There will be no relief from high cost title insurance for New Mexico homeowners this year. The Albuquerque Tribune is reporting that Gov. Richardson will not put the issue on the legislature’s agenda this year, but will focus on health care.
In states like New Mexico and Texas, the cost of title insurance is regulated. Everyone charges the same thing, and discounts are not available for properties purchased within the last two years, developer policies, re-financing, etc. The costs are set very high compared to other states and compared to what is actually paid out. One ALTA study in 2003 showed that nationwide only 4.3% of what was actually charges was paid out in claims.
Many homeowners do not realize that after the real estate commissions, the title insurance policies are the second most expensive item typically found on a closing statement, and the one that increases proportionate to the price of the home and the amount financed.With increased transaction costs, you create a disincentive to sell or re-finance your property.So in the end, the title insurance might actually benefit from making less money per transaction across more transactions.
Title companies in New Mexico should be allowed to compete on price, just like real estate brokers.