The real estate title industry has taken a lot of flak lately for practices that state regulators and consumer advocates claim drive up the costs consumers pay for title insurance.
On Tuesday, the industry sought to counter some of the criticism by unveiling a website -- www.clta.titlewizard.com -- that, for the first time, allows consumers to see what the major title insurers charge for their policies.
By typing in a ZIP Code or city name, Californians in need of title insurance can comparison shop, without having to register or pay a fee.
State Insurance Commissioner Steve Poizner called the website "a first step" that could lead to lower title insurance rates in California, where such insurance is a $2.6-billion-a-year business.
Poizner has demanded rate cuts from the title companies, which have resisted. The two sides have been meeting in an attempt to reach a compromise.
"Too often, consumers have to rely on a middleman to select their title insurance. Now, consumers will be empowered to compare prices and services online," he said in a statement.
Title insurance is something most people don't need until they sell their house or refinance their mortgage. It's a short-term policy required by lenders to ensure that there are no other ownership claims on a property they are financing.
In California, title insurance is one of the largest line items in closing costs paid by buyers and sellers in a real estate transaction.
Sellers typically must buy a policy before escrow can close, though in some California counties buyers are required to pay. Often, buyers and sellers split the cost, which is based on a percentage of the sale price.
Often, a real estate agent or mortgage broker involved in the transaction will recommend the title insurance company, and consumers may be unaware that they can shop around for a better price.
At the new website, users type in the location and sale price of a home and then receive quotes from title insurers. On Tuesday, setting the parameters for a $550,000 home sale in Downey, the site offered 19 quotes ranging in price from $1,386 to $1,653.
In California, title companies have paid more than $40 million in customer refunds and penalties since 2005 for allegedly participating in kickback schemes involving pricey gifts, sports tickets and cash payments.
Other states and the federal government have also targeted the industry, and currently there are more than 100 investigations looking into such arrangements.
