"They are covered and do not really care about your coverage. That is why owners title insurance is always optional, while the lenders policy is required." - brickeyee Perhaps, but in this case the title company services only credit unions in the local area. In fact, they are a wholly owned subsidiary of our own credit union, which is handling the loan. Credit unions are supposed to exist for the benefit of their members. All the folks on the other side of the table at closing (CU loan officer, CU construction mortgage official, and title company official) seemed genuinely surprised when I questioned declining owners title insurance. They flat out stated that none of their construction loan customers ask for or get owner's title insurance, which is why I posted here. Bear in mind that this closing covered both loans. The construction loan automatically converts to a fixed rate conventional loan on completion of the house. There is no second closing where title insurance would come up in the future. The CU in question has a very active construction loan program with dedicated officials overseeing it. It isn't a small or part time operation. They run a full business credit/risk analysis on the contractor, and they send specialists out to inspect the build on a regular basis and prior to any payout. I'll be calling the title company next week for further discussions.

Here in CT the house next to us was abandoned last January. Compalints began with the town but no one could get ahold of the mortage company, the town said they could not go on the property including the 'set back' line. In March or April it went up for auction with several interested parties. They wanted a very large amount of money for it and considering it had been destroyed by previous owners, pipes had burst, structural damage had been done and needed a new spetic they would not enterain any lower bids. The house then sat. Several of us in the neighborhood went to the town about it - I in particular went in May and complained b/c the house butts up against my back yard, had a man made water feature/pond and they had piled garbage in bags on the deck and filled the cars with garbage, food prior to leaving. I have small children and raccoons had taken up living there due to food/water source. I complained about failure to use my backyard due to animals, etc. I also asked for a name of who to send hospital bills to when my children needed medical care from animal attacks. We then got into it about 'getting rid' of the raccons and one of our police officers was at the town hall by chance and he suggested that I pay for traps to be set up. I work in a law firm and advised them they were inhibiting my right to use my property but it got no where. In any event - My husband and I went on to contact the health dept., the State Dept. of health and various news stations as did other neighbors. Finally, in July - someone came and mowed the yard. In Sept. someone came and cleaned the house - they told us it took 20 bombs to kill was was moving in the house inside full bags of garbage. (I had been inside in early spring and there was food, flies, etc. everywhere - GROSS.) I will also say that we were advised NOT to mow the lawn b/c they claim that it could be considered tresspassing and desstruction of property. We rotated mowing the grass until the end of the season disregarding the town. The house went up for sale 'as is' by a real estate company in the fall and they are not disclosing it was a foreclosure or any of it's problems. My neighbor was outside when a potential buyer started talking to him and had no idea about the issues - when his 'realtor' came outside to join him - she said she new nothing about it and would have to look into it. It is now 1 year later and it still sits.

Just a vent here - I have been really tempted by this one house, so I went out to USAA's website to try to figure out the whole mortgage thing - so confusing! If a point is usually 1% of 100,000 - then how come they list variations on the point amounts for the same loan amount? I could go on about how baffled I was. I called and basically got the apply on line for pre-approval, then its 350.00 when the loan goes through. Now others on this board have said you should be able to get all the numbers up front to really study first - but both my credit union and USAA have you apply (50.00 for the C.U.) first and my impression is they don't get into how much anything really is till the very end - so how the H*** do you compare? Or even figure out which loan is best for you?

The other weakness of many title insurance policies is the payoff is limited to the value when the policy was issued. You purchase a house for $200,000. The lender policy covers the mortgage of $160,000. The owners policy covers the remaining $40,000. Ten years later the property is worth $300,000. A title problem arises. The title insurance company is on the hook for the the mortgage balance after 10 years, and the additional $40,000 owners policy. Add to that legal costs of defending the title, and they may just pay off. You get $40,000, the lender gets the mortgage balance, and you no longer own anything. Tough luck about the increase in value. Here is your $40,000. Go find another house. There are title policies that increase the payoff, but like everything else they cost more for the additional risk.