Mortgages Blog

Finance Blogs » Mortgages Blog » Empire $tate tops list

Empire $tate tops list

By Holden Lewis ·
Monday, August 16, 2010
Posted: 10 am ET

New York, as it often does, occupies the most expensive spot in Bankrate's annual closing costs survey.

Arkansas had the lowest closing costs in this year's survey.

Texas is the second-most expensive state for closing costs. It often is. New York and Texas usually find themselves in the top two, for a number of reasons. The state of New York levies some taxes directly onto lenders, and those costs are passed along. And in New York, lawyers perform closings, and lawyers are expensive. Outside the northeast, closings tend to be done by title or escrow agents, who charge less than lawyers for their time.

In Texas, title insurance is expensive. Texas has what are called "promulgated" rates for title insurance premiums and title services. "Promulgated" means that those fees are set by state regulators, and title insurance companies and title service providers have to charge that rate -- no more, and no less.

Yes, you read that right. In Texas, it is illegal to charge less than the promulgated rate for title insurance. It is flatly illegal for title companies to compete on price. Texans like to think of themselves as rugged capitalists, but comfy socialism thrives in the Texas title insurance industry. The title insurance companies have one of the strongest lobbies in Austin.

I wish the cost of title insurance were an issue in this year's elections for governor and lieutenant governor. Instead of vowing to cut title insurance costs for Texans by requiring the insurance companies to compete, the candidates are squabbling about border security, which is a federal issue.

You would think that Gov. Rick Perry or challenger Bill White would make expensive title insurance a campaign issue. I wonder why they don't?

OK, off the soap box. Bankrate's annual closing cost study is a multifaceted affair. There's the gallery of the five most expensive states, the gallery of the five least expensive states, the list of states from most to least expensive, and charts of fee averages within states. That last one, the fee charts for each state, is a little tricky; make sure to read the explanatory paragraph.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
Joseph W. Eaton
August 17, 2010 at 8:15 pm

Dear Holden:

Bankrate's GFA report of August 16 will probably be ignored by the media, when they discuss the current housing industry situation. But there is a chance that your evidence will be bought to the attention of the new Consumer Financial Protection Agency. Its findings are not likely to have a legislative impact unless the Democrats gain votes, especially in the senate..

In Texas, companies must charge the minimum promulgated fee, but they usually go much above it. They can add unregulated fees, including junk fees, averaging in the 2008 FHA Closing Cost study to 55%. Some of the added fees were legitimate, for endorsements to cover unusual risk. But most of them were not. (This fact is not in the report. It was revealed to me by the people who made the study, on the basis of a special tabulation of their raw data.)

What is the penalty for charging more than 10% above the GFE at closing. Does HUD have the power to fine or do states?

Joe Eaton