Title Insurance Refinance Discounts
One key piece of the title insurance reform law that Think New Mexico successfully championed in 2009 increased the discounts available for homeowners who buy policies when they refinance their mortgages. (These policies are less expensive because the homeowners already purchased a title policy for the property when they bought the house.)
The new discounts are:
- at least 60% less than the full policy price for a homeowner refinancing 0-3 years after buying (or previously refinancing) the home;
- at least 50% after 3-5 years;
- at least 40% after 5-10 years; and
- at least 20% after 10-20 years.
To qualify for these discounts, all homeowners need to do is bring in their closing statement (often called a HUD statement) to demonstrate that they bought title insurance when they purchased the property.
Unfortunately, data collected by the Insurance Division of the Public Regulation Commission has found that many customers are not yet receiving the discounts to which they are entitled. As shown in the chart below, from May 2009 (when the law first took effect) through August 2010, only 26% of the policies purchased by New Mexico homeowners refinancing their mortgages received the new discounts (rather than the smaller discounts established by regulation prior to the reform law).
Here is a summary of the data reported to the Insurance Division by title insurance underwriting companies (a more detailed chart showing how calculations were made is available as a pdf here):
| NUMBER OF REFINANCE TRANSACTIONS RECEIVING NEW, HIGHER STATUTORY DISCOUNT RATES MAY '09-AUG '10 | |||
| Title Insurance Underwriter | Number of Transactions that Received New Statutory Discounts | Number of Transactions That Did Not Receive Statutory Discount | Percentage of Refinance Transactions Received the New Statutory Discounts |
| First American | 1,685 | 3,880 | 30% |
| Fidelity | 1,689 | 2,835 | 37% |
| Lawyers | 436 | 1,876 | 19% |
| Commonwealth | 116 | 1,939 | 6% |
| Stewart | 292 | 593 | 33% |
| Chicago | 0 | 595 | 0% |
| Old Republic | 95 | 252 | 27% |
| Ticor | 0 | 18 | 0% |
| Entitle | 4 | 0 | 100% |
| TOTAL | 4,317 | 11,988 | 26% |
After sharing this data with New Mexico's title insurance companies, we received several responses detailing how some companies are addressing this concern:
- The Title Company, Inc. of Ruidoso, NM sends all of its refinancing customers a "borrower questionnaire" well in advance of the closing of the loan. The questionnaire includes a statement in bold type explaining that customers are eligible for a discount if they provide a copy of their settlement statement from the original loan closing.
- Territorial Title of Las Vegas, Inc. contacts the "lender, real estate agent and /or consumer to obtain the necessary documentation" to provide the higher discounts.
- Title Services, Inc. of Raton, NM contacts "the borrower or lender to obtain a copy of the policy or HUD I [settlement statement] for that policy."
- The New Mexico Land Title Association writes that it "has in the past and will continue to urge its members to ask customers for their closing statements or a copy of the prior loan policy if they happen to have a copy of it. This way they will receive the [higher] statutory discount."
We encourage all New Mexico homeowners seeking to refinance their mortgages to bring in their original closing statements and request the new, higher discounts rates. We also encourage all of New Mexico's title insurance agents to inform their refinancing customers that they will pay less for title insurance if they bring in their closing statements.
