Title insurance reform vitally needed

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By Fred Nathan

In “Block, Lass Share a Forum,” published Oct. 22 in the Los Alamos Monitor, Public Regulation Commissioner elect Jerome Block Jr., a former title insurance executive, is quoted as saying  that he does not “have a personal opinion” about the need for title insurance  reform in New Mexico.

Allow me to explain why Commissioner Block needs to back reform instead of  remaining neutral and allowing the out of state title insurance underwriters to continue to take daily advantage of New Mexico homebuyers.

Out of state title insurance industry lobbyists pushed through a law in 1985 that essentially outlaws free market competition in the setting of title insurance prices in New Mexico.

In other states, homebuyers can shop around for the best price, but not in New Mexico.

As a result, out-of-state title insurance underwriters have profit margins higher than 50 percent in New Mexico, according to the PRC, and New Mexico homebuyers pay about $40 million annually more for title insurance than they would if the price were set by the market.

Not satisfied with that, these same out-of-state title insurance underwriters enacted a provision in 1999 that prohibits them from being sued by homebuyers if they negligently fail to discover title flaws that decrease the value of the property – the very risk they are supposedly paid to protect homebuyers from.

New Mexico homeowners are also forced to purchase title insurance every time they refinance their mortgages, which is very lucrative to out-of-state title insurance underwriters, whose fees on these new policies go straight to their bottom lines.

The bottom line for New Mexico homeowners is that the lack of title insurance reform makes it that much  harder for first time homebuyers to afford a home and for others to re-finace their mortgages and makes the housing crisis even worse.

Commissioner Block should consult with  Bill Enloe, CEO of Los Alamos National Bank, which owns Title Guaranty & Insurance Company.

Bill would like to do better by his customers but is prohibited from doing that by current New Mexico law.

So he wrote last year to Governor Richardson and asked him to join forces with Think New Mexico and work to change the law.

No doubt this does not make Enloe and LANB popular with the out of state title insurance underwriters, but of course it is the right thing to do and makes Bill and LANB profiles in courage. Commissioner Block would be wise to follow his lead.

Readers interested in reading Bill Enloe’s letter to Governor Richardson and learning more about title insurance should go to www.thinknewmexico.org  and click on title insurance.

Fred Nathan is executive director of Think New Mexico.