Title Insurance Fraud

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

I was reading that there have been some recent cases of Title Insurance companies who overcharge customers and then kick back a portion of the premiums to the lenders, real estate brokers or builders that brought them business.

This is another case where people are faced with trusting people they don't because they face making such a purchase rarely, so they have no experience in dealing with such companies or who to ask. Fortunately, we have places like this :D where hopefully people will read and get educated so they don't get bamboozled.

Any advice you would give?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Best advice: Be informed.

My first employer did this on appraisals, solely on his end. I wouldn't be surprised if he was getting something like this back from the title company as well..

capnmorgan5555 · Joined: 29 Jan 2005 Posts: 29

This type of thing is hard to detect unless you shop around and find out that you are paying more for the lender or whoever directed service provider.

There is a lot of this going on. Realtors expecting kick backs from lenders, title companies etc... and lenders and title companies paying them.

It's another case of buyer beware. There are rules in place to prevent this but there is very little enforcement, although that there seems to be more enforcement lately.

Personally, I think a bigger problem is the unscrupulous lenders that partake in false advertising and then lie there tails off, promising a lower rate and low closing costs only to jack up the buyer at the closing table. This happens a lot and nobody really says or does anything about it. The Good Faith Estimate is a crock with no recourse if it is off by $1 or $5,000 and rate locks can easily be broken by the lender and the buyer is left with a bad taste in their mouth about the ENTIRE INDUSTRY.

My personal favorite lately is the 1.75% Fixed Loan. No other disclosures, no rate and payment may change after consummation hell they don't even advertise the APR in the same font type and size as the rate. I have reported these yahoos in the past and nobody does anything about it. I even saw the 1% 30 Fixed mortgage. Think about that. 30 Fixed- yea, it's fixed for 30 days, do you think the consumer knows that?

Sorry just venting.

David, I have seen that you like to bring up different topics about the biz so I thought I'd throw out a couple you don't ever hear or read about but really give the industry a black eye.

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

Quote: David, I have seen that you like to bring up different topics about the biz so I thought I'd throw out a couple you don't ever hear or read about but really give the industry a black eye.

Thanks for your contribution. I hope it doesn't seem that I am trying to give the industry a black eye. Right now, I am somewhat in a learning phase, and I am just asking a lot of questions. I really want this forum to be a good resource for people, and I hope to cover many of the important areas over time.

capnmorgan5555 · Joined: 29 Jan 2005 Posts: 29

David,

It wasn't a slam on you. I understand you aren't a mortgage guy and are asking these questions for your benefit and to hopefully bring in more traffic to your site- hey that is what you do.

I was just throwing out a couple other things that really hurt the consumer more than some of the topics you have brought up.

I would think that a forum like this that you could control which mortgage pros were answering questions would be good for the public to come ask questions and have TRUE mortgage pros answer them.

chow · Posted: Sun Feb 27, 2005 9:43 pm Post subject:

I'm doing my part. I drug the President of the National Mortgage Brokers Association over for a peek and to get Becca some help on her weird commerical loan(s). :P

I hope he ends up helping her. I have a bet with another broker who looked at it too. I bet Bob ends up teaching us a trick ot two!

My usual hangout is really on the mean side, so I have slowed down posting there. It's really beginning to get out of control. I don't know if it's worth getting too involved with too many of them. The only reason I went back last week was to find out if Nikko had been beaten to death yet! :wink: (yes Nikko, you do have a habit of saying the wrong things at the wrong time-or wrong way!) :lol:

Mac · Joined: 04 Feb 2005 Posts: 276 Location: Knightdale, NC

David, the mortgage industry is rife with fraud and or kickbacks. In all aspects of it.

There is no condoning it or excusing it. There are so many factions involved in the transaction and so many ways for someone to skim another dollar, I don't know of any single broom that will sweep the house clean of it.

The best thing to remember when going through the mortgage transaction is to question everything. If it seems out of place, ask. If the cost seems exorbitant, negotiate. Of course this advice is good for any transaction. It's just that there is a lot more money flying around in the mortgage industry than most others.

In my opinion, the hardest thing to hide is a money trail. A few dollars is not worth the possibility of losing one's livelihood, even if it were thousands of dollars.

You would take a used car you wanted to buy to a trusted mechanic for a thorough going over before purchase, right? You'd also get a second opinion when your doctor said you needed an extreme operation too. So why wouldn't you get a second opinion in regards to questions you might have on a Good Faith Estimate? If the Settlement Statement (HUD-1) didn't match up pretty closely to the GFE, all things considered, don't sign until you are satisfied. Throw any pressure you may get from anyone else (realtors, brokers, attorney, etc) out the window. It's your home and your financial outlook at risk. Tell them all to take a flying leap at a rolling donut until they come back with the terms you agreed to.

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

Thanks, Mac. I like the way you explained that.
Do you suppose, for example, it would be helpful for someone seeking a mortgage to actually post their Good Faith Estimate online for review?
Or I would love to see an example of such a document that would identify places that should be questioned. I think that would be really helpful.

Mac · Joined: 04 Feb 2005 Posts: 276 Location: Knightdale, NC

I dunno if there is a place to post it and I don't know if it would be such a good idea anyway. Too many people with identity theft and other nastiness in mind.

The simplest way would be to show the GFE to another "trusted" broker and ask their opinion while giving them a full accounting of the loan scenario as you know it to be.

Asking your Attorney or Realtor wouldn't help because they don't have the experience to know what all is applicable given the various circumstances involved.

A good example would be a situation that Nikko recently had where the lender required 2 separate appraisals for a specific type of loan. It is considered common practice for this loan to have 2 independent appraisals but someone not in the industry wouldn't know that and would say that you were being ripped off.

Mac · Joined: 04 Feb 2005 Posts: 276 Location: Knightdale, NC

David, here is a link to a relevant article on this subject.

http://www.respanews.com/