonexistant.
I am formulating a theorem. It's this: "If I can do your job better than you can do your job, you're not providing me with any service. And you don't deserve an extra thousand clams."
My spreadsheets provide me with a more accurate estimate of what total fees at close are going to be, and I only got familiar with the costs and the processes a couple of weeks ago. How is it possible that I can keep more accurate records than people who have been in the business for decades ("We've been around for a century," is a very typical claim from the title insurance script that they read you around here when you call to shop prices...).
It's possible because, in fact, they're not providing any high-level service or thinking. They collect giant fees up front and farm out the actual work to low-paid subcontractors or other flunkies who, being low paid, not so bright and/or under significant stress, simply don't do a great job. That would be fine by me if the prices weren't insane, but with title / settlement agencies keeping 80% to 90% of title insurance premiums, plus charging an assortment of fat fees for every step in the clearing process, I'm more convinced than ever that the title insurance and settlement business is an utter scam. The only reason it hasn't attracted more of the scrutiny it deserves is that 99% of people buying homes have no idea about this one last ripoff, and in the grand scheme of things, where the entire transaction costs hundreds of thousands of dollars, the couple of hundred or couple of thousand dollars stolen from them via junk fees seems like too little money to worry about.
But that's real money, coming right out of consumers' pockets at closing.
Please folks: If you're buying a house, be very careful about taking on a local settlement agency. Shop those out-of-state discounters that the locals warn you about, and save yourself a thousand bucks. In my experience, the highly-recommended local is proving he doesn't deserve his reputation, my cash, nor my trust.