When choosing a title company, investigate whether the
company has multiple options as to underwriters. Some
companies are direct operations of national underwriters,
with just a single set of underwriting guidelines. An alternative
is a title agent, an independent company often with multiple
under writers behind them. This might make a difference on a
more complicated transaction, because the title agent can
shop among several underwriters to find one with guidelines
that offer workarounds.
Where is the title research handled?
Many large title companies have followed national trends
and sent behind-the-scenes jobs to other states or other
countries, particularly parts of the title research process. On
the ground in your town, this can impact the ability of local
employees to get timely answers
and solutions when there’s an issue
to be cleared up before closing
Find out if the company you’re
considering has a fully staffed
title department at their local headquarters, or at least
in your time zone.
Is the company compliant with new federal rules?
The Consumer Financial Protection Bureau has a host of new
regulations that will be effective August 1st, 2015, for any
residential transaction involving a federally insured loan. The
new rules touch on many aspects of title company practices,
from enhanced security measures to new forms and time
frames for processing.
As this deadline approaches, it will be vital for the health
of your transaction that the title company be compliant
with all the new requirements. Most lenders will be
vetting title companies for compliance well in advance
of the official deadline, and your transaction could be
stopped in its tracks if the title company you choose is
If you’re hoping to close your transaction any time after June
1st, 2015, it’s a good idea to ask the question: “Is your company
ready to comply with new rules from the CFPB?” You’ll sound
super savvy, and if the person you speak with has no clue what
you’re talking about, it would be best to move on.
What value-added service do I get?
Again, title companies in Texas can’t compete on price, and
those that are serious about standing out from the herd offer
a range of resources and services to smooth and enhance
the experience of buying or selling a home.
Look for things like reports and guides that help sellers answer
questions about their property, and explain the closing process
for the lay-person. Some offer both printed and online
resources that help buyers learn about local schools, taxing
authorities, and communities. Some have online calculators
to help in estimating costs, and mobile applications to
connect you with branch locations and other resources.
Are there any relationships I should know about?
This item is a question for your real estate or mortgage
professional, as they help guide your choice of title company.
Because Realtors and mortgage lenders are involved in
more transactions than the majority of consumers, they tend
to have relationships with particular title companies and
escrow officers. This is a normal and
functional aspect of the way these
industries work together.
However, some real estate brokerages, builders or title companies
form business agreements to steer
transactions to a particular provider. If certain legal requirements are met, this is allowed under existing laws, although
some of these rules are under review by federal regulators.
As a savvy consumer, it’s wise to ask whether a title company
has been recommended based solely on their stellar service
and performance. Any side deal or “affiliated business
agreement” is required to be disclosed by law, and you as
the consumer have the final say in what title services provider
handles the transaction.
Except… it’s negotiable in Texas
That is to say, buyers and sellers must ultimately come together
and agree on the choice of title company. In Texas, the agreed
upon title company is indicated on the promulgated sales
There are arguments on both sides of the issue as to whether
sellers or buyers should have their choice. On the one hand,
sellers sometimes need the assistance of a title company to
resolve known issues that would complicate the sale, even
before talking to a potential buyer. And in Texas, typically the
seller pays for the title policy insuring the buyer (although this
is also negotiable). On the other hand, the buyer is ultimately
the insured party, and will have the ongoing business
relationship with the title company.
The important takeaway is that you as the consumer have a
voice and a vote. All title companies are not the same, and a
little research can help you make an informed choice.
“ The important takeaway
is that you have a voice
and a vote.”