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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (28951)	3/19/2005 3:15:46 PM
From: ild	Read Replies (1) \| Respond to of 110194

First American to cut refinancing fees The reduction for California customers comes after criticism over referral practices. By JEFF COLLINS The Orange County Register First American Corp. responded Thursday to recent criticism of its title-insurance practices by announcing plans to reduce and simplify fees California customers pay when refinancing home loans. The Santa Ana-based firm estimates that its "First American One Rate" plan will cut title-insurance and escrow fees by about 30 percent. The company declined to give out an exact dollar figure on the savings because the state has yet to review plan details. But First American did say the discounts could cut its 2005 profits by as much as $5 million. "It's still kind of tentative," said Paul Hammann, an underwriting director at First American. Refinancing customers who use First American for both title insurance and escrow services will see those fees consolidated into one line item. Other loan-finishing charges will still apply. First American and its chief competitors - Fidelity National Financial and LandAmerica Financial Group - came under scrutiny in California, Colorado and elsewhere over allegedly paying builders, lenders and real-estate firms for customer referrals. State insurance regulators and title industry officials differ over whether the practice is legal. California Insurance Commissioner John Garamendi called the referral deal a "scam," accusing insurers of overcharging homebuyers and splitting the profits with those making the referrals. First American agreed last month to refund $24 million to borrowers under a settlement with Colorado regulators over the practice. A California Department of Insurance spokesman and a consumer attorney both said that, while it's too soon to comment on First American's one-rate plan, they believe title-insurance companies overcharge consumers - especially because there's little risk of a title problem when property owners merely are refinancing their homes. Claims are filed on just 3 percent to 5 percent of the titles insured during refinancings, said Dan Mulligan, a San Francisco consumer attorney specializing in title-insurance cases. Rates on refinancings, he said, "are totally out of relationship with any risk involved." First American's Hammann explained, however, that his firm is able to pass along savings it's just now realizing from a $100 million investment in a new computer network. First American, which has about 30 percent of California's market share, filed its proposal with the state insurance department Wednesday, Hammann said. The insurance department has 30 days to review it and decide whether to approve it, deny it or require that it be modified. ocregister.com