The Uniqueness of the Chicago Market…

Anybody who has spent any time in the Title Insurance Industry quickly comes to the realization that all Title Insurance is local. Even with a state governed by a singular set of rules, such as Illinois, you can have vastly different markets. The Chicago Market is comprised of roughly of a 6 county area of northeastern Illinois and contains about 10 million people. The rest of the great state of Illinois has about 2.5 millions people and is, for the most part, a patchwork of farms and small towns along with the relatively small and self contained Peoria, Rockford and St. Louis markets.

The Chicago market is attorney directed. Some 99% of residential resales are directed to the title company by the seller’s attorney. These attorneys have a relationship with the title companies in which they are the title issuing agent. The attorney must do the title exam and takes all the risk, in turn takes the majority, if not all of the premium. The title agent makes the closing fee, a service fee from the Attorney Agent and some small ancillary fees. Realtor’s, for the most part, have no real function in the closing process.

Now, once you step foot outside the Chicago Market into rural or Southern Illinois, these Attorney Agent programs don’t really exist. Realtor’s direct resale’s to the Title Company of their choice and may or may not be engaged in a Controlled Business relationship with said title company. This also leads to many bifurcated transactions, transactions that simply do not exist in the Chicago Market. Attorney’s tend to be absent from these transactions and the consumer suffers. As a buyer, you’re lucky to get survey coverage or even standard exceptions waived.

I have always marveled at how one state, with one set of title insurance laws can have such different ways of completing a simple resale transaction. I’m not going to pass judgment on which way is better, heck, maybe neither is right. All I’m going to say is that Illinois proves that Title Insurance is local and the best way to govern a local industry is to do it locally. I believe that Title Insurance should be removed from the proposed Consumer Financial Protection Agency. To attempt to change the intricacies within a local marketplace with overreaching federal legislation can have a paralyzing effect.