2.10.05

January Highlights

Outlook is bright for 2005. January comparative shows a 2.7% increase in the average home sale price in Mecklenburg county. Forecasters expect home prices to continue to increase during 2005. An increase in jobs is expected to fuel the demand. During the first 2 months of the 4th quarter of 2004, 5500 jobs were added in Mecklenburg. This decreased the unemployment rate from 5% during the 3rd Qtr to 4.8% during October/November.

Although interest rates will likely increase over the year, they will still remain relatively competitive.

( February 10, 2005) --   At a cost ranging from a few hundred dollars to thousands, title insurance is one of the biggest expenses homebuyers face at settlement but one that is necessary for the lender to sign off on a mortgage.

The borrower fronts the cost for it, but it is the lender that the policy actually protects against outstanding liens or other claims on the property, although homeowners may take out a separate policy to protect themselves.

Before the secondary market emerged, making the consumer pay for title insurance was logical given that primary lenders assumed the greatest risk of borrower default. Now, however, lenders quickly securitize and sell individual loans on the secondary market, essentially ridding themselves of the default risk—although they still need the title insurance in order for Fannie Mae, Freddie Mac, and Ginnie Mae to purchase the loans.

As such, there is an argument to be made for requiring the lenders, rather than the consumers, to shoulder the cost of title insurance.

According to Iowa Bar Association general counsel Jim Carney, for example, these premiums "ought to be considered a cost of business that the lender assumes and pays for" since the coverage is needed for the secondary market.

Reform advocates say lenders would get better deals than individual consumers and that the premiums would be more uniformly and fairly priced.

Source: Wall Street Journal (ONLINE) (02/10/05); Cullen, Terri