Guest Blog: Price Competition Begins in Title Insurance Industry Today for the First Time in New Mexico Since 1985

This is a guest blog by Fred Nathan, Executive Director of Think New Mexico.

Title insurance companies may offer customers rates that are lower than the single rate schedule promulgated by the state Superintendent of Insurance, under rules that take effect today. Title insurance, which is required by banks before they will approve or refinance a mortgage, is one of the largest elements of closing costs.

Under the New Mexico Title Insurance Law enacted in 1985, the Superintendent of Insurance promulgates a single rate schedule for title insurance prices. This law, which was drafted by the title insurance industry, eliminated price competition by prohibiting companies from charging rates lower than the state-promulgated rate. Only two other states, Texas and Florida, prohibit price competition in the title insurance industry.

In 2009, after a two-year effort, Think New Mexico successfully championed the enactment of a law reforming the title insurance industry. The new law allows title companies to charge rates lower than the state-promulgated rate schedule if they file their proposed rates with the Superintendent of Insurance and receive prior approval to offer them. However, the law could not take effect until the Insurance Division implemented regulations establishing the process for prior approval of lower rates.

The regulations that take effect today allow title insurers to file their proposed lower rates with the state Insurance Division, which has 60 days to approve them before they can be offered to homebuyers.

This is a big win for New Mexico families, who will soon have lower cost options for title insurance when they buy or refinance their homes. Price competition in the title insurance industry can only help New Mexico’s struggling economy and housing market.

The 2009 title insurance reform law also increased and extended the discounts available for title insurance policies purchased with mortgage refinancings, a provision that required no regulations and took effect in May of 2009. The enhanced discounts are available to any New Mexican refinancing a residential mortgage who provides the title company with the settlement or HUD statement from their home purchase.

Think New Mexico is a results-oriented think tank serving New Mexicans. The new title insurance regulations are published in the most recent edition of the New Mexico Register. For more information, contact the Title Insurance Bureau Chief Kenny Ortiz at (505) 827-4528.

This is a guest blog by Fred Nathan. If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.