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Title company fees matter

December 15, 2010 Leave a comment

Most reputable title companies now maintain robust websites with a disclosure of their title charges/fees, making it simple for prospective homebuyers to compare title company fees and select their title company.

According to a recent analysis, less than 10 percent of homebuyers and refinancing homeowners chose to select their own title company – despite the fact that it was their legal right to choose a title company.  Instead, the overwhelming majority of those homebuyers and refinancing homeowners deferred to their real estate agent or mortgage lender to choose the title company on their behalf.

Why?

Because most homebuyers do not realize the potential cost-savings associated with selecting their own title company.  They do not realize that a simple online search for comparing costs among local title companies could save a thousand dollars or more.

In fact, many real estate agents and mortgage lenders are not aware of this simple fact.  It is incorrectly assumed that all title company charges are equal.

My “Best Friends” advice is as follows:

  • Choose a title company yourself – don’t leave the task to others.
  • Choose a title company that clearly discloses their title fees and title insurance rates on their website.
  • Choose a title company that is independent – not a title company affiliated and sharing profits with your real estate agent’s brokerage or your mortgage lender’s company.
  • Choose a title company that has been in business for at least 10 years.
  • Choose a title company that conducts closings by licensed real estate attorneys – not notaries or settlement agents.
  • Choose a title company with positive user reviews. Check out Yelp, ActiveRain.com or Google for starters.

Follow my “Best Friends” and you will end up at the closing table of a reputable title company AND pay less.

Federal Title’s closing costs below national average

August 20, 2010 Leave a comment

A recent survey from Bankrate.com showed homebuyers in Maryland and the District of Columbia pay closings costs that are below the national average. That was good news on its own.

When I began digging through the details of the survey, I discovered this chart that breaks down closing costs for each state and separates origination fees from title & closing fees. That’s when I learned (or confirmed, rather) homebuyers who select Federal Title for their closings pay well below average across the board.

For starters, closing costs across the nation averaged $3,741, according to Bankrate.com. The research was based on a $200,000 loan and a 20 percent down payment.

The survey shows that the average homebuyer in Maryland pays $1,921 in title & closing fees. A homebuyer who settles the same real estate transaction through Federal Title pays $1,465.

And in D.C. the survey shows the average homebuyer pays $2,322 in title & closing fees. If the homebuyer had settled that property address with us, he would have paid $1,905 for the same title services.

Homebuyers in Virginia should be most excited of all: Closing costs average $2,355 across the state — exceeding the national average — but when Federal Title is on the case, closing costs come in at $1,509.

While these numbers are great, it’s not the only factor to consider when choosing a title company. Beyond our competitive prices, at Federal Title we’ve built a reputation of exemplary customer service. We’ve bought and sold houses of our own, so we know how it feels to be a homebuyer or seller, to expect quality service for your dollar.

With this in mind we are working to improve our technology to make the closing process even more seamless and painless. This will free up time for our humans to tend to each client, which can only improve the title services we provide.

Seasoned Settlement Attorney Returns to FTE

November 17, 2009 Leave a comment

FOR IMMEDIATE RELEASE
CONTACT: Nikki Smith
Main line: 202-362-1500
Direct line: 202-274-1517
E-mail: nikki@federaltitle.com
Website: www.federaltitle.com

DC TITLE COMPANY WELCOMES SEASONED SETTLEMENT ATTORNEY TO ITS TEAM OF CLOSING EXPERTS
Retired Marine brings steadfast work ethic and 20 years of title experience to Federal Title’s closing table

Washington, D.C. – Pens around Catherine E. Schmitt‘s office have a way of disappearing. That’s the running joke around the office anyway, because this retired Marine and newest member of Federal Title & Escrow Company‘s team of closing attorneys can do a lot more with a pen than push paper.

Catherine Schmitt, formerly the managing attorney for Monarch Title – Georgetown and Bethesda – rejoins the ranks of Federal Title’s talented staff after a five-year hiatus. She brings with her 20 years of title experience and a steadfast work ethic sharpened by her service with the U.S. Marine Corps. She says the most rewarding aspect of her work is the time she spends developing relationships with her clients.

“I am a loyal customer of Catherine”, says Tom Buerger of Re/Max Allegiance. “She is always there for me – whether it is as an expediter for a quick settlement, as a counselor to allay the fears of my first-time homebuyers or as a resource to solve potential issues before they become a problem that will delay settlement. She is my attorney-on-call.”

Schmitt’s clients vary from new homebuyers to seasoned investors, but one thing her clients have in common is they understand the settlement process.

“Buying and refinancing a home are big decisions,” says Schmitt. “The settlement process is an opportunity to educate clients. It’s a time for them to ask questions, so they can feel comfortable and informed.”

Schmitt earned two Bachelor’s degrees from the University of Maryland and has her Juris Doctorate from Drake University Law School in Des Moines, Iowa, the same institution that produced Federal Title’s founder and president, Todd Ewing.

“Catherine works hard and is dedicated to her clients.” Ewing says. “She is a model of customer service, and I am very excited to welcome her back to our team.”

Homebuyers seeking advice from Schmitt about title insurance or the settlement process need only venture up Wisconsin Avenue to Federal Title’s Friendship Heights office.

Reach Catherine E. Schmitt at 202-362-1500 or e-mail her at catherine@federaltitle.com.

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About Federal Title & Escrow Company:
In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Federal Title recognizes consumer-driven market pressures, as exemplified by the new RESPA rule, and seeks to offer home buyers substantial closing cost savings and a streamlined settlement process.

Federal Title has a reputation of being technically innovative and always at the forefront of the latest real estate trends. Years ago the company made a bold move by eschewing all Affiliated Business Arrangements and established its REAL Credit Program, which saves home buyers up to $2,000 on closing costs.

Now Playing: Closing Costs Explained Visually

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Amendment to delay RESPA implementation withdrawn

October 23, 2009 Leave a comment

An amendment that would have required HUD’s secretary of housing to delay implementation of the new RESPA rule for at least six months was quietly dropped this week.

Federal Housing Commissioner David Stevens denied the request, saying the industry will have 14 months to prepare for the changes before they become mandatory.

Learn more

Congress passes amendment clarifying reach of CFPA

October 22, 2009 Leave a comment

The American Land Title Association applauded Congress’ passage of an amendment that clarifies the oversight of the Consumer Financial Protection Agency.

“Congress recognized that title insurance is best regulated by a comprehensive, well established state regulatory system,” ALTA CEO Kurt Pfotenhauer told Reuters.

Title insurance providers are still subject to federal regulation, however, in the form of the Real Estate Settlement Procedure Act. RESPA changes go into effect Jan. 1, 2010, and HUD has no plans to delay the implementation.

Learn more

Title Report highlights our ‘unique business model’

October 20, 2009 Leave a comment


With new legislation around the Real Estate Settlement Procedures Act slated to take effect Jan. 1, 2010, many in the industry have concerns about how these changes will impact their daily work routine. More accountability, full disclosures — the new RESPA rule has placed a lot of lenders in particular on the hook.

A few weeks back Todd Ewing spoke with The Title Report editor Jennifer Kovacs about Federal Title’s approach to the changes.

“There’s a hard push with the RESPA reforms toward what we’ve been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they’re going to demand all title companies provide a guaranteed quote for their services,” Ewing said.

Below is the article in full:

Title company’s unique anti-AfBA business model pays off

About nine years ago, Federal Title & Escrow Co., which serves the Washington, D.C. metro market, decided it was time to quit a bad habit.

“We kicked the [affiliated business arrangement] joint venture addiction and replaced that relationship with a pro-consumer model that we now call the REAL Credit program,” Todd Ewing, Federal Title president, told The Title Report.

It was after about five years in business that the company put everything on the line for what felt right.

“If anyone is really honest about it, the affiliated business arrangements (AfBAs) are not consumer friendly, they’re just not. You got too many hands in the pie. So the consumer ends up losing,” Ewing said.

Federal Title’s REAL Credit program is simple: If title work is ordered through the company’s Web site, the consumer receives a credit that reduces the overall cost. Just like AfBAs, which caused the company to lose a good chunk of its revenue to the referral source, this program comes at a loss to Federal Title — but one not linked to a conflict of interest.

“Our REAL Credit represents in dollars what we used to pay over to our AfBA joint venture referral partners, only now we just pay it over to the homebuyer,” Ewing said. “I don’t want to be beholden to the interest of the referral source. I’d rather be beholden to the interest of the consumer. So we developed the concept, and it’s worked really well.”

The model
While not involved in any joint ventures, Federal Title does still rely on its referral sources. The company has a network of real estate agents and lenders who can also take advantage of the pro-consumer platform.

For example, when a real estate agent goes online to order services through Federal Title, an automated e-mail is sent to the homebuyers that tells them their agent just saved them $1,200 for ordering online, which then puts the agent in a great light.

“That goes a long way,” Ewing said.

In the first three years of the program, Federal Title saw a 50-percent increase in transaction volume and since has continued to grow its referral base.

“What happened is real estate agents realized that they wanted to extract themselves from that conflict of interest potential [with AfBAs]. And if they can look good and we can look good, then they’re going to come. And we’re obviously providing a cost-savings proposition to the homeowners,” Ewing said.

In fact, as word has spread about the credit, it’s not just industry partners who are referring business to Federal Title — consumers are discovering the company on their own.

Cost savings
Federal Title is able to stay above water and still offer the credit thanks to the increase in transaction volume that it’s seen over the years. However, the key to the program is that services must be ordered online.

The automated system is one that’s allowed Federal Title to see a significant savings.

The process starts with a transparent, instant online quote available from the company’s Web site. Federal Title was the first title company to provide the service in 2002, thanks to its proprietary software.

“A lot of our competition just couldn’t believe we were doing it. They were fearful. They were, like, ‘Why would you do that? Why would you guarantee that? You don’t know, things could change [from the quote].’ Well, we were willing to do it. Very few things change, frankly, and we ask the right questions,” Ewing said.

The user gets a guaranteed quote from the Web site on a modified HUD-1 form that shows the costs for title insurance, settlement fees, government recording charges, etc., Ewing said.

Then the person seeking the quote is able to order services online from there. Through asking detailed questions, Federal Title is able to limit its liability at the same time it cuts down on mistakes and automatically populates forms a title agent would normally need to process.

“All of that results in a cost-savings to us,” Ewing said.

Federal Title processes about 3,000 transactions a year, and the average savings to consumers through the REAL Credit program is $750. “It adds up, doesn’t it?” he said.

Federal Title has tried streamlining processes even further in the past, through outsourcing title work and surveys, but Ewing said the company has decided to bring all of its services back in-house and rely on its technology instead.

“None of it has really panned out for us. There’s nothing better than a home-grown title report. I don’t see that changing anytime soon,” he said.

Technological focus
Federal Title offers a variety of services, from deed transfers to a 1031 exchange to wills and estate planning, but Ewing said the majority of its business remains traditional real estate closings.

And while the bulk of that business is ordered online, Ewing said there’s always been some who would rather fax over the necessary forms. “We still have a few of those, but after nine years, given the changes in technology, I think people are adapting,” he said.

The industry, too, is adapting to the business model Federal Title has taken on, something Ewing said is apparent in the RESPA final rule and its goal of transparency in real estate closings.

“There’s a hard push with the RESPA reforms toward what we’ve been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they’re going to demand all title companies provide a guaranteed quote for their services,” he said.

Ewing added that he expects lenders also to begin seeking instant, electronic quotes for title work that doesn’t throw off any specified tolerances, as dictated by the RESPA final rule and the Truth in Lending Act. “Who wants to call up and ask for numbers?” he said.

Federal Title also is using its technology platform as a vital part of its expansion efforts. The company recently partnered with a law firm in Coral Gables, Fla., to offer its expertise in marketing as well as technology to grow the company in that region. Federal Title is also seeking like-minded partners for opportunities on the East Coast, potentially in North and South Carolina and Georgia, Ewing said.

However, Federal Title is also using the technology arena to grow its footprint at home. The company is focused on developing its Web site’s blog to reach consumers who are technologically savvy and use the Internet to investigate the home buying process before jumping in.

“With the blogging atmosphere and everything that is available to the average consumer and the consumer’s appetite for that, we see a great opportunity not to be beholden to our traditional referral system. So that’s exciting for us,” Ewing said.

Issue Date: October 19, 2009
Questions/comments? E-mail Jennifer Kovacs at jkovacs@octoberresearch.com.

10 Things You Should Know about Title Insurance: Referral Fees Increase Premiums

September 1, 2009 Leave a comment

Referral fees increase the cost of title insurance. The General Accounting Office recently reported that 5 percent of title insurance premiums went toward insurance claims. A far greater percentage (some reports claim 50 percent or more), went to real estate agents and mortgage lenders for referral fees. This practice is illegal and punishable by imprisonment and/or a fine, yet it’s very difficult to regulate.

Home buyers’ best protection against exorbitant title costs is education, simply knowing they have the right to choose their title company, asking about discounts and learning about what options are available . Not all title companies shell out referral fees, or kickbacks. In fact, some title companies cut out the middle man and credit the home buyer instead when he/she orders settlement services online directly from them.