We New Mexicans dearly love to take advantage of one another\u2019s ignorance.\u00a0 It\u2019s how some of us make a living.<\/p>\n
Title insurance, for example.<\/p>\n
You are required to purchase title insurance when you buy a house.\u00a0 Since you probably buy a house once or twice in your lifetime, it\u2019s understandable that you are not an expert on the legalities.\u00a0 You\u2019re probably relying on your real estate agent and the other professionals who are supposed to be acting in your interest.<\/p>\n
You may have thought that you were buying an insurance policy that would — well — insure you.\u00a0 As it turns out, not exactly.<\/p>\n
And you didn\u2019t focus much on the cost of the insurance, because it was just another thousand or two, rolled into the biggest purchase of your life.<\/p>\n
Title insurance, you thought, would ensure that your title would be unencumbered by liens, lawsuits, or restrictions hidden in the history of the property.<\/p>\n
So when it was reported in 2002 that a title company had missed such a restriction on a property in Santa Fe, and that the owner could not build the planned two-story office project because of a height restriction, but the title insurance company had no liability for its error and the owner had to take the loss, I thought, am I the only one noticing that this is nuts?<\/p>\n
An amendment to the law in 1999 had absolved title companies from responsibility for their own failure to do what you thought you were paying them for.\u00a0 Only in New Mexico — or Wonderland.\u00a0 Except you may not have been paying them to protect you, anyway.\u00a0 You may have bought a policy that protected the lender but not you, because that\u2019s all your mortgage required.\u00a0 Home mortgage lenders:\u00a0 you remember them, right?\u00a0 Those wonderful people who brought us 2008?<\/p>\n
The almost good news is that two other problems with the title insurance law have been reformed, sort of — thanks in large part to an advocacy group called Think New Mexico, which had noticed that our unjustified high premiums affected families of modest means trying to buy homes.\u00a0 Think New Mexico published a report in 2007 showing New Mexico costs for title insurance were high compared to other states, even though very little was paid out in claims (the report is still on the web site at thinknewmexico.org.)\u00a0\u00a0 This led to legislation in 2009.<\/p>\n
One prior provision had made anti-competitive pricing not only legal but mandatory:\u00a0 the law required premium rates to be set by the Superintendent of Insurance.\u00a0 The 2009 law got rid of that, but we have yet to attract new insurers offering competitive rates.<\/p>\n
Another issue, especially critical in these times, is the cost of a second title policy when you refinance your home.\u00a0 When you bought your house, the first title policy should have ensured that the title was good, so when you refinance, the second insurer is theoretically taking no risk at all.\u00a0\u00a0\u00a0 That second policy should cost you next to nothing.<\/p>\n
The 2009 legislation provided for substantial discounts on title policies for refinanced properties.\u00a0 But, whoops!\u00a0 You qualify for the discount only if, at closing, you bring a copy of your original closing statement, which documents the first policy.\u00a0 Easy enough?\u00a0 The catch is that nobody is required to advise you to do this. As I said, we love to take advantage of one another\u2019s ignorance.<\/p>\n
But our law still hasn\u2019t fixed the negligence problem.\u00a0 The director of the industry association was quoted in 2009 as saying,\u00a0 “That negligence liability will decimate the industry.”\u00a0 In other words, insurance shouldn\u2019t insure.\u00a0 It should just be something we are required to pay for. \u00a0This is New Mexico.\u00a0 Go ask the white rabbit.<\/p>\n
Triple Spaced Again, \u00a9 New Mexico News Services 2011<\/p>\n","protected":false},"excerpt":{"rendered":"
We New Mexicans dearly love to take advantage of one another\u2019s ignorance.\u00a0 It\u2019s how some of us make a living. Title insurance, for example. You are required to purchase title insurance when you buy a house.\u00a0 Since you probably buy … Continue reading