According to MyClosingSPACE.com Survey, Americans Spend $650 Million on Something They Know Nothing About

4.5 Million Homebuyers Ignorant of Where a Big Part of Their Closing Money Goes

According to the American Land Title Association (ALTA), net income to the title industry in 2006 amounted to $1.01 billion. Research taken from the myClosingSPACE.com 2007 survey on consumer attitudes regarding title insurance and related fees revealed that 65 percent of those surveyed admitted to ignorance about the subject. Can this mean Americans spent over $650 million purchasing something they knew nothing about? As myClosingSPACE.com president Gregory Schmidt sees it, the answer is yes. It may also explain why last year’s GAO report on the title industry and the new HUD proposal for RESPA reform place great emphasis on increased consumer awareness of title insurance and settlement services and greater market competition. In other words, the government wants home buyers and refinancers to know just exactly what it is they are spending their mortgage closing money on.

The ALTA 2007 special report, conducted by A.M. Best, revealed that around 7 million homes were sold in 2006. (Realtor.org reported almost 6.5 million homes sold.) Factoring in what Schmidt describes as the “65 percent ignorance factor,” more than 4.5 million homebuyers spent on average of $2,748 (2007 average as cited by Bankrate.com) without knowing what they spent the money for.

“These are staggering statistics,” says Schmidt. “And, the numbers confirm what the GAO and HUD also concluded — the title industry needs radical reform.”

Thanks to the national media’s recent scrutiny of the title industry, and last year’s GAO report, the reason for the “65 percent ignorance factor” has become obvious – in the words of the GAO report, “Because consumers generally do not pick their title agent or insurer, title agents do not market to them but to the real estate and mortgage professionals who generally make the decision.”

The process has led to widespread allegations of RESPA violations, chiefly “fees, kickback, or anything of value”…in return for referring business among realtors, lenders, or attorneys.

HUD has responded to the GAO recommendations, and while the proposed RESPA reforms are designed to help consumers shop more intelligently and better understand where their closing costs are going, they will not immediately affect what the myClosingSPACE.com study also revealed – 62 percent of all consumers did not know they could purchase their own title insurance and closing services.

“This will change once RESPA reforms are passed,” says Schmidt. “With simplified and standardized forms, consumers will begin to shop for the best values. That will force title insurance companies to actively market to consumers. Involved consumers will make the industry more transparent, more honest, and more market friendly.”

Published in early 2007, the myClosingSPACE.com survey interviewed more than 600 people, grouped into three classifications – people looking to purchase a home within the next year, those currently in the process of buying a home, and consumers who purchased a home within the past 12 months. Findings revealed that 23 percent learned about title insurance for the first time when they took the survey, and another 32 percent found out about title insurance at the time of their closing. The study was conducted by Atlanta, Georgia based Images Market Research.

Since 2006, myClosingSPACE.com has been committed to change in the title insurance industry by marketing title insurance and closing services directly to consumers and professionals online, bringing greater transparency to the process, providing consumer education, and by lowering the costs for title insurance and closing services. myClosingSPACE.com has expanded its presence nationwide, and was acquired by the Titledge Group in March of 2008.

Note: Mr. Schmidt is available for interviews upon request.

Contacts

myClosingSPACE.com
Larry Weiner
PR Director
Phone: 908-206-3243
E-Mail: lweiner {at} larrymweiner(.)com