No More Negotiated Title Insurance Rates in Georgia – Violation of the Law

Georgia becomes FILE AND USE STATE for Title Insurance
Some of you may have used negotiated title insurance rates on some of your files in the past on Georgia loans. Under an agreement between the title insurance underwriters and Georgia Insurance Commissioner, John Oxendine, Georgia is now becoming a “file and use” state.

As a “file and use” state, each underwriter is required to file it’s published rates with the insurance commissioner. Agents ARE NOT allowed to quote any rate OTHER THAN THE PUBLISHED RATE. (See the following Georgia Code sections for further information: O.C.G.A. §§ 33-6-5(5)(6)(B); 33-8-2; 33-8-4).

O.C.G.A. § 33-6-5(5)(6)(B) states:

No person shall knowingly collect as premium or charge for insurance any sum in excess of or less than the premium or charge applicable to such insurance, which sum is specified in the policy in accordance with the applicable classifications and rates as filed with and approved by the Commissioner. …. (emphasis added).

What this means to Lenders, Loan Officers, Realtors, Consumers, and Title Attorneys:
If you had a negotiated title insurance rate, for example, $1.95 per $1,000 of loan amount, once the title insurance underwriter FILES it’s rates with the insurance commissioner, you MUST follow published rates. It is my understanding, IF the TITLE ORDER and TITLE INSURANCE RATE were quoted BEFORE the FILING, you will be allowed to use the negotiated rate on the specific Title Order.  ANY TITLE ORDERS and TITLE INSURANCE RATES AFTER THE EFFECTIVE DATE OF FILING MUST BE AT FILED (known as “book”) RATES.

WHEN DOES “FILE AND USE” GO INTO EFFECT?
The effective date is essentially the date the title insurance underwriter files it’s rates with the insurance commissioner, in any event, it is my understanding all rates MUST BE FILED this spring.

My understanding is the following underwriters’ have an effective date as follows:

Chicago owned companies – Effective March 1, 2009
Fidelity owned companies – Effective March 1, 2009

Old Republic and all owned companies – Effective April 1, 2009
Security Union and all owned companies – Effective April 1, 2009

Stewart and all owned companies – Effective May 1, 2009

First American and all owned companies – Have not filed (to my knowledge), EXPECTED to file and be effective in April, 2009.

WHAT WILL “FILED” RATES BE?
I have NOT seen any of the filed rates EXCEPT Fidelity as of yet. I would expect the filed rates to be competitive with each other, but again, have not yet seen all the “filed” rates.

Ticor (a Fidelity owned company), Chicago and Security Union have published the following rates for Georgia loans:
________________________________________________________
Loan Policies – Premium per $1,000 of insurance amount:
$0 to $100,000 $2.50
$100,001 to $500,000 add $2.00
$500,001 to above add $1.75
Minimum Premium $100.00
________________________________________________________
Owner’s Policies – Premium per $1,000 of insurance amount:
$0 to $100,000 $3.50
$100,001 to $500,000 add $3.00
$500,001 to above add $2.50
Minimum Premium $150.00
_________________________________________________________
Enhanced Policies – Premium per $1,000 of insurance amount:
$0 to $100,000 $4.20
$100,001 to $500,000 add $3.60
$500,001 to above add $3.00
Minimum Premium $150.00

IF your are quoting a PURCHASE where Owner’s and Lender’s policies are issued simultaneously, you would use the Owner’s Rate (so long as the loan amount does not exceed the Owner’s Coverage) and add $100.00 for the loan policy.

Example 1 PURCHASE: Purchase Amount = $250,000.00, Loan Amount = $200,000.00.
Owner’s Policy:
$0 – $100,000 @ $3.50/$1,000 = $350.00
$100,001 – $250,000 @ $3.00/$1,000 = $450.00
Total Premium for Owner’s Policy of $250,000 = $800.00

Lender’s Policy:
Since it is less than the owner’s coverage = $100.00

Total Title Insurance Premium for Owner’s and Lender’s = $900.00

Example 2 REFINANCE: Loan Amount = $200,000.00.
Lender’s Policy:
$0 – $100,000 @ $2.50/$1,000 = $250.00
$100,001 – $250,000 @ $2.00/$1,000 = $200.00
Total Title Insurance for Lender’s Policy = $450.00

While the calculation of title insurance premiums may be a little more complicated under the new system, all lenders, mortgage officers, consumers and title attorneys should now be on the same, even playing field. That SHOULD make the costs of borrowing more predictable and more uniform.

How do you keep your GFE accurate? I suggest contacting your title attorney BEFORE you quote your GFE to insure greatest accuracy. In my office, we will provide you with a preliminary HUD showing exact title fees, title insurance, and recording taxes. UNLESS your loan amount changes, those fees should be EXACT. Recording fees will vary with the number of pages in the security deed, but, will always be (in Georgia) $10 for the first page and $2 for each additional page.

If you have further questions, do not hesitate to contact me at joel@joelwilliamslaw.com.