Two Different Settlement Sheets?

I would like to take a quick moment to thank everyone who, earlier this week, responded to my first post on Active Rain, "The Silent Second Revisited."  It's great to be part of a supportive and appreciative group of professionals.  I've decided to construct a separate article around a comment submitted by Jeff Belonger, a New Jersey mortgage banker. 

Jeff said: "In regards to your throw away second. I might have to disagree on the fact that this hardly happens if you need a title company to do 2 settlement sheets. Sure, I am sure there are a few out there....  but they aren't as likely or as desperate as a lender or  realtor trying to do this. And in this case... they wouldn't bother with it, unless it was a very small title company with not much at stake. A larger title company, making money already...having many clients.... I would have to say that they wouldn't take part in this."

Until recently, I would have agreed whole-heartedly with Jeff who apparently has a great deal of confidence in the title industry.   In October, a study into the marketing practices of title companies was released by Mike Kreidler, insurance commissioner for Washington State.  Kreidler's investigation took 10 months to complete while probing into industry practices during an 18 month period.  The results were alarming to say the least.  Some of the most important and influential  players in this nations title industry were guilty "per se" of blatant violations of federal and state laws that were promulgated to protect the interests of consumers.   The laundry list of items and activities paid for illegally by title insurers includes expensive gifts, golf tournaments, extravagant parties, ski trips, shopping trips and tickets to sporting events.  The violations were so rampant and wide-spread that regulatory enforcement was a practical impossibility.  In one case, the report speculates that a particular underwriter was able to "attain superior market share" only by paying illegal inducements.

Equally as disturbing is a dramatic increase in the incidence of class action lawsuits against title insurers alleging anti-competitive practices (pricing) and failure to disclose material facts to consumers.  It's safe to say that the title industry is dominated by a handful of insurers following an aggressive stream of acquisitions. Title insurers employ armies of attorneys who provide advice and guidance to title agents.  The system is decidedly broken when underwriters fail to exemplify ethical and proper behavior.  I hope that everyone takes a couple of minutes to read the report and form a personal opinion.  Please don't take this post as a general indictment of title professionals who I believe to be an honest group overall.  Serious problems currently exist within the title industry affecting large and small companies alike.

There's another dimension to this story that's my real motive for writing.  Many of you are presently involved in joint ventures or considering the possibilities.  Since it's your reputation and future success on the line, I suggest chosing a title company partner very carefully.