Jun. 18--In Texas, unlike every other state except for Florida, the state sets the rates for title insurance, so there's no way for homeowners to shop for a better deal.

Rates are reviewed every two years. They were reduced 6.5 percent in 2004 and 3.2 percent in 2006, but stayed the same in 2008.

Currently, the rate is about $843 for a $100,000 home.

There's evidence, though, that the rates are too high, according to a report by the Government Accountability Office.

The 2007 report quoted figures from Bankrate.com, which examined rates in each state's largest urban area. It found that the average rate nationwide for a $200,000 loan was $663.

For that amount, title insurance companies may only have to do a few seconds of work, the report says.

Typically, title insurance companies have detailed databases, known as title plants, that show the ownership history for every piece of land in a county.

"During a tour of one title plant in Texas, we observed a title examiner obtain nearly all documents pertinent to the title search and examination in electronic format within seconds," the GAO report says.


What's more, it's rare that title insurance companies have to pay a claim, the GAO reported. And while premiums go up depending on the price of a purchase, "insurers' losses rose only slightly and agents' search and examination costs generally either did not increase or, in many cases, fell."

The GAO report found that many real estate agents had deals to steer business to title insurance companies, and were sometimes even paid for referrals. That creates the appearance that title companies are being chosen on the basis of the referral fee, rather than on their qualifications. In some cases it can also be illegal under anti-kickback laws.

Aaron Day, a lobbyist with the Texas Land Title Association, said it's hard to make a valid comparison among states. In some states, the rate covers just the insurance premium, and the buyer pays a separate charge for a title search. In Texas, the cost of the title search is included in the insurance rate.

For more online: www.gao.gov/new.items/d07401.pdf

MIKE LEE, 817-390-7539