If you want to save money on one of the most costly items connected with a home mortgage, learn these two words: Reissue rate.

Reissue rates are discounts off the standard premiums charged on title insurance policies. Though the discounts vary from state to state and from title insurer to title insurer, they average 50 to 60 percent. Reissue rates are normally available only on refinancings, but in some areas they can be obtained on home resales where a title search was performed relatively recently for the seller.

Here’s how it works. Say you bought your home five years ago. Now you see mortgage interest rates in the mid-6 percent range and you decide to refinance. Should you pay full price for another title search and insurance policy? Given the fact that a comprehensive search of the public records on your property was performed just five years ago, there’s no reason to have to pay for another full search.

That’s why the title industry offers special discount pricing for situations such as yours. Rather than paying $1,200 for a new title policy, for example, why not take advantage of a reissue rate at $500 or $600?

Why not, indeed? Why isn’t the concept of discount pricing more widely known among American homeowners? Because it is not widely promoted to the general public, as even the industry’s national trade organization admits. James R. Maher, executive vice president of the American Land Title Association (ALTA), says that he is “aware that not all of our members disclose” the existence of reissue rate discounts.

But the association’s own Website recently posted an advisory for consumers referring to the “good news” from the title industry. The good news, put bluntly, is that you don’t need to pay more--provided you know to ask for a reissue rate when you apply for a refinancing.

Title insurers’ policies sometimes severely restrict the eligibility period to obtain reissue discounts. Others have strict rules requiring presentation of the prior title policy to the title agent, to prove that insurance still covers the dwelling. The rules and discounts also are regulated by state laws in most cases, so consumers need to ask what rules apply to their specific situation.

Generally your mortgage broker or lender can make the arrangements for a reissue rate at the time of selecting the title coverage or closing agent. Some brokers say that they routinely ask for reissue rates on refis as an additional service to their customers. But others admit that unless an applicant asks, they don’t mention the reissue rate option.

Some title, escrow or settlement attorneys also routinely mention the existence of a lower cost option. But the financial incentives for them are heavily weighted to non-disclosure, as ALTA confirms. The smaller the premium that is charged for the insurance coverage, the smaller the compensation to the title agency or settlement attorney. The avarage national “split” of the premium charged at closings, according to ALTA’s Maher, is 70 to 72 percent to the title or settlement agency, and the balance to the title insurance company. The splits go as high as 92.5 percent to the agent or attorney and just 7.5 percent for the insurance, says Maher.

ALTA’s Website posting is intended to dispel some of the mystery about reissue rates. Although it offers little in the way of practical details, its fundamental message is one that homeowners should heed: Say the magic words. Ask for a reissue rate when you go to refinance. Don’t pay full price if you don’t really need to.

Published: June 17, 2002

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.