I’m guessing many dear readers have been waiting day and night for the details on the money saving method mentioned in Part I, and some may have delayed their closing date. (OK, I’m being delusional that anyone even read Part I, much less believed it could be true.) Well, I wouldn’t spend those saved $1000’s before finishing the rest of this post.
As it turns out, my friend was able to enact this transaction and actually did save the purported $1000’s mentioned in the original story using a little known discount called a reissue rate, which can save up to 50-60% of a full policy. This effectively involves using the existing owner’s insurance company to “reissue” the policy to the new owner. It makes sense that a discount would be in order since the insurance company has already done a significant portion of the work for the existing owner and won’t be starting from scratch. Many brokers won’t mention this due to existing relationships with certain title companies, and there’s no motivation for the insurance company to mention it either, so the catch is to know the discount exists and to ask for it.
In the end, the reissue method was adequate enough for my friend’s mortgage company to endorse the mortgage, but whether this is the case in all mortgage applications can only be determined on a case-by-case basis. As more of the deed and mortgage processes are handled by computers, the risk afforded by title insurance will continue to decrease, and it’s likely title insurance companies will have to look for other ways to generate revenue. That’s when we can really start saving.