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Title insurance rate hike for Texas homeowners

Amarillo, TX - If you're in the market for a home or you're refinancing your own, you'll be paying more for your title insurance in the state of Texas.

On May 1st, title insurance rates in Texas went up for the first time in 22 years. And while it was only a 3.8 percent increase, it renewed arguments to reform the current state-run system.

Title insurance is a specialized kind of property insurance that protects you against mistakes or oversights like liens or claims of ownership.

"There could be a tax lien that someone missed, there could be some issues with descendents of an estate," explains William Ware, president of Circle A Title Company in Amarillo.  "There could be some sort of error that could cause someone to come back and sue you, and say, 'That's my property,' and you could lose your property if you don't have proper representation in your title insurance policy."

Title insurance is not mandatory in Texas, but lenders require it to make a loan.  The rates are set by the state insurance commissioner - and rates have actually been dropping over the last couple of decades.

"The prices have come down over 20 percent in the last 22 years on this rate right here," says Ware.  "So that's been a good thing, that's because of regulation, but on the flip side, if we wanted to lower the price for our customers, regulation won't allow us to do that."

Texas is generally known for its lax regulation, but title insurance is heavily regulated by the state.  Current legislation pending in the Texas house would increase consumer choice and allow more leeway for negotiation.

"I think it would be better if independent agencies could set their own rates, and it would provide a little more competitiveness," says Ware, "but I am convinced that the title insurance regulators are extremely fair to the consumer."

The state of New Mexico deregulated its title insurance in 2009, but most insurers wouldn't come down from the maximum price, so consumers didn't see much of a drop.

If you'd like to learn more about the issue or about how title insurance works in the state of Texas, follow the links attached to this story.

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