Closing costs on home purchases skyrocketing in Illinois
A law firm president said Realtors across Illinois are involved in kickback schemes with the lawyers they use to write title insurance policies, contributing to closing costs more than doubling in the past decade.
Title insurance is essentially homeowners insurance against loss to past issues, such as boundary disputes and unknown liens on the property. Realtors typically guide the buyer to a law firm to facilitate that. A State Senate Licensed Activities and Pensions Committee hearing in Chicago last week examined whether there is a need for such transactions to be better regulated.
Attorneys’ Title Guaranty Fund President Peter Birnbaum said the need is dire because Realtors across Illinois are receiving bribes for that business.
“Kickbacks and other forms of illegal competition are growing, and the costs of these arrangements are being borne by the consumer in the form of higher prices,” Birnbaum said.
Birnbaum and others at the hearing alleged that this practice is why the average cost of closing on a home has more than doubled in the last 10 years.
“That’s an increase of 105 percent in the last 10 years, and it comes at a time when many home sellers are underwater, and the last thing they need is another $2,000 in fees,” Birnbaum said.
Birnbaum said his company is one that he says would be approached to provide bribes to ensure they are referred title insurance policy customers. Birnbaum said he wanted to bring the issue to light because it’s hurting homebuyers and sellers. Birnbaum said you rarely hear complaints about the system of kickbacks because the lawyers who would complain would surely lose that business.
The Illinois Department of Financial and Professional Regulation, which regulates the industry, said there are 19 licensed underwriter agencies and approximately 20,000 title agents in Illinois.
Illinois Association of Realtors President Greg St. Aubin told the committee that he and his members take great offense to Birnbaum’s accusation and that if Birnbaum knew of any kickbacks, he should report them.
“To make this broad-brush accusation that Realtors are involved in illegal kickback schemes, we find very offensive,” St. Aubin said.
–Illinois News Network