The CUSO offers cost savings in two ways. The first is through an owner’s policy that covers the borrower. The second is through a concurrent lender’s policy that covers the lender.
For example, if a home’s purchase price is $400,000 and the loan amount is $350,000, the CUSO’s website says its policies would total $1,008 and $383, respectively. While it's difficult to quantify the savings as all title insurers have different posted rates, Berriz estimates credit union members up to nearly $500 per transaction compared to other major direct insurers.
DID YOU KNOW?
A 2009 California bill makes it “unlawful for any title insurer, underwritten title company or controlled escrow company to pay, directly or indirectly, any commission, compensation, or other consideration to any person as an inducement for the placement or referral of title business.”
According to Frank Berriz, president and chief executive of California Members Title Insurance Company, that means pens, pads, and swag with a permanent logo are ok. Financial benefits are not.
The CUSO bases its rates on the purchase or refinance amount and is able to offer low rates because it keeps expenses low. For example, the CUSO has no sales staff and relies on word-of-mouth to increase awareness.
A Strong Start
Title and escrow service can be complicated, and whereas members can shop for the service, most don’t. Instead, they often rely on a referral from their real estate agent.
“Real estate agents have title and escrow companies they prefer working with,” Berriz says.
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The CUSO has a relationship with California Credit Union, but it needs to differentiate itself to gain the attention and trust of local realtors. That why the locally owned and operated shop plays up its personalized service.
Many national insurers outsource their title services to reduce costs, Berriz says. California Members Title Insurance Company does not.
We felt we could reduce members’ cost and provide the type of service they are accustomed to.
“We do everything on our own with our on-site staff,” the chief executive says.
And right now, business is good.
The CUSO has processed more than 7,000 transactions since October 2015, mostly in refinances. And while it's hard for Berriz to estimate total cost savings provided by the CUSO, several hundred dollars saved across thousands of transactions is no small change.
The potential rate increase has slowed refi activity in recent months; however, according to Berriz, HELOCs have now exploded as a way for homeowners to tap into equity.
Despite a changing mortgage environment and challenges from a lack of a sales staff, the first 20 months at the CUSO have been both rewarding and successful, Berriz says.
And members have responded positively. They've been complimentary and appreciative of the CUSO's staff and services, Berriz says. The CUSO will build on these response in the months to come.
“It’s been a very good start,” he says.