Mortgage brokers, loan originators, and real estate agents have all been warned NOT to accept any inducements from title insurance companies. Giving OR receiving an item of value in exchange for a referral of a federally related loan is already illegal under RESPA. However, HUD auditors do not routinely wander around inside real estate offices and mortgage companies checking out the latest title insurance company give-a-ways. A law without inforcement is basically like having no law at all. Most of the enforcement has been left up to state regulators. Read this blog post for more details.
Do you believe this new law will help level the competitive playing field within the title insurance industry? If yes, why? If no, why not?
I do not believe this new law will help level the competitive playing field within the title insurance industry,in fact it may make it less competitive. Brokers/LO’s are going to use Title Companies that they have built relationships with. To gain and attract new business a Title company will have to entice the LO’s/Brokers to try them and if I already have a company that I enjoy working with, the only way to get me try a differnet company might be to entice me with a some sort of incentive. I try you and determine if your service was up to par with my preferred Title Company.
Now I may as well stick to my preferred Title Company. If ain’t broke, why try another company?
No, I don’t think it will matter. It is all about relationships that have been built up over time. For the newer people in real estate or mortgages it will be up to the title company to provide good service and value to attract new business.
I think that the relationship between broker and title company should be based on service. With that said, I think this will level the playing field, in that brokers will be forced to focus on the service that they’re getting rather than the gifts they were receiving in the past. I really doubt if the title reps. can no longer provide perks, that the brokers/LO’s will continue to send them business if their office isn’t cutting it for time and accuracy. I can’t count the number of times I’ve been forced to use the listing agent’s title and/or escrow company, who can’t tell their left from their right. It gets very frustrating.
The blog also said that using the same title/escrow company may target you for an audit…but why would you use anyone else if you’re happy with the service you’re receiving? A good, reliable escrow company is VERY hard to come by.
I strongly disagree with Stephanie that “a good, reliable escrow company is VERY hard to come by.” I know of several in Western WA, and each one would welcome ethical brokers/LO’s to direct business to them.
And by the way, stop looking for “good, reliable escrow” services in companies that have their hands in another pot that is part of the transaction, i.e., the mortgage broker or the title company that also do escrow in addition to their main cash cow business.
The “good, reliable escrow” companies tend to have several characteristics in common: (1) they are licensed (title companies are not); (2) they are owner-operated, and the owner is usually also the Designated Escrow Officer; (3) the licensed, owner, Escrow Officer tends to have somewhere around 10+ years experience in closing; (4) they very likely have never had a claim … ever; ask them; and (5) they tend to be service-oriented, over the top givers for the well being of their customers. Finally, (5) they understand the meaning of “neutral third party.”
By their own admission, the WA State Office of the Insurance Commissioner admits it has not audited a single title company escrow operation in 2008 … falsely and lamely claiming they don’t have the authority. Give me a break!
Mortgage companies use escrow and title companies that are good at what they do and are honest. The relationship is built on time and trust not kickbacks. I am sure some companies were making a lot of money off each other by steering clients but I have not seen it where I work.
My first impression of this law, before researching further was that it likely wouldn’t make much of a difference. Perhaps that is because I didn’t realize the extent that some people were benefitting from these these title company gifts. Yes, I think this law should help create a level playing field in the title industry. It may take some time, as past gifts likely cemented a lot of relationships that will continue for some time, but over time, I feel this regulation will promote an environment where relationships are based on services, which is as it should be.
Well, this could get tricky. Yes, it is going to curb enticements to some degree but this is only talking about monetary value. What about time. Can’t this force Title & Escrow to ‘push’ certain LO’s files in front of others. They could certainly entice an LO by having their files move faster than others. Title & Escrow know how important it is to LO’s to close quickly. This form of inducement is not mentioned but should have been addressed. They will find ways around it.
This might be off topic but what about appraiser’s offices? They bring in gifts, lunches, etc. Shouldn’t they be subject to the same law of doing business in WA?
I don’t think that this will change the playing field. There are only a certain amount of title companies in the area. I have never paid attention to the goofy trinkets that are showered upon brokers by vendors. It has always come down to service and fees. Key chains and coffee doesn’t matter if I can’t get the them to the closing table.
I think that this will be difficult for the state to monitor and correct.
I don’t think this will change a thing. It’s all about relationship and the ones who want to take a chance are going to take that chance another intergrity thing. like Denise it’s not about the trinkets, it’s about service and fees. I don’t know how the State thinks it can monitor all of it. I’m sure allot of this goes on and nothing will change for those who want to continue bucking the system
There must have been some particulary serious violations that prompted this law. Wouldn’t it have been easier just to make all title/escrow company owners take a 30 hour class on RESPA?
Like the other comments above…my choice of which company to use for a refinance transaction has always been based on the quality of service and competitive fees. The playing field has always been level in my community.
It seems like the State has bigger problems to worry about right now.
Wow – I pretty much agree with everyone above. I dont believe it will change a thing. Denise you summed it up for me…”Key chains and coffee doesn’t matter if I can’t get the them to the closing table.” I was shocked to see all of the little things that fell into the category of kickbacks. However, I disagree with “By continuing to send your business to ONLY one title and escrow company, you’re drawing a target on your chest. If I were a state regulator, you’re who I’d audit first.” I have one, maybe two title/escrow companies that I enjoy using and its only because of the great service. I like knowing that I can count on them. I like knowing that when I have questions I will get prompt assitance and wont get the run around.
An interesting question in a free market…once again it seems we need to legislate something to give greater opportunity to companies that can’t otherwise compete? As everyone has already stated, I also select Title & Escrow for their service and ability to deliver within contracted timelines. I could care less about the “treats”!
I’ve historically preferred ‘bundled’ services (Title & Esrow) for conveniece and discounts but recently changed to an absolutley independent escrow. As Jay stated, Service is OFF the charts… and the closer (also owner/operator) is professional, personable, fun, available and takes excellent care of my clients
Providing assistance in the form metrocans data and the like seems more a professional courtesy then – say- tickets to a ski lodge or preferred pricing. Again legislation has to be in place because the professionals taking advantage and leveraging these relationships cretaes a bad situation for all.
I have my preferences for these services and frankly dont see why I should do business with people who dont do business with me. And if I rely on my borrowers to provide a source for T & E based on – for example- the best price out there then we may not get the best service out there and in a timley fashion. So…
Title insurance is a commodity that is masquerading as a valued added service. Like oil, soybeans etc. Someone in the technology field needs to develop a platform that will drive out unnecessary overhead (like title reps, etc) and offer coverage at about half the rate. This would be distruptive to the market and tranform the industry from offering overpriced, worthless services (and trinkets and kickbacks) to streamlined affordable services. Flood databases have done it and it is good for the consumer and great for the lenders. Title companies have a vested interest in avoiding this.
I don’t think this will change anything. We use the companies we have experience with that provide quality service to our borrowers. I was never interested in the “swag” given by title and escrow companies. It was just nice to have plenty of paper pads and pens when needed. It didn’t sway who I did business with.
No I think people will work with people based on cost and service. Sure there will be a small percertage of people who were sending their business to Title companies based on some “payoff” but this is relatively small compared to most who really try to get good deals for their clients.
Here is another law that has gone to the extreme.
I’m sure all industries are ripe for corruption. I send my title
and escrow business to the reps and offices that provide the best
service, not the best parties. Yes I enjoyed the calendars and
office treats, but there were not big payoffs coming to most small brokers. This is a large distortion in my opinion. The fact that I
can’t give my client a $50.00 gift certificate to home depot after
closing a new home purchase is ridiculous in my opinion. This falls
in the same catigory of over correction.
I feel that the title and escrow companies for my clients are based off the professionalism, needs and fees. This is what I shop for when setting up the orders.
I do know alot of great escrow and title companies and try to give them all a little business. I don’t just use one or two….although I am aware of the ones that did a great job!
I have never received any lures or gifts from title or escrow companies..I feel I would owe them actually.
I’m not sure that this new law will “level the competitive playing field” at all. Those companies that rely on obtaining the business by offering these inducements will probably continue to do so. Many are blessed with huge marketing budgets and some mortgage companies probably will send their escrow/title business to particular companies as a result of “freebies”. However, I would like to think that most of us do so based on service. When you establish a professional realtionship with an escrow/title company then you should maintain that. This final step in the financial transaction is a very important piece of the puzzle and if you have confidence in their expertise and abilities it will have a direct impact on your reputation as a mortgage professional.
I don’t think this will level the competitive playing field to the degree that the law intends to. Although I’m sure there’s plenty of kickbacks that has been happening between the two entities, I would like to think that no amount of kickback could replace good service. In other words, I think relationships between a LO and a good title company can sometimes outweigh a kickback. If faced with the choice, I would choose a good title company with whom I had good relationship and puts me and my client first over a title company that compensated me and provided standard service. I can say I’ve been offered gifts by other companies but gifts aside, I value the relationships I’ve built without the use of gifts. If I ever needed to find a new title company, I would be looking to establish a similar relationship.
Escrow agents have a tough job , making $495 for a closing
dealing with all the paperwork and extreme deadlines thats a job!
The only money they make is the commission on the stuiped product of mortgage insurance . Have you ever heard of a mortgage insurance company having to pay off ? They even have a clause that title insurance will not pay of native americans file against the property . By this theory all the ocean front land could be re claimed by tribal memebers , it could !
I belive that this new Law will help to stop receiving inducements in inkind or cash for the most part.
I mean that the unfair doing busienss between Broker/LO’s; Real State agents and Title Insurance providing a preference of services will be based on business relationships and not in inkind/inducements gifts or money. Although, for example, there is a good chance that preferences servicing on LO’s file over other LO’s file will still happend. The diference is that this fact will be based “not in inkind or cash” but maybe in other small ways like a home dinner or similars. About this part, on this free market you may still do that with the consideration of the $25.00 limit based on RESPA.
Brokers, LO’s, and agents will continue doing business with the title / escrow company that provides them with good, timely service. It doesn’t matter what knick knacks or pads of sticky notes, desk calendars, or pens they hand out. It doesn’t matter if they bring Starbucks and pastries. Business is based on good customer service. I’ve used the same title and escrow I’ve started with. They have never done me wrong so I see no reason to try someone else. Title companies will operate based on word of mouth, established relationships, and good old fashioned service.
No, it will not. Because I gave my business to the title compoany that had a good relation with me in terms of their timely commitment and their manners of speaking with me.
In dealing with any vender service is key. I would not use a title or escrow company simply because they buy me lunch or bring me a gift.
I use my title company because I know that if I have a rush they will do it for me. I have an escrow company that will do ANYTHING to make sure my loans close on time. That might me doing a signing at 9pm or even getting any broker conditions that they can help with.
Do I think the law will stop title companies from buying? Probably not… but the companies that do that typically aren’t the ones earning business by outstanding service.
Service and a good working relationship is where it is at for me. I am willing to return all the title company coffee cups I have collected over the years to keep peace in the family. The loan I am working on is for my current client. I do the best job I can for them to put a fair package together for them. Live is too short if I have left 53 cents on the table because I haven’t lined up so fee sharing gimmick with the title company!!!
QUEEN CHRISTINE FINALLY ADMITS TO A 5,OOO,000,OOO.[5 BILLION] DOLLAR SHORT FALL [AFTER THE ELECTION OF COURSE] AND THE LEGISLATURE IS WORRIED ABOUT SOME TITLE CO. GIVING OUT A CUP OF COFFEE AND A CANDY BAR? WHAT WORLD DO THEY LIVE IN DOWN THERE?? ARE WE GOING TO HAVE “ERRANT TITLE CO. ENFORCEMENT CZAR” ??…..ADD ANOTHER MILLION….
As far as Title Insurance goes. I have not had any issues so, I am guess I don’t have much to add it this topic.
I do not believe the new law will help. Without the enforcement, people already living outside of what is legal according to RESPA will continue to do the same things.
That being said, I personally haven’t noticed Title giveaways having any significance.
Let them make title company reps walk and not use a car. Then they won’t be able to shower us with gifts. I don’t care one way or another. The title premium is such a small piece of the loan cost one company to another really makes no difference to me!!
When things go wrong then everybody burns at the same time. this issue has come to the surface because many companies have violated the ultimate responsibility that we have as mortgage people and realtors and that is the best interest of the client. Any time there is money involve, there is room for fraud, that is it. This has been the case from when the mankind existed. So, to deal with this the authorities have to make it one fit all no exception.
I can’t beleive it needs a law. I have relationships with title and escrow companies over the years because of their professional service to my borrowers not for a box of doughnuts or scratch pads. PLEASE give me a break
I cant believe that this law would have a place in this arena. I don’t think it will matter. I have many relationships with title, escrow, and insurance, who are professional to my clients regardless of the spiffs. I would like to see how this law will be enforced and how it will be applied to each transaction.
I think it is a mute point. We select by speed and level of customer service. I do miss the free data services that use to be offered which were a great benefit to the customer. To bad too many people ruined it for the rest of us by taking spiffs for it.
I have worked with several title and escrow companies, I used them not because I got a gift from them but because of the kind of service they provide my borrower and me. This new law does not affect the title or escrow companies I work with. We have a profesional relationship base on perfomance not in material things.
This is a minor drop in the bucket, compared to the real crime.
Title insurance is not insurance. Insurance is buying a policy for a potentially disastrous future event. Title policies are written for past events (deeds of record), and claims can all but be eliminated by careful research of the liens on title. Claims paid are generally less than 10% of the premiums collected (car insurance is around 80%) .
Go for the Iowa system, where they have outlawed Title insurance companies (the state provides it).
Is it proper procedure to answer the call of an obvious problem? Yes. Will it create a more even playing field? Perhaps, in time. Will it keep, agents, LOs, and title/escrow reps from new creative means of forming seemingly illegal alliances? No…again, as I’ve stated in additional posts…what’s the standard for ethics and moral practices? Answer: It’s being destroyed on a daily basis, so don’t be shocked…keep attempting to do something by all means, you can’t quit.
I believe the changes have made a difference, but not necessarily a positive difference. Title reps are afraid to offer anything at all. The downside is that some of what was being offered was truly of value for the consumer. As a result of this law, the consumer may be a little less informed because they are not getting as much of the trickle-down effect of valuable services that have been cut out. If a loan officer was using services solely for his/her own benefit, that originator does not belong in the business.
I think the changes and the climate together will produce signifcant change for the better. While I have not witnessed any of this going on I’m sure it exists just the same. To think there are illegal alliances that have been formed and still have the audacity to operate in the same manner seems ridiculous.
I feel that this new law is irrelevant to the title companies that brokers pick because we use our title companies for reliability, accoutability, closing, etc, and not for a referral or kick back fee. Being part of an office with over 40 loan officers, it is extremely important to have the title company we use, who is extremely responsive on all our requests and that is why they are more expensive than all the other title companies out there. We use them for their high level of service and have never been “induced” to pick a different title company.
I tend to do business with people i like and trust. I use a title company that is reliable, honest and provides a good service. I’m not sure this bill can be regulated anyway. If title companys are paying inducements now, they’ll find away around this bill. And who will monitor this? How many title companys are in the State of Washington that will have to be monitored? My feeling is that its a small minority that are doing it anyway. I think the state should be more specific about there meaning of “Things of Value”. Maybe they should put a dollar amount to it. Things of value could be a pencil, sticky notes or coffee cups. They all have value. Would these be considered payoffs?
I don’t believe it make a change. I tend to sway my LO’s to use the title/escrow companies that provide the best service. I’ve never had a title/escrow rep try to buy their services or offer incentives. We work with a company repeatedly due to the fact that they provide excellent, quality service. The ones that will go out of their way to make a closing quick, easy, and keep in touch all the way through.
In defense of title companies most managers and employees are anal,conservative, pencil pushers anyway. Who else could sit in front of a computer and pour over Gov’t documents all day? This is not a put down, it’s the type of people the title industry attracts. Every title employee or manager that I have ever dealt with already knows the RESPA rules and they cautiously abide. Come on folks an occasional post-it-note or calendar with the title companies name on it! It’s about service not trinkets. More bureaucratic B.S., and you and I are footing the bill.
I don’t think this law will help. Relationships have been built. If there isn’t anyone to enforce the law who is going to tell. Not the people benefitting from gifts and ect. And if someone did blab how are you going to prove it if you have two parties that would obviously have ” no clue whats going on”.
I think this law will not do anything. Most people in this industry use someone who knows what they are doing, and have devloped a long standing relationship with them. I never had a title/escrow company offer incentives to me to work with them. Even if I had, I would not use them, simply becouse they gave me something. To me, knowing who to use, and someone who will be good to my client is far more important, then a misly gift i would get.
I don’t thing it will change a thing!And who really cares. I really don’t!I go by service and responds time. I agree with catherine the state needs to work on other problems at hand!I also LOVE Jim’s comment he put about “Queen Christine” Amen!!
Although I have read of Title companies guilty of give aways, etc. I have not had the opportunity of becoming a recipient. I believe everyone is well aware that this is illegal and many try to earn your business with good work. My relationship with title insurance companies has been through word of mouth, real estate agents, and networking in industry functions. I believe this is normal business practices and I wouldn’t necessarily say that the law has made title companies competitive, but more on the lines of ethical.
Will this law change anything? Doe’s it make sense to”spread your business around so you don’t have a target on your back”. People do business with people they trust and get great service. The only thing this law does is it gives the state another tool to use if and when the state decides it wants to go after a title company for what ever reason.
I think the title companies have a pretty even playing field. They are responsible for their own demise in this situation. How many Realtor open houses did I attend with the same title rep you see all over in the real estate magazines serving up food etc. I never saw them once do that in my office.
There are quality title and escrow companies everywhere, who give good service to EARN your business. Which is more fair than the give aways. Again I see the realtor’s boo-hooing every where because they actually have to pay for their own advertising now.
I agree with John’s comment about time. This goes beyond gifts and lunches. Any title company has the ability to move a file on top of a pile, if they have a steady stream of business from any individual loan officer or company.
Be loyal and provide good service and that will be returned to you time and time again. It is a normal business practice to take potential customers to lunch, but not to overwhelm them with preferential treatment and gifts. I guess for the 5.00 per person allotted we can go have a subway sandwich and talk business. 😉