I see a lot of closing statements, aka HUDs, from a lot of different Title Companies. I’ve noticed a trend that I consider annoying or even disturbing. Several title companies include additional fees for endorsements that I didn’t request, and the borrower didn’t ask for.
When I’m lending money to a real estate investor, I send the Title Company very detailed and specific lender requirements. Basically, I require a Lender’s Title Insurance policy from a well rated company and in most cases, no additional Insurance endorsements. If the borrower is getting an Owner’s Title Insurance policy, it’s only an extra $100 (Ohio pricing) for the Lender’s insurance.
Today, this is the one of three similar ones I received with “extras”.
Initial total cost to Borrower $1,135.
- Services Borrower Did Shop For $1,135.00
- Binder Fee to Unnamed Title & Escrow Services, LLC $50.00
Closing Protection Fee to Anonymous National Title Insurance $40.00
- Closing/Settlement Fee to Unnamed Title & Escrow Services, LLC $295.00
- Courier/Shipping & Handling to Unnamed Title & Escrow Services, $25.00
- Lender’s Title Insurance (REISSUE RATE) to Unnamed Title & Escrow $125.00
OH ALTA Endorsement (Survey) to Unnamed Title & Escrow Services $100.00 OH ALTA Endorsement (Environmental Protection Lien) to Unnamed $50.00 OH ALTA Endorsement (Restrictions, Mineral) to Unnamed Title $150.00 OH-112: Delete Exception for Mechanics’ Lien to Unnamed Title $150.00
- Search & Exam to Unnamed Title & Escrow Services, LLC $100.00
- Wire Fee to Unnamed Title & Escrow Services, LLC $50.00
I sent back corrections, (three times for one company to get it right, geesh)
Final total cost to Borrower $645.
That’s five items with $490 in additional fees that were included but weren’t requested by the borrower or lender. I’m sure those Endorsements are good to have at the right time. Some lenders DO require them, so the charges MAY be valid for specific lenders. Ask your lender what they require.
So why are some Title Companies automatically charging for them when nobody asked for them? Imagine this. “Hi, thanks for coming in for the $12 carwash. We also waxed it for you. Your total bill is $20.” Who would put up with that?
I’ve asked several Title Companies, why the extra endorsements and the associated fees show up on the closing statement when they aren’t requested. The universal response is “Our template puts them in there automatically”. Well, guess what, YOUR company built the template, and you chose to use that template, despite the instructions being different.
I have all these questions running through my head:
- How many people don’t catch this?
- Is the borrower assuming the lender requires it?
- Does the lender notice?
- If the lender notices, do they care enough to have it changed?
- Or does the lender not bother, because the borrower is paying for it?
- Is this “stuffing” the bill to create additional profit for the Title Company?
- Does the Title Company assume the borrower won’t ask the lender?
- Does the Title Company assume the Lender won’t ask the borrower?
- How much additional profit does this practice get the Title Company?
- Am I just overly sensitive to unnecessary fees?
Ok, the last one is true. But since I’m also an investor, I always watch all sides of the transaction.
When I see these charges, I have them removed every time. Today, I saved three borrowers almost $1500 in unnecessary fees for services that were not requested. The borrowers will probably never know. But as I type this, I’m starting to think, maybe I should tell them. Not to pat myself on the back, but to let them know the Title Company they chose has a business practice of padding the bill.
- What do you think?
- Have you noticed this?
- Do I tell the borrowers or not?
Personally, I refuse to use any title company that has this practice. If you want to offer me an additional coverage, that’s great. Tell me about it, let me choose. BUT you need to ask my permission first. Don’t just put it on there and I hope I don’t catch it.