Fred Nathan, executive director of Think New Mexico is pushing his way through legislators big and small to get title insurance reform to the people. This could be the year he makes it happen.
Think has pushed for a change in title insurance law for three sessions now. The current legislation is Nathan’s best effort. He settled on a compromise with title insurance companies allowing them to keep statutory immunity. So they can’t be sued for negligence. Nathan said it was a good compromise.
The new law will allow home buyers to shop for their own title insurance instead of paying the same rate regardless of where the insurance is purchased. It also provides for some steep discounts when refinancing.
It’s ridiculous that a home buyer has to buy title insurance in most instances anyway. But then, say three years later, you want to refinance you have to repurchase the insurance all over again. Talk about a racket.
Think’s legislation allows for at least a 60 percent discount for a homeowner refinancing 0 to 3 years after buying the home; at least 50 percent after 3 to 5 years; at least 40 percent after 5 to 10 years; and at least 20 percent after 10 to 20 years. That reeks of common sense.
It also guarantees local agents get 80 percent of the premium. The bill analysis also states it would stop the practice of title insurance agents paying part of their premiums back to home builders or realtors in the guise of “reinsurance” when it is actually a referral fee.
Nathan’s probably elated he could get such a package through the House. It’s in the Senate now and shouldn’t meet too much resistance. Then it’s to Governor Bill Richardson’s desk. And that could remain a problem.
Richardson’s close ally David Contarino is in the title insurance business. We suspect that’s why the governor wouldn’t put the legislation on his call list last year. Of course in the midst of all these pay to play scandals and grand jury investigations, Richardson may be distancing himself from Contarino and will sign the bill.
That would be the right thing to do, regardless of Richardson’s relationship to any title insurance broker.