Opinion: Property insurance is vital to protecting the American dream

As someone who has had a career in the title insurance industry – both as a title business creator and as a leader in the industry trade group – I am proud of the role we play in helping protect what most Americans do. consider it the biggest purchase of their lives.

Property insurance is imperative for creditors to ensure that the borrower has property rights over the property, but not only protects against property rights issues. It plays a key role in the home ownership economy, ensuring that credit reaches those who need it and providing guarantees to those who give it. Capital markets depend on the due diligence, transparency and protection that our industry provides to do its job.

In fact, our industry is so important that during the COVID-19 pandemic, title insurance professionals were considered important by the federal government. Their hard work kept much of the economy working in difficult times, when buying a home meant more than ever.

At the same time, our industry has helped consumers take advantage of low mortgage refinancing rates. When refinancing, homeowners receive a new loan and lenders require a new title search and a loan insurance policy to protect their investment. Professionals search and review documents, with title companies regularly providing a discount or “reissue rate” on refinancing.

Discounts may also be available if you use the same lender that issued the original loan. And as home ownership remains unchanged, homeowners’ property insurance policy is valid through refinancing.

Why is it necessary to search for a refinancing title? In short, even if someone has recently refinanced, there may be problems that the lender needs to be aware of before approving a new loan. For example, a homeowner may have seized a contractor who claims he has not been paid. Or a homeowner may have a sentence for his or her house due to unpaid taxes, homeowners’ association fees, or child support. The borrower may also have encumbered the property with loans that were not disclosed when applying for refinancing.

There are other problems that may arise between the occurrence and the refinancing:

  • Easements created by contract or by use or adverse prescription (eg., right of way for utilities, rights acquired by neighbors due to encroachment on a fence);
  • Restrictions on construction or use contained in a recorded platform, agreements or acts;
  • Insolvency rights or claims;
  • In some states, unpaid parking tickets;
  • Cases recorded between parties that do not currently reflect property; or
  • Fraudulent documents have been registered against the property.

Real estate is a $ 3 trillion industry in the United States. There has been a lot of innovation around buying homes, lending and closing real estate deals. This innovation is positive for consumers. However, sometimes innovators may misrepresent products or confuse. They point to the low benefit ratios as proof that property insurance is not necessary. Not only is this not true, but it is a fundamental misunderstanding of what title professionals do and how our take on rights protects this work.

The low complaint ratios are proof of the work our agents are doing to remove items before until closing. It is this work that keeps the cost of our insurance low and protects the owner and creditor from problems that might arise. if not for the work we do before closing – problems that could be detrimental to the homeowner’s credit and the lender’s investment.

While this is clear to active industry players, it may not seem intuitive to homeowners buying or refinancing for the first time. That is why we are making efforts to explain the process. Through American Land Ownership Association and government associations, the industry continues to develop new tools to help consumers understand the role that property insurance plays in closing, the benefits of property insurance, and how to buy property insurance. The best resource for users is the comprehensive ALTA home closing website, homeclosing101.org.

The work that professionals do every day is crucial to defending the American dream. And the work our industry is doing to make the closure process faster and easier is a critical part of the overall economy. All players in this economy need to engage in good faith talks – with facts and figures – to improve our industry’s offerings.

As the economy and housing market begin to slow, we must avoid the temptation to move away from well-regulated products, which are a key part of protecting creditors and homeowners. The recent housing crisis has shown that strong insurance standards are crucial, especially during a downturn. But it is never the right time to take on new and unknown risks that will ultimately increase costs and be detrimental to consumers and creditors.

Mary O’Donnell is the CEO of Westcor Land Title Insurance Co. and former president of the American Land Ownership Association.

This column does not necessarily reflect the views of the HousingWire Editorial Board and its owners.

To contact the author of this story:
Mary O’Donnell c [email protected]

To contact the editor responsible for this story:
Sarah Wheeler c [email protected]

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