ALTA® Responds to Harney Article on Radian
December 10, 2001
Washington, DC– The American Land Title Association (ALTA) responded today to the article by syndicated real estate columnist Ken Harney concerning the product known as Radian Lien Protection. James R. Maher, Executive Vice President of ALTA, said, "Mr. Harney’s representation of our lawsuit is in error. All we want is a level-playing field. Radian, a mortgage guaranty company, operates under a much different regulatory regime than title insurers must. If they want to offer title insurance, let them establish a qualifying company, pay our premium taxes, and honor our reserving requirements. Then we can compete on equal terms." ALTA filed suit in California on November 20 seeking an injunction against Radian and its subsidiaries to prevent them from selling an unapproved and illegal product in that state. "We are confident that a plain reading of both the Radian policy form and the California statutory definition of title insurance will lead the court to only one conclusion: That Radian is issuing title insurance, is not licensed to do so, and cannot be so licensed in California," Mr. Maher said.
Mr. Maher went on to say, "We further take issue with Mr. Harney’s repeated favorable characterizations of this product. We previously advised him of the problems with the product which he notably failed to mention in his latest piece. We believe that the Radian product is inferior to standard title insurance, and will result in more risk for the lender and consumer because of the following:
- its extremely small and remote indemnity coverage for lenders;
- its failure to provide legal defense for the lender should a problem arise with the lender’s lien or the borrower’s title;
- its reliance on the borrower’s word that there are no outstanding liens on his title, (no true title search is done) which exposes the borrower to very real potential liability;
- its failure to fix any title problems that could subsequently cloud the title;
- its reliance on FICO (credit) scores which, unlike title insurance, makes it available only to "A" rated borrowers,
- the very questionable nature of its supposed cost and time savings (Title insurance reissue rates—which are broadly available despite Mr. Harney’s contentions—make it comparable in cost in many transactions with the Radian product.)"
Mr. Maher went on to say, "Perhaps of the most immediate importance, however, is the fact that this product has already been determined to be title insurance by both the Texas and Florida departments of insurance. Only licensed title insurers may sell title insurance, thus making Radian’s product illegal. Radian’s filings of the product in these states has been rejected, and they were advised they could not offer this product in those states. Apparently, Mr. Harney’s Radian contact failed to advise him of this fact. He would have gotten a more balanced view if he’d chosen to call ALTA for comment before publication." Mr. Maher also noted that other states were actively considering the question of the legality of Radian’s product as well as other practices of its wholly-owned subsidiary, ExpressClose.com.
"It would seem that Mr. Harney believes that any product with a vague claim to cost and time savings and with a technological aura about it is good for the consumer, without any analysis of whether the claims are accurate or the alternative has any significant downside. We believe a balanced comparison between this product and standard title insurance would raise serious questions in both areas. Mr. Harney, in our view, has not engaged in such an analysis, and we are troubled by his devoting two of his national columns to promoting such a product," said Mr. Maher.