The American Title Insurance Industry: How a Cartel Fleeces the American Consumer

The American Title Insurance Industry: How a Cartel Fleeces the American Consumer

The American Title Insurance Industry: How a Cartel Fleeces the American Consumer

The American Title Insurance Industry: How a Cartel Fleeces the American Consumer

Excerpt

Capitalism relies on a free market to establish prices, reward innovation and efficiency, and balance the needs of buyers and sellers. In the United States, however, firms that sell real estate titles to property owners and mortgage holders are an exception. Their trade organization, the American Land Title Association (ALTA), lobbies strenuously against any plan to allow market forces to influence the industry's price structure. The tile insurance industry, which will be analyzed in this book, is one of America's most highly regulated and legislatively protected business niches. The status quo is increasingly being criticized by consumer-oriented reformers. The resulting public policy differences reveal how greatly the American market economy can be modified when elected officials, irrespective of political party, are under the influence of efficient lobbyists.

In the southern counties of New York State, a lender policy for a $500,000 home costs $2,142. The optional owner policy, if purchased at the same time, costs an additional $633. The total cost of “only” $2,775 would have been 15 percent higher in 2006 but for the fact that Eliot Spitzer, then the state attorney general, had pressured the industry to accept a 15 percent reduction of its fee schedule. He took the position that the premium schedule in New York State was excessive.

In Iowa, nearly identical lender and owner policies are being marketed profitably for only $115.

There is no evidence of a criminal conspiracy to achieve state government support for New York's high mandatory premium schedule. It is even higher in some other states. The title insurance industry is owned and operated largely by respected citizens and investors. They take advantage of the fact that in a democracy, elected officials are . . .

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