What Explains Variation in Title Charges? a study of five large markets

by HUDUSER

WHAT EXPLAINS
VARIATION IN
TITLE CHARGES?
a study of five large markets
U.S. Department of Housing and Urban Development | Office of Policy Development and Research

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WHAT EXPLAINS
VARIATION IN
TITLE CHARGES?
a study of five large markets
June 2012
Prepared for
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
Prepared by
Robert Feinberg
Daniel Kuehn
Signe-Mary McKernan
Doug Wissoker
Sisi Zhang
The Urban Institute
Washington, DC

Acknowledgments
This report was funded by the U.S. Department of Housing and Urban Development Order Number
C-CHI-01027CHI-T0001.
The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that
examines the social, economic, and governance problems facing the nation. The views expressed are those of
the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
The report benefited from the oversight, suggestions, comments, and experience of William Reid, as
well as from comments by William Reeder and Kurt Usowski, all of HUD’s Office of Policy Development and
Research. The authors also thank the settlement agents, industry representatives, and title insurance experts
who contributed to our qualitative analysis.
Disclaimer
The contents of this report are the views of the authors and do not necessarily reflect the views or
policies of the U.S. Department of Housing and Urban Development or the U.S. Government.

Abstract
Title charges include title insurance premiums and often charges for closing or settling a loan. Title
insurance premiums vary considerably across metropolitan areas, from an average of $700 in Des Moines,
Iowa, to $2,190 in New York City. Housing market institutions and regulations explain some, but not all, of
the variation in premiums. The non-premium title charges vary as well. This report explains some of the
remaining variation in title costs within five housing markets. Local regulations and home prices are
substantially associated with costs. Characteristics of the home purchase that make title search more
challenging are modestly associated with costs in some markets, but not others. Significant remaining varia-
tion between the fees charged by individual settlement agents suggests consumers would benefit from shop-
ping for settlement services.

FOREWORD
Foreword

In the current economic environment, much consideration is given to how to
improve households’ access to credit to purchase and refinance homes. While credit
scores and house values play critical roles, it is also important to consider the costs of
the mortgage loan transaction. HUD has sponsored a line of research looking into
settlement costs incurred in connection with mortgage loans to better understand how
prices can be decreased by encouraging competition and consumer shopping. I am
pleased to share this report, which looks specifically at the title-related charges. Title
charges include title insurance premiums and endorsements, title search, and charges for performing the real
estate settlement and are a main component of the costs associated with closing a loan.
In 2007, the GAO issued a report on the title insurance market, which found that the industry’s
marketing and pricing raised questions “about the extent of price competition in the title insurance industry and
the ability of consumers to affect market prices.” This quantitative research addresses the issue of competition
by examining how much of the variation in title charges between and within five different housing markets can
be explained by differences in state laws, cost-related characteristics of the transaction, and non-cost related
factors relating to the household, housing unit, or neighborhood, and how much remains unexplained. The
study found that more than half of the variation in total title charges remains unexplained. This unexplained
variation may reflect market segmentation or relationships between real estate agents and settlement agents.
Both of these possibilities suggest that prices are higher than they need to be. Furthermore, the finding of
substantial differences in title charges between settlement agents within a market suggests that consumers
would benefit by shopping for title insurance and related services.
While this study examines title charges using settlement statements from 2001, its findings have
significance today. The study creates a baseline for evaluating the effectiveness of the revised Good Faith
Estimate and HUD-1 settlement statement, which were implemented in 2010 to improve competition by
encouraging lenders to shop for settlement services and to enhance the ability of consumers to shop for loans
and settlement service providers. It also provides quantitative research to support efforts by state and federal
regulators to make the title services market more competitive.
We hope that this study will join HUD’s other research on closing costs to contribute toward increasing
competition among settlement service providers and further encouraging consumers to shop for not just their
loans but also the settlement services so that they obtain the best prices possible.

Raphael W. Bostic, Ph.D.
Assistant Secretary for Policy
Development and Research

i
TABLE OF CONTENTS
Table of Contents
I. Introduction...........................................................................................1
II. Literature & Definitions ........................................................................3
Overview of the Literature on Title Charges, the Title Industry, and Regulations ........................3
Definition of Title Charges .............................................................................................................7
Qualitative Analysis—Understanding Title Charges in the Five Markets .....................................9
III. Data & Methods ....................................................................................13
Data .................................................................................................................................................13
Empirical Model .............................................................................................................................14
IV. Descriptive Results: How Much Do Title Charges Vary? ..................19
National Data ..................................................................................................................................19
Metropolitan-Area Data ..................................................................................................................20
V. Regression Results: What Explains Variation in Title Charges and
Components of Title Charges? ...........................................................25
Home Price......................................................................................................................................26
Cost-Related Factors .......................................................................................................................27
Non-Cost-Related Factors ...............................................................................................................27
Settlement Agent Effects ................................................................................................................27
Attorney Fees and the Role of Attorneys in Cook County.............................................................28
Loan Origination Fees and Itemization of Fees on the HUD-1 .....................................................29

ii
XV. Regression Results: How Much Variation Remains Unexplained?..31
XVI. Summary, Implications, and Future Research ...................................33
Summary of Findings .....................................................................................................................33
Implications .....................................................................................................................................33
Future Research ..............................................................................................................................34
XVII. References ............................................................................................35
XVIII. Appendix ...............................................................................................37

1
INTRODUCTION
I. Introduction
Title insurance and settlement costs represent
a substantial proportion of real estate closing costs
paid by consumers and add significantly to the cost of
purchasing a home. This study uses data on mortgages
in counties covering five major metropolitan real
estate markets to estimate the extent of variation
in title charges faced by consumers and the factors
associated with those charges. The analyses address
the following research questions:
• How much do title charges vary?
• What factors are associated with variation in total
title charges and components of title charges?
• How much variation in these charges remains
unexplained after controlling for a series of
factors commonly thought to influence title
charges?
These analyses contribute to the literature on
title insurance, and real estate markets more generally,
by assessing how factors hypothesized to influence
title charges are associated with those charges
across a variety of actors and markets. In addition
to comparing results across five different regulatory
and institutional environments (Cook County,
Illinois; Philadelphia County, Pennsylvania; Broward
County, Florida; Maricopa County, Arizona; and
Sacramento County, California),1 this study answers
these research questions from the perspectives of
various parties: consumers, regulators, settlement
agents, underwriters, and attorneys.
1
These markets or metropolitan areas will be referred to
by their common names in the report: Philadelphia and
Sacramento Counties will be referred to as “Philadelphia”
and “Sacramento,” and Broward, Cook, and Maricopa
Counties will be referred to as “Broward County,” “Cook
County,” and “Maricopa County.”
Analysis of title charges across the five
metropolitan areas suggests that the amounts paid
by consumers vary substantially, both between and
within housing markets. Price of housing units, age
of housing units, and foreclosure risk are found to be
associated with title charges, though the association
differs across markets and varies by components of
title charges. In most of the markets, title charges
for comparable properties vary substantially across
title companies. Evidence consistent with price
discrimination against minorities and less-educated
homebuyers exists in some of the metropolitan
areas. After controlling for various characteristics
of homebuyers, housing units, neighborhoods, and
the identities of the top title companies, more than
one-half of the variation in total title charges remains
unexplained.
The rest of the report is organized as
follows. Section II provides essential background on
the title industry, a review of the existing literature
on the determinants of title insurance charges, and
an explanation of the major title charges considered
in this report. Section III starts by describing the
data sources used in the analyses, the conceptual
framework used to identify the explanatory variables,
and the specific methods used in this report. Section
IV addresses the first research question by presenting
a descriptive treatment of variation in title charges,
and an explanation of how this variation motivates
the analyses in the rest of the study. Section V tackles
the second research question by presenting results
from models of the relationship between various
components of title charges and house, neighborhood,
and consumer characteristics. The components of
title charges are classified by the recipient of the fee
(underwriters, settlement agents, or attorneys) as well
as by whether it is regulated or substantially influenced
by local institutions (premiums and endorsements,
or attorney fees). Section VI summarizes and
discusses the amount of variation in title charges left
unexplained by the factors that are controlled for in
Section V. Section VII presents policy implications
from the perspective of consumers and regulators,
summarizes the findings of the research, and
discusses possible future research. Different terms
are often used interchangeably to refer to the title
industry. The terminology used in this report is
discussed in text box 1. The method of deriving these
charges and fees from the HUD-1 forms is discussed
in more detail in Section II.
The rest of the report is organized as
follows. Section II provides essential background on

2
the title industry, a review of the existing literature
on the determinants of title insurance charges, and
an explanation of the major title charges considered
in this report. Section III starts by describing the
data sources used in the analyses, the conceptual
framework used to identify the explanatory variables,
and the specific methods used in this report. Section
IV addresses the first research question by presenting
a descriptive treatment of variation in title charges,
and an explanation of how this variation motivates
the analyses in the rest of the study. Section V tackles
the second research question by presenting results
from models of the relationship between various
components of title charges and house, neighborhood,
and consumer characteristics. The components of
title charges are classified by the recipient of the fee
(underwriters, settlement agents, or attorneys) as
well as by whether it is regulated or substantially
influenced by local institutions (premiums and
endorsements, or attorney fees). Section VI
summarizes and discusses the amount of variation in
title charges left unexplained by the factors that are
controlled for in Section V. Section VII presents policy
implications from the perspective of consumers and
regulators, summarizes the findings of the research,
and discusses possible future research. Different
terms are often used interchangeably to refer to the
title industry. The terminology used in this report is
discussed in text box 1. The method of deriving these
charges and fees from the HUD-1 forms is discussed
in more detail in Section II.
Box 1. Title Charges Considered in This Report
• Total title charges. All charges paid by either the buyer or the seller and associated with title insurance
or services.
• Title insurance premium. The premiums paid for title insurance to cover both some portion of the title
search costs and the payment of claims. Different search costs are incorporated into the title insurance
premium in different markets.
• Endorsements. Additional premiums paid for additional insurance coverage.
• Net service fees. All monies received by the settlement agent, including their retained portion of the title
insurance premium and endorsements, and any other fees charged for title services and recorded on the
HUD-1 (such as abstracting, examination, or document preparation fees).
• Underwriter fees. The portion of the title insurance premiums and endorsements that are passed on to
the title insurance underwriter—the party that bears the risk of title insurance claims.
• Attorney fees. All fees paid to attorneys performing services other than those performed by settlement
agents.
This report follows the nomenclature of the HUD-1 that was in use in 2001 and will therefore refer
to charges when discussing monies paid by buyers or sellers to settlement agents, underwriters, or
attorneys. It will refer to fees when discussing individual components of the total title charge paid to
specific parties (for example, attorney fees). Finally, the report will use the term costs to refer to the
costs incurred by settlement agents, underwriters, or attorneys in providing title insurance or services
to the consumer.

3
LITERATURE & DEFINITIONS
II. Literature
& Definitions
Overview of the Literature on Title
Charges, the Title Industry, and
Regulations

Title charges are an important component
of real estate transaction costs. Title charges include
the costs of performing a title search, preparing a title
insurance binder, attorney or other settlement agent
fees, the cost of the insurance against title defects
covering the lender and (often) the owner, and other
fees related to processing the title insurance policy.
Establishing that a seller has legitimate ownership of
his or her property is essential to the smooth operation
of real estate transactions, given the large share of
household wealth tied up in property (GAO, 2007);
however, the process of searching the sometimes-
byzantine chain of titles to a property can be time
consuming. The specialization and experience that
settlement agents offer are an attractive alternative
to homebuyers searching court records themselves
(Baker et al., 2002). For these reasons, despite the
controversies associated with it, the title insurance
industry remains central to the American real estate
market.
Title insurance also merits attention
because it represents a substantial cost to consumers.
Woodward (2008) finds that nationally, title charges
averaged $1,200 per loan for FHA-insured loans
in 2001. The GAO’s (2007) study of the industry
identified a wide range of premiums, the major
component of title charges, from an average of $700
in Des Moines, Iowa, to an average of $2,190 in
New York City. Title charges are also an important
component of the wider array of closing costs. A
widely cited, regularly conducted survey of closing
costs by bankrate.com consistently concludes that
the substantial variations in title insurance charges
across real estate markets account for much of the
observed variation in closing costs (Lewis, 2010).
Title insurance is a controversial
industry. Many researchers argue that title charges
are held substantially above cost by industry practice,
state regulation, and the infrequency with which
consumers shop around (Woodward and Hall,
2010). One of the most prominent criticisms of the
title insurance industry is that costs are kept high
by reverse competition, kickbacks, or inappropriate
referrals. Because consumers are generally unaware
of many of the technical details involved in closing a
real estate transaction, real estate service providers
(such as settlement agents, lenders, and real estate
agents) often compete for each other’s referrals and
business. Although consumers may technically
be free to challenge referrals or seek out their own
settlement agents or title insurers, in practice they
rarely do so. Settlement agents may engage in reverse
competition on several fronts, seeking out initial
referrals from real estate agents as well as profitable
partnerships with title insurance underwriters. Title
insurance companies also compete for settlement
agents by negotiating more generous premium
retention rates.
Critics allege that in competing for the
business of real estate agents and underwriters,
settlement agents have less incentive to satisfy what
they perceive to be a captive customer (Dumm,
Macpherson, and Sirmans, 2007; GAO, 2007; Kay,
2007; Lehmann, 2005; Owen, 1977; White, 1984).
Even more sympathetic analyses highlight reverse
competition as a genuine problem that is inherent
in the market and requires a solution (Roussel and
Rosenberg, 1981). Although Roussel and Rosenberg
(1981) suggest that self-regulation through rating
bureaus offers such a solution, others contend that
the problem can be addressed only by affirmative
rate regulation by the state (Leslie and Bethel, 1983).
Reverse competition is ultimately a problem because
of the potential it introduces for a conflict of interest
on the part of lenders, settlement agents, and realtors.
Most agree that reverse competition is inherent in the
incentive structure facing settlement agents, but more
egregious cases of fraud and sham business affiliates
have also emerged, leading to prosecutions (Kay,

4
2007; Lehmann, 2005). The Real Estate Settlement
Procedures Act (RESPA), enacted in 1974, is intended
to limit reverse competition by prohibiting kickbacks
and referral fees, and by outlining requirements for
acceptable affiliated business arrangements between
settlement agents and other parties in the settlement
process. Reverse competition is still possible,
however, through the negotiation of the premium
retained by the settlement agent.
Another common critique is that most
title charges go toward expenses (and profit) rather
than covering claims. Birnbaum (2005) notes that,
between 1995 and 2004, title insurers paid only 4.6
percent of premiums to resolve claims, as compared
with around 80 percent of premiums going toward
claim settlements by property and casualty insurers.
The title insurance industry points out that the low
share of the premiums that go to resolve claims is
attributable to the unique structure of title insurance
in which the insurance is covering future discovery
of complications that are missed in the title search.
As a result, detailed title searches largely replace
standard actuarial analyses, and costs incurred during
search are intended to prevent claims (Miller, 2006;
Rosenberg and Roussel, 1981). If less time were spent
on searching, payments to resolve problems would be
higher. Miller (2006) emphasizes that many studies
alleging that premiums are excessive relative to
payments for claim resolutions focus on short time
periods, although claims in the title insurance industry
are strongly contingent on foreclosure rates and,
therefore, the business cycle. Garcia (2009) reviews
the performance of the title insurance industry in the
wake of the housing bust and notes that claims are
considerably higher than they were during the boom,
at the same time that a weak housing market is cutting
into the collection of new premiums. Disagreements
on the appropriateness of the low share of premiums
going to resolve claims revolve around differences
of opinion on the role of title insurance. Although
critics compare title insurance to other insurance
arrangements, others note that the function of the
title insurer is to investigate title chains to prevent
claims, and then cover the remaining, inevitable risk.
Jaffee (2006: 94) attempts to clarify this confusion
by pointing out that “title insurance is really a service
product,” referring to the service of the title search
itself, “and the insurance policy is a form of a product
guarantee.”
In addition to the charges of market
failure outlined previously, many characteristics
of the title insurance industry are considered to be
anachronistic. Woolley (2006) has suggested that the
entire industry is rendered unnecessary by the advent
of digital housing records, and that it continues to
exist only as a result of regulatory protection. Eaton
(2009) has argued that Pennsylvania’s rating bureau
is essentially a cartel that keeps title insurance prices
higher than they are in other states by restricting
competition. Between 1972 and 1984 many states
authorized voluntary associations, known as rating
bureaus, to collect and analyze industry data and
file premium rates with the states on behalf of their
members. In 1985 an FTC complaint alleging that
these rating bureaus violated antitrust laws resulted in
their disbanding. The rating bureau in Pennsylvania
was reconstituted 4 years later according to new
court requirements, and it continues to operate today
(Lipshutz, 1994). Although Eaton (2009) cites these
rating bureaus as the major obstacle in Pennsylvania
to lower rates through competition, they have been
defended in the past as a bulwark against kickbacks
(Roussel and Rosenberg, 1981). Aside from the
question of rating bureaus, which are less common
than they have been in the past, the GAO (2007)
has found substantial concentration among title
insurance underwriters nationwide. Birnbaum (2005)
documented unusually high profit rates by title
insurers, and the GAO (2007) observed consistently
high returns on equity for the industry since as far
back as 1992.
In addition to regulatory and organizational
controversies, Woodward (2008) finds differences
nationally in title charges paid by minorities and
less-educated homebuyers. Homebuyers purchasing
houses in tracts with a high share of minorities or
a low share of college graduates tend to pay higher
title charges than those in more predominantly
White and college-educated neighborhoods (holding
other factors constant). She concludes that, “given
the absence of any reason race or education should
relate to the cost of establishing or resolving title
for a property, this appears to be straightforward
price discrimination, again suggesting a less-than-
competitive market” (Woodward, 2008: 89). These
concerns about price discrimination are especially
important to consider, given the country’s history of
racial discrimination in housing markets.
Consumers lack important information.
A primary reason for reverse competition in the
title insurance industry is that consumers face
severe information asymmetry problems during
the settlement of a real estate transaction (Dumm
et al., 2007; Kay, 2007; Stango and Zinman, 2011;

5
Woodward and Hall, 2010). Uninformed customers
are profitable enough to settlement agents that
Woodward and Hall (2010) raise concerns about
settlement agents expending resources to actively seek
out less informed customers, in addition to the more
traditional complaints that the interests of uninformed
customers will be ignored in pursuit of kickbacks.
Lacko and Pappalardo (2010) contend (with evidence
from a randomized experiment with 800 mortgage
borrowers) that part of the problem is the complexity
of current mortgage disclosures. They advocate
mandating a simple, one-page mortgage disclosure
form that is easier for homebuyers to understand.
2

Murray (2007) argues that information is so essential
to share with consumers in this market that attorneys
are guilty of malpractice if they fail to insist that their
client purchase owner’s coverage. In many ways, the
opacity of the settlement process is self-reinforcing.
The existence of reverse competition, by precluding
a market in which homebuyers can easily shop for
title insurance and other settlement services, keeps
buyers uninformed about alternatives. Woodward’s
(2008) finding that less-educated neighborhoods tend
to pay higher title charges is especially notable in the
context of information asymmetry; less-educated
homebuyers may be paying more because they are
especially prone to confusion about settlement costs
and title insurance.
Regulation of title insurance. The title
insurance industry is primarily regulated at the state
level, and regulations often focus on premium rates.
Of all 50 states and Washington, D.C., 10 have no
provision for premium regulation, including Illinois
(a state studied in this report) and Washington,
D.C., which Woodward (2008) has identified as a
title insurance market exhibiting large variation in
premiums. In addition, 21 states have file-and-use
provisions, in which title insurance companies can
set their own rates but must register them with a state
regulator who often has some authority to review and
reject filed rates. Of the states in this study, Arizona
and California are file-and-use states. Pennsylvania
is 1 of 16 prior-approval states, which are different
from file-and-use states in that rates must be
approved by the state before settlement agents can
use them. Another 4 states “promulgate,” or set rates
for settlement agents, including Florida, which is the
fifth market covered in this study, and Iowa, which
runs a state title insurance monopoly (Eaton and
Eaton, 2007). Table 1 identifies the procedures for
2
This disclosure was experimentally tested against the
mandated Good Faith Estimate disclosures and was
found to be clearer to consumers.
regulating title insurance premiums in all 50 states
and Washington, D.C.
States also impose monoline restrictions on
title insurers, preventing them from using their capital
to pay claims for multiple types of insurance. Jaffee
(2006) defends monoline restrictions by emphasizing
the safety of title insurance. Because title companies
only insure against past events and the search process
significantly minimizes the risk of claims being filed,
the benefits of diversification for title insurance are
minimal. Indeed, diversifying into riskier insurance
lines that are potentially correlated with title
insurance claims (such as mortgage insurance) could
create more risk and raise the cost of title insurance.
Many states also require a minimum title search
length. Because investment in a complete search
is generally not optimal, Baker and his coauthors
(2002) empirically determine optimal search lengths
for each state using information on foreclosure risk,
turnover, and so forth. They conclude that actual
state regulations on search length largely conform
to estimated optimal search times. Regulations to
prevent or prosecute fraudulent transactions such as
equity theft (a type of fraud some settlement agents
have perpetrated) and identity theft (fraud in which
settlement agents and many other parties are the
victims) are also common across states (Bagwell,
2009). In addition to these regulations of the practices
and prices of settlement agents themselves, a variety
of licensing, auditing, and capitalization regulations
structure who can participate in the title insurance
industry (Kay, 2007).
One might attribute observed cross-
state differences in title charges to variation in
regulatory mechanisms and local customs; however,
Woodward’s analysis also showed large variations
in title charges within states. For example, in the
District of Columbia, total title charges varied from
$1,200 to $2,300 for loans of about the same value—
despite the relatively small size of the District and the
lack of county divisions.
The primary role of the federal government
in regulating title insurance has been to restrict
kickbacks and reverse competition through RESPA.
Although referral fees are prohibited through RESPA,
retained premiums are still negotiated between title
insurance underwriters and settlement agents and can
be used as an incentive. In addition, RESPA requires
that prices for title services stay within a 10-percent
tolerance of the Good Faith Estimate of settlement
charges delivered to the borrower before closing.
LITERATURE & DEFINITIONS

6
Table 1. Premium Regulation by State
State Premium Regulation State Premium Regulation
Alabama File and use Montana File and use
Alaska Prior approval Nebraska Prior approval
Arizona File and use Nevada File and use
Arkansas Exempt/no provision New Hampshire Prior approval
California File and use New Jersey Prior approval
Colorado File and use New Mexico Promulgation
Connecticut Prior approval New York Prior approval
Delaware File and use North Carolina File and use
Washington, D.C. Exempt/no provision North Dakota Prior approval
Florida Promulgation Ohio Prior approval
Georgia Exempt/no provision Oklahoma Exempt/no provision
Hawaii Exempt/no provision Oregon Prior approval
Idaho File and use Pennsylvania Prior approval
Illinois Exempt/no provision Rhode Island File and use
Indiana Exempt/no provision South Carolina Prior approval
Iowa State monopoly South Dakota Prior approval
Kansas File and use Tennessee File and use
Kentucky File and use Texas Promulgation
Louisiana Prior approval Utah File and use
Maine Prior approval Vermont File and use
Maryland Prior approval Virginia Exempt/no provision
Massachusetts File and use Washington File and use
Michigan File and use West Virginia Exempt/no provision
Minnesota File and use Wisconsin File and use
Mississippi Exempt/no provision Wyoming Prior approval
Missouri File and use
Source: Eaton and Eaton (2007).

Title charges can vary widely across
different consumers. Previous studies examined
factors associated with variation in total closing costs
(Birnbaum, 2005; GAO, 2007; Woodward, 2008).
These studies consistently find considerable variation
across loans. The largest component of closing costs
is the lender fee, but a substantial cost (with a median
value of $1,284, according to McKernan and her
coauthors [2009]) was attributable to title insurance
and related settlement services. Woodward (2008)
finds that title fees rise with loan amount. This may
be seen as evidence of market power exercised by
title insurance underwriters and agents because the
costs of examining titles and insuring their validity
are unlikely to rise substantially with the size of the
loan involved. Although it is the case that the amount
of risk associated with title defects rises with the loan
amount, payments for title claims account for so little

7
of the premium that the effect of loan size on
premiums should be minimal. This pattern is often
interpreted as price discrimination against owners of
higher-valued properties. Others have pointed to only
modest discounts given to customers who are
refinancing and generally no discounts given to
purchasers of recently sold properties as indicators of
price discrimination and market power (Eaton and
Eaton, 2007). James Maher, a former executive vice
president of the American Land Title Association
(ALTA), suggested that the organization is aware of
settlement agents who do not disclose available
discounts for reissuing title insurance for recently
sold properties, and that ALTA considers this to be
“very bad practice” (Harney, 2002).
Previous research also concludes that
geography matters. Woodward (2008) shows that
borrowers of similar loan amounts pay widely
varying amounts for title services both across and
within states. Her analysis finds that 25 percent of the
title fee variation across the nation is because of the
borrower’s state of residence.
3
Much of this interstate
variation in title fees remains unexplained, even
after controlling for loan amount and demographic
characteristics of the borrowers.
Definition of Title Charges
In this study, title fees received by the
settlement agents, underwriters, and attorneys are
derived from data on the HUD-1 forms that are filed
at the time of the closing. The HUD-1 form provides
an account of the charges paid by the buyer and
the seller of the house. To learn more about closing
costs, HUD asked the Urban Institute to sample and
transcribe several thousand HUD-1 forms for FHA-
insured home purchase transactions from 2001. The
two resulting databases are described in the following
section. This section defines the title insurance
charges reviewed in this study with reference to their
location on the HUD-1 form. The first section of the
HUD-1, which records the name of the settlement
agent, the lender, and the address of the property, is
presented in figure 1.
4
This section of the form also
provides the mortgage insurance case number, which
is used to match the closing data used in this report
to additional FHA data.
3
For example, in 2001, North Dakota and Missouri had
average title charges of less than $800, while New Jersey
and California had averages of more than $1,900.
4
This version of the HUD-1 form was used at the time
that the data for this study were collected. Since that
time, a new HUD-1 form has been issued.
Title-related charges are itemized on the
HUD-1 on lines in the 1100 series (figure 2). Line
1108 provides the title insurance premium. Most of
this premium is retained by the settlement agent to
cover search costs, but a portion of it is paid to the title
insurance underwriter to insure against undiscovered
title problems. This retention rate is negotiated
between the underwriter and the agent (except in
Florida). In some markets, components such as
abstract or title search (line 1102) or title examination
(line 1103) are itemized separately, although in others
they are included in the premium. In most cases, both
lenders and owners receive title insurance coverage
(lines 1109 and 1110). Coverage for the second
parties is usually available at a substantial discount.
Attorney fees are recorded in line 1107, but they can
also be recorded in additional lines that are provided
on the form (1111 through 1113).
The HUD-1 form provides additional
lines (1111 through 1113) for recording fees that
are not noted in lines 1101 through 1110. These
fees include further attorney fees or clerical fees.
Endorsements are often recorded in these additional
lines. Endorsements provide additional title
insurance coverage for a fee and are usually added
at the request of the lender. Standard endorsements
include “restrictions, easements, and minerals”
endorsements, which protect land; “environmental
protection lien” endorsements, which insure against
losses associated with state environmental claims
on the property; and “planned unit development”
(PUD) endorsements, which insure that the house’s
development was organized in accordance with
regulations.
The HUD-1 provides two columns for
recording these itemized charges. The left column
records charges paid by the borrower (who is the
homebuyer in a purchase transaction). The right
column records charges paid by the seller. The
analyses in this study combine buyer and seller
charges for two reasons. First, from the perspectives
of the buyer and the seller, specific components of
the costs of a home sale are fungible. If a seller
nominally pays a share of the settlement costs, those
costs will be passed on to the buyer through a higher
home price. Payment arrangements determined at
closing may be determined by factors such as the
availability of cash on hand to pay closing costs,
but it is assumed that all costs are ultimately passed
on to the buyer. Second, from the perspectives of
the regulator, settlement agent, underwriter, and
LITERATURE & DEFINITIONS

8
attorney, the source of these fees (for example,
from the buyer or seller) is irrelevant.
This study focuses on five categories of
title charges: total title charges, net service fees,
underwriter fees, attorney fees, and premium
plus endorsement. Table 2 defines each of these
categories, and notes the line number from the
HUD-1 form that was used to construct the variables
used in the analyses presented in section V. A more
detailed treatment of the strategy used to model
these charges is provided in section III. Qualitative
Analysis—Understanding Title Charges in the Five
Markets.
Figure 1. Buyers, Lenders, and Settlement Agents on the HUD-1 Form
Figure 2. Title Charges on the HUD-1 Form

9
Table 2. Definition of Title Charge Categories
Title Charge Definition HUD-1 Line
Total title
charges
Total title charges are all charges paid by consumers to the
settlement agent or to attorneys for title work. This is the total of all
charges listed in the 1100 series of the HUD-1 form.
a
1101, 1102, 1103,
1104, 1105, 1106,
1107, 1108, 1109,
1110, 1111, 1112,
1113
Net service fees Net service fees are total title charges minus both attorney fees
(1107, and any additional attorney fees listed in the extra lines) and
the portion of the premium and endorsements that is passed on to
the insurance underwriter.
1101, 1102, 1103,
1104, 1105, 1106,
1108, 1109, 1110,
1111, 1112, 1113
Underwriter
fees
Underwriter fees are the portion of the title insurance premium (line
1108) and any endorsements (variously included in line 1108 or in
extra lines provided) that is passed on from the settlement agent to
the underwriter. The portion is negotiated, although typical ranges
for each metropolitan area are presented in table 7. Assumptions
about the settlement agent retention rate used for models in this
study are provided in table 4.
1108, 1111, 1112,
1113
Attorney fees Attorney fees are any fees paid to attorneys representing clients
at a closing (rather than attorneys performing settlement agent
functions). These fees are traditionally listed on line 1107, but
additional attorney fees are occasionally added in the extra lines
provided on the HUD-1.
1107, 1111, 1112,
1113
Premium plus
endorsement
Premiums are typically listed in line 1108 and are paid directly to
the settlement agent. When information in line 1108 is missing,
lines 1109 and 1110 (indicating the price paid for owner and lender
coverage) are used instead. Standard endorsements are occasionally
included in line 1108 with the premium but also appear in the extra
lines provided on the HUD-1 form.
1108, 1109, 1110,
1111, 1112, 1113
a.
Lines 1109 and 1110, the lender and owner premiums, are used to fill in the title insurance premium if line 1108 is missing
information. If line 1108 is not missing information, line 1109 and 1110 are not included so that the premium is not double
counted.
Qualitative Analysis—
Understanding Title Charges in the
Five Markets
Qualitative interviews inform the empirical
model and interpretation of the regression analyses.
Table 3 provides a summary of the lessons learned
from these interviews. Background on the practices
and idiosyncrasies of each of the five metropolitan
markets was provided by settlement agents or
underwriters from each market. Title industry
representatives from ALTA supplemented the
insights of these agents and underwriters with an
understanding of the operation of the industry
nationwide. Two academic and legal experts who
have written about and testified on title insurance
provided a similar, broad perspective. These experts
were especially useful because they provided an
independent viewpoint on the industry. The
interviews were primarily intended to learn about
standard practice within each metropolitan area,
such as the typical endorsements provided and the
typical premium retention rate, as well as an overview
LITERATURE & DEFINITIONS

10
of the regulatory environment for each market. The
interviewees also provide their understanding of
what factors are and are not associated with title
charges.
5
Philadelphia and Broward County are
the most constrained of the five markets studied.
Philadelphia cannot be strictly categorized as a
regulated market. State involvement consists of
5
Whether by regulation or custom, in all cases the expectation
is that the title insurance premium itself would vary directly
with house value.
approval of premiums agreed to by a rating bureau,
which sets common rates on a complete package of
settlement services, from title insurance underwriting
through the actual closing of the purchase. Premiums
are determined by a formula and increase as the
house price increases. Some smaller underwriters do
not participate in the rating bureau and may charge
somewhat less than the rating bureau rates. The
retention rate—the share of the premium not passed
on to title insurance underwriters by the settlement
agent—is not set by the rating bureau, but is instead
Table 3. Characteristics of the Five Metropolitan Counties
Philadelphia
County
PA
Broward County
FL
Maricopa County
AZ
Sacramento
County
CA
Cook County
IL
Premium
determination
Rating bureau
(and approved
by state)
State
promulgated
File and use File and use Market
Premium varies
across firms
No, except
for the few
nonmembers
No Yes Yes Yes
Items included
in title insurance
premium
Title insurance,
search, abstract,
closing
Title insurance,
abstract
Title insurance,
search, abstract
Title insurance,
search, abstract
Title insurance,
search, abstract
Expectation
of attorney at
closing
No No No No Yes
Title search
separate?
• Regulated?
• Charges vary
with house
value?
No Yes
No
No
No No No
Escrow/
settlement
separate?
• Regulated?
• Charges vary
with house
value?
No Yes
No
No
Yes
Yes
Yes
Yes
Yes/filed
Yes
Yes
No
Yes
Typical agent
split (retention)
70–88% 70% (regulated) 85–92% 88–92%
a
Approximately
80%
Endorsement
issues
Added at lender
request;
3 standard
Added at lender
request
Added at lender
request;
6 standard
Added at lender
request
Added at lender
request
Data source: Qualitative interviews with settlement agents and industry representatives.
a.
Provided by Birnbaum (2005).

11
negotiated by the individual agents with underwriters.
In Philadelphia, the typical agent retention rate ranges
from 70 to 88 percent.
Although Philadelphia is constrained by
a rating bureau, Broward County, Florida, has
the tightest title insurance regulation imposed by
the state government of all the markets in this
study. Similar to the rating bureau in Philadelphia,
premiums in Broward County are determined by the
house price. The portion of the premium retained
by the settlement agent is restricted to 70 percent in
Florida.
6
The state of Florida does not regulate title
search or abstracting fees.
Maricopa County and Sacramento are
moderately regulated. The title insurance markets
in Maricopa County and Sacramento are both lightly
regulated by the state, which requires only that
rates be filed with the state before using them. Title
insurance fees and search fees must be filed in both
of these cities, and abstracting fees must also be filed
in Maricopa County. Interviewees familiar with the
Maricopa County market suggest that retention rates
range between 85 and 92 percent, with smaller or less-
established agents in a weaker negotiating position
retaining a smaller share of the premium. According
to Birnbaum (2005), retention rates in California are
similar, ranging between 88 and 92 percent.
Cook County is the least regulated of the
five markets. The Cook County title insurance market
is widely recognized as one of the least regulated
markets in the country, leading one interviewee to
refer to it as “the Wild West.” A unique aspect of
the title market in Cook County is that attorney fees
(which are not common and generally are a small
expense elsewhere) represent a significant share
(approximately one-third) of total title expenses.
The interviewees familiar with the Cook County
market suggest that these attorney fees do not go to
title or settlement companies. In the analyses that
follow, attorney fees are therefore subtracted from
total title charges before calculating net service fees.
Typical premium retention rates in Cook County are
approximately 80 percent.
Factors influencing title insurance fees.
The interviewees noted several determinants of
the costs of settlement agents and title insurance
underwriters that may be passed on to consumers
in the form of higher or lower fees. Many suggested
6
In all other markets the retention rate is negotiated between
settlement agents and underwriters.
that claims on title insurance appear more frequently
during foreclosure episodes. Properties located in
areas with high foreclosure rates or borrowers who
pose a high risk of foreclosing might pay higher title
insurance rates, either because underwriters demand
a higher portion of the premium to cover the added
risk or because lenders require more endorsements.
Any characteristic of a property that might
increase search costs also has the potential to increase
fees, particularly in a market in which settlement
agents have substantial discretion in charging fees.
The interviewees suggested that higher fees can be
charged for older houses, because they have longer
title histories. Some agents indicate that they add
predetermined fees for houses older than 30 or
40 years for this reason. Properties that combine
multiple prior properties raise search costs as well,
because a separate search must be conducted for each
title chain.
The relationship between housing stock
turnover and title costs is more ambiguous. Houses
with greater turnover have more complicated title
chains to search, with a greater likelihood of prior
mistakes or liens. Greater turnover is expected
to increase search costs; however, more recent
purchases ensure that title searches have been done
more recently, reducing risk and search costs.
Title insurance charges can also be higher
for reasons that have no direct relation to insurance or
search costs at all. For example, charges can be higher
if a fee is assessed for the fairly typical simultaneous
issuance of owner and lender policies. In many cases,
the fee to the consumer can be quite low (for example,
$25). Nevertheless, even in the tightly regulated
Florida market no statutory cap exists on charges for
simultaneous policies, leaving open the opportunity
for settlement agents to charge higher fees. Another
issue that complicates understanding of title charges
is that some part of charges must compensate title
companies for transactions that do not occur (one
interviewee estimates that 40 percent of title searches
and underwriting are for deals that fall apart).
In Philadelphia and Broward County, title
premiums are calculated with a formula that has
the premium increase with the house price. The
interviewees provided several justifications for a
relationship between house prices and title charges
in states that do not require the calculation of
premiums by formula. One interviewee suggested
that higher premiums are charged on more expensive
LITERATURE & DEFINITIONS

12
houses for the simple purpose of cross-subsidizing
lower income consumers. In explaining closing fees
specifically (sometimes called escrow fees), another
expert suggested that the higher liability associated
with greater amounts of funds being handled
for high-priced houses justified higher charges.
Nevertheless, another settlement agent stated that
title search and closing fees generally are fixed fees,
not depending on house (or loan) value. Interviewees
did not mention the potential for higher losses when
higher loan amounts are at risk as a reason for higher
premiums assessed against more expensive houses,
perhaps because of the low share of premiums going
to pay claims.
Typical retention rates. The previous
section described the process by which agents, who
retain the remainder to cover their own costs. Except
in Broward County, where a insurance underwriters
receive their fees from settlement 70- to 30-percent
split between agents and insurers, respectively,
is mandated, this retention rate varies with each
transaction. For example, smaller settlement agents
occasionally lack the bargaining power of larger
agents and retain smaller shares of the premium.
The exact retention rate on any given transaction
was not recorded on the HUD-1 in 2001 (at the
time the data were collected), so a retention rate is
imputed for the purposes of the regression models
in this study. Interviewees provided guidance on
typical retention rates in each metropolitan area.
The retention rates used to construct the net service
fees and the underwriter fees are presented in
table 4.
Table 4. Treatment of Premiums in the Regression Models
Philadelphia
County
PA
Broward County
FL
Maricopa
County
AZ
Sacramento
County
CA
Cook County
IL
Average
premium plus
endorsements
$778 $885 $1,036 $1,102 $868
Retention rate
used in models
85% 70% 88.5% 90% 80%
Data source: Metropolitan HUD-1 Settlement Cost Database, 2001; qualitative interviews with settlement agents and industry
representatives.

13
DATA & METHODS
III. Data &
Methods
Data
Despite concerns among some researchers
that a lack of competition exists among title insurers
and associated settlement companies, little rigorous
analysis of the determinants of title fee variation
has been conducted. Until recently, the largest
impediment to understanding the determinants of
variation has been the lack of high-quality data. As
a response, HUD had Urban Institute staff create
the National and Metropolitan HUD-1 Settlement
Cost databases. This study uses data from these two
databases, combined with three additional data sets.
Metropolitan HUD-1 Settlement Cost
Database. The Metropolitan HUD-1 Settlement
Cost Database contains 2,839 HUD-1 settlements for
FHA-insured, fixed-rate 30-year mortgage loans that
were closed between May 21 and June 30, 2001, in five
metropolitan areas—Philadelphia, Maricopa County,
Cook County (Illinois), Broward County (Florida),
and Sacramento County (California). These loans
are for the purchase of an owner-occupied home and
do not include refinancing loans. This metropolitan
database provides the primary sample for the current
study. Itemized charges from these HUD-1s are used
in the analyses presented in the next section.
National HUD-1 Settlement Cost
Database. The National HUD-1 Settlement Cost
Database is a nationally representative database of
7,600 HUD-1 settlements for FHA-insured, fixed-
rate 30-year mortgage loans closed during the same
period (May 21 to June 30, 2001). These national data
were used by Woodward (2008) and McKernan and
her coauthors (2009) to study closing costs for FHA
mortgages. Although, on their own, these data do not
allow for a detailed analysis of any single metropolitan
housing market, the database contains 370 cases
from the five metropolitan areas investigated in this
study. Because the national and the metropolitan
HUD-1 databases were constructed and formatted in
an identical manner, these cases have been appended
to the larger metropolitan database.
FHA data set. The 2,839 settlements from
the metropolitan database and the 370 additional
settlements from the national database were matched
by HUD to FHA data corresponding to the FHA-
insured loan. These data provide more detailed
demographic information on the borrower, as well
as characteristics of the house itself. Two particularly
useful additional pieces of information are also
provided in the FHA data: the house price and the
census tract. House price is measured using the
FHA data measure rather than the HUD-1 measure,
because the FHA measure exhibited fewer extreme
values.
7
The FHA data also include the census
block group of the house, which allows for a match
with tract-level data from the 2000 Census to the
settlement data.
Summary File 3 (SF-3) data. The settlement
records are supplemented with census block-group-
level data from the Summary File 3 (SF-3) of the
2000 Census. The SF-3 data provide neighborhood
characteristics for variables that are not available
for individual home purchases, such as the amount
of turnover in the housing stock and the average
age, education, and income levels of residents of the
census block group. In the metropolitan database, 52
cases are missing block-group information and, thus,
could not be matched to a record in the SF-3 data;
they are excluded from the analyses.
Settlement agent data from the HUD-1.
To investigate variation in title charges across
settlement agents, HUD extracted the following
information from the HUD-1 forms in the national
and metropolitan databases: the settlement agent’s
name; the settlement agent’s address; and the name
of any lawyer present at settlement. The settlement

7
There are 116 cases out of 3,051 cases in which price in the
HUD-1 data and FHA data differ. Many of these cases are
missing a digit, such as $10,500 versus $105,000. We use the
FHA measure of price and replace it with the HUD-1 measure
for two cases in which the FHA price exceeds $300,000 and the
HUD-1 price is closer to the FHA appraisal value.

14
agent’s name and address were then used to create
unique settlement agent identifiers.
8
Outliers. Outliers in the title charge and
house price data are removed. The top and bottom
1 percent of values in total title charges are trimmed
in each metropolitan area for the regressions that are
presented.
9
After trimming and removing cases with
missing values, the total sample included in the five
metropolitan area regressions is 3,051 cases.
Empirical Model
Dependent Variables in the Regression Analysis
The empirical models are constructed
to describe the relationship between title charges
that homebuyers pay and the characteristics of
the homebuyers, their houses, and their local
communities. Each of the five title charges discussed
in section II is modeled to understand the factors
associated with charges:
1. Paid by consumers (total title charges).
2. Paid to distinct participants in the title industry
(net service fees, underwriter fees, and attorney
fees).
3. Regulated by states, localities, or rating bureaus
(premiums plus endorsements).
An understanding of the factors associated
with total title charges is important for consumers to
know how much they can expect to pay in total, and
the extent to which shopping for title insurance can
help lower the costs of buying a home. The analyses
in this study do not differentiate between charges that
are nominally paid by the seller or the buyer. Because
money is fungible, all costs are ultimately passed
on to the homebuyer; anything paid by the seller is
expected to raise the total price of the house.
Although all title fees except for attorney fees
are received by the settlement agent, a portion of those
fees is paid to the title insurance underwriter. Each of
these three actors (settlement agents, underwriters,
8
Some cases are missing settlement agent information, so a
dummy that indicates agent information missing is included
in the regression analysis. An attempt was made to create
unique attorney identifiers, but it was rare for more than one
homebuyer to use the same attorney, precluding an analysis
differentiating variation within and between attorneys.
9
Regressions that trimmed the top and bottom 0.5 and 2 percent
of values were also estimated to ensure that the findings are
robust to different strategies.
and attorneys) is influenced by a different set of
costs and therefore acts on different incentives in the
market. To better understand the determination of
title charges, we model these fees separately. In all
but one of the metropolitan areas in this study, only
a small percentage of homebuyers pay any attorney
fees. For this reason, models estimating correlates of
whether an attorney fee is paid at all, as well as the
amount of attorney fees paid, are also produced.
Title insurance regulations generally do not
distinguish between fees retained by the settlement
agent and those passed on to the underwriter, nor
do they normally consider miscellaneous fees or
attorney fees. To understand the factors associated
with variation in title charges that are of primary
interest to regulators, this study includes models
of premiums plus all endorsements. In regulated
markets it is expected that house price will play a
crucial role in the determination of these charges,
although in unregulated markets the costs incurred
by settlement agents and underwriters may play a
more prominent role.
Explanatory Variables in the Regression Analysis
Three classes of explanatory variables and
their association with title charges are measured. The
first class includes measures of characteristics of the
house identified by interviewees and the literature
as influencing the costs of settlement agents and
underwriters, and which therefore could affect fees
charged to consumers. The second class of variables
includes characteristics of the homebuyer, the house,
and the neighborhood. These variables are not
directly related to costs incurred by the title industry,
and therefore should not be associated with higher
or lower title insurance charges. The third class of
variables is a set of fixed effects for the 10 largest
agents operating in each metropolitan area.
Cost-related factors. Philadelphia and
Broward County settlement agencies determine title
insurance premiums using an explicit formula that is
dependent on house price. Although the other three
markets do not have a formulaic relationship between
price and title charges, title agencies may charge
higher premiums for more expensive properties for
other reasons. The optimal time spent examining
a title is most likely greater as the risk assumed by
the title insurer increases. More expensive properties
represent a greater risk for insurers, but one would
expect a highly nonlinear relationship—a positive but
diminishing relationship between house price and

15
search effort. A quadratic function of house price
is included to estimate a nonlinear relationship in a
fairly flexible way.
The qualitative analysis of the five
metropolitan markets concluded that title insurance
claims are more likely to be paid when properties
go into foreclosure. To account for this, the models
include an indicator of whether a homebuyer’s loan-
to-value ratio exceeds the FHA recommendation of
97.5 percent as a proxy for foreclosure risk. Older
properties, which are likely to have longer title chains,
are also identified as increasing search costs for
agents. The models include indicators for houses that
are less than 5 years old and greater than 30 years old
(with properties between 6 and 30 years old as the
reference group) to account for these additional search
costs. Housing stock turnover, which is expected
to have an ambiguous relationship, is controlled for
with the inclusion of a measure of the percentage of
households that moved into the census block group
in the past 5 years. Finally, because larger residential
lots may increase search costs, the models control for
the square footage of the lot.
Non-cost-related factors. We include
several non-cost-related factors in the regression
models to determine whether certain homebuyers pay
higher charges. Interpretation of the association of
these variables with title charges is delicate; although
strong empirical relationships may be a sign of price
discrimination, they may also suggest substantial
market segmentation with certain settlement agents
serving a restricted set of neighborhoods.
Minorities face a long history of housing
market discrimination (Turner et al., 2002) and may
also pay higher title costs. The numbers of closings
for persons of specific racial or ethnic groups in our
databases are too small for their separate inclusion
in the models in most markets; instead, an indicator
variable is included that equals one if the homeowner
is a minority (Black, Hispanic, other race) and zero if
the homeowner is White non-Hispanic to determine
whether minorities pay higher title charges than
similarly situated Whites. An indicator is also
included for census block groups that are urban (as
opposed to rural and suburban). Although urbanicity
should not influence costs, more densely populated
neighborhoods may host more title agencies and thus
have lower rates because of competition.
Higher income levels for a homebuyer or
for a neighborhood should not increase title costs,
after controlling for price, because the title search
process remains the same between these buyers. If
title agencies price discriminate, or if high-cost real
estate agents partner with high-cost settlement agents,
however, a relationship between income and title
charges may exist. Title agencies may also operate in
specific neighborhoods, on the basis of neighborhood
income levels. The monthly income of the homebuyer
and average household income in the census block
group are included as control variables to determine
whether these charges vary with income.
Less-educated homebuyers may be more
susceptible to settlement agents who attempt to take
advantage of them by raising costs, and they may
lack the information or confidence to investigate
and negotiate their closing costs, including their
title charges. The models include two education
variables: (1) the percentage of census block group
residents who are 25 years old or older with less than
a high school diploma and (2) the percentage of block
group residents with a college degree. The median
age of residents in a census block group is included
in the models. Although age should have no effect
on search costs, younger homebuyers may lack the
confidence or experience to assert themselves during
the settlement process. The age measure could also
pick up tracts with more turnover.
Settlement agent fixed effects. In a
competitive market, with no cost to consumers of
obtaining information, individual settlement agents
should not charge substantially different fees for title
insurance services after controlling for all factors
that are expected to influence title costs. In a market
in which certain agents charge consistently higher or
consistently lower fees than other firms, consumers
could benefit from comparison shopping. To test
whether settlement agents charge different fees,
the models include fixed effects (that is, a series
of dummy variables) for each of the 10 largest title
insurance agents in each market.
10
The coefficients
on the fixed effects provide an estimate of the
difference between each agent’s charges and the
charges of smaller agents or those for whom the
agent is unknown. The results indicate whether a
significant range of title charges exists between the
largest agents after controlling for other relevant
factors. Care is required in interpreting these results
10
Models with five settlement agent fixed effects are also
estimated to determine the robustness of the results to the
number of fixed effects specified. The results are consistent
between the two specifications. Models with 10 settlement
agent fixed effects are presented here to describe the range of
title charges within a larger share of the market.
DATA & METHODS

16
as a reflection of the nature of competition between
title companies: In both a highly competitive market
and a tightly regulated (or cartelized) market, these
agent fixed effects are expected to be negligible. In
a less-regulated market, however, especially one in
which consumer information or shopping around is
limited, substantial variation in charges would be
expected across agents.
Summary statistics on the explanatory
variables suggest that the five metropolitan areas
differ in their demographic and economic conditions
and in the characteristics of the housing stock (table
5). Homebuyers with FHA mortgages in Philadelphia
are much more likely to have high loan-to-value
ratios than homebuyers in any other metropolitan
area, suggesting that title insurance underwriters may
face greater foreclosure risk in that market or that
higher leverage is more feasible for homeowners in
Philadelphia because the price-to-income ratio is low.
In Cook County and Philadelphia, housing units are
older than in the other three cities, although housing
stock turnover in Cook County and Philadelphia is
more comparable to turnover elsewhere.
Approximately two-thirds of the FHA-
insured homebuyers in Cook County, Philadelphia,
and Broward County are minorities, as compared with
fewer than one-half of buyers in Maricopa County
and Sacramento. Even within the metropolitan areas
considered here, a wide range exists in the degree
of homebuyers in each market. In Sacramento most
homebuyers with FHA-insured mortgages live
in suburban areas, although in Philadelphia most
homebuyers live in urban areas.
None of the five markets is dominated by a
single settlement agency, but a few agencies control
a nontrivial share of the market in Cook County,
Maricopa County, and Sacramento. In Sacramento,
four settlement agencies control nearly 60 percent
of the market for title insurance on FHA mortgages.
Finally, as noted previously, Cook County is the only
market in which a substantial share of homebuyers
uses an attorney.

17
DATA & METHODS
Table 5. Explanatory Variable Means
Cook County
IL
Philadelphia
PA
Maricopa
County
AZ
Sacramento
CA
Broward
County
FL
Home price
Price/10,000 $13.96 $7.15 $10.98 $14.17 $11.33
Loan-to-value ratio > 97.5% 15% 80% 46% 26% 55%
Cost related
Unit </= 5 years old 4% 3% 13% 3% 13%
Unit > 30 years old 67% 74% 21% 28% 20%
Percent of households that
moved into unit since 1995
41% 37% 55% 51% 54%
Percent of households that
moved into unit before 1980
26% 33% 13% 15% 12%
Lot size/100 54.10 23.75 67.22 61.41 52.97
Non-cost related
Owner is non-White 67% 64% 49% 35% 67%
Lives in urban area 33% 83% 25% 4% 35%
House price per acre/sq. ft. $1,059.20 $562.51 $812.80 $1,128.90 $829.04
Effective monthly
income/1,000
$4.71 $3.03 $3.67 $4.46 $4.17
Average census block group
household. income/1,000
$56.70 $43.89 $52.62 $51.72 $50.72
Settlement agents
Agent 1 20% 9% 13% 18% 5%
Agent 2 13% 7% 13% 17% 3%
Agent 3 10% 6% 10% 14% 3%
Agent 4 9% 5% 9% 10% 2%
Agent 5 8% 3% 7% 8% 2%
Agent 6 6% 3% 6% 8% 2%
Agent 7 3% 3% 5% 6% 2%
Agent 8 2% 3% 5% 6% 2%
Agent 9 2% 3% 4% 4% 2%
Agent 10 1% 3% 4% 3% 2%
Attorneys
Buyer attorney only 5% 1% 2% 5% 1%
Seller attorney only 50% 5% 0% 0% 10%
No attorney 6% 93% 97% 95% 88%
Data source: Metropolitan HUD-1 Settlement Cost Database, 2001.

18
Empirical Approach and Specification
Descriptive statistics are used to answer the
first research question: How much variation is there in
title charges? Ordinary least squares regressions are
used to answer the second research question: What
explains variation in title charges and components of
title charges? R-squared values from the regressions
are used to answer the third research question: How
much variation remains unexplained?
Three model specifications are estimated
for each dependent variable. The first model (price
only) estimates the charges paid by person i (Y
i
)
as a function of house price, house price squared
(represented as PRICE
i
), and the constant term, α:
(1) Y
i
= α + β
1
PRICE
i
+ u
i
The second model (cost related) adds all
factors that are hypothesized to have an association
with the costs of the settlement agency or the
underwriter that could be passed on to consumers.
This includes characteristics of individual
homebuyers (X
i
), as well as characteristics of a
census block group in which multiple homebuyers
in the sample may reside (Z
c
). This model also
introduces the 10 settlement agent fixed effects
(AGENTS
i
):
(2) Y
i
= α + β
1
’PRICE
i
+ β
2
’X
i
+
β
3
’Z
c
+ σ’AGENTS
i
+ u
i
The third model (full model) includes all
explanatory variables in the cost-related model, as
well as the factors that are not expected to influence
title costs. As with the cost-related variables,
these factors include characteristics of individual
homebuyers (A
i
) and characteristics of the census
block group (B
c
).
(3) Y
i
= α + β
1
’PRICE
i
+ β
2
’X
i
+ β
3
’Z
c
+
β
4
’A
i
+ β
5
’B
c
+σ’AGENTS
i
+ u
i
These three models are estimated separately
for each of the five title charge categories and for each
of the five metropolitan areas, for a total of 75 models.
Each title charge is estimated separately because the
explanatory variables are expected to have a different
relationship with different charges. The house
price, for example, may be associated with all title
charges but is hypothesized to have a much stronger
association with premiums and endorsements. Model
details are reported for only four of the five charge
categories, because two of the categories—premiums
plus endorsements and underwriter fees—move in
tandem.
The relationships between the dependent
variables and the explanatory variables are estimated
in distinct regressions for each metropolitan area,
because variation in institutions across metropolitan
areas is expected to produce different patterns of
association. It is likely that the relationship between
home price and total title charges will be more
substantial in Philadelphia than in the relatively
unregulated Cook County, but it is not clear
whether the effect of local housing turnover will
differ substantially between the two markets. These
regressions will assist in understanding the role of
market-specific institutions in shaping title charges.

19
DESCRIPTIVE RESULTS: HOW MUCH DO TITLE CHARGES VARY?
IV. Descriptive Results:
How Much Do Title
Charges Vary?
National Data
The first research question in this report is:
How much variation is there in title charges? This
study is motivated by previous research that sought
to answer this question for homebuyers nationwide
and consistently concluded that consumers faced
substantial variation in title charges. Analysis of the
national HUD-1 data finds that total title charges
on FHA-insured loans in the United States ranged
in 2001 from a minimum of less than $500 to a
maximum of nearly $3,000 (Woodward, 2008),
with a median of $1,284 (McKernan et al., 2009).
Figure 3 presents the weighted distribution of total
title charges using the HUD-1 national database, and
confirms these previous findings.
Woodward (2008) estimates that
approximately 25 percent of the variation in title
charges nationally can be attributed to differences
between states. Each state has a different regulatory
environment and housing market institutions, which
inevitably influence title charges. Table 6 presents
summary statistics on total title charges from the
national HUD-1 database, by state. Median charges
range from $625 in North Dakota to $1,971 in
California. The five states represented in this study
are noted in the table, and they generally have higher
title charges than other states.
Woodward (2008) points out that the
variation among states in title charges is larger
than the variation among states in lender or broker
fees, suggesting that controlling for state-based
characteristics of the title insurance market is
essential for explaining variation in title charges.
The Metropolitan HUD-1 Database was designed
to control for state-level characteristics of the title
insurance market. It provides a large sample of FHA
mortgages in five metropolitan areas.
Figure 3. Histogram of Total Title
Charges in the United States
0
1
2
3
4
Pe
rce
n
t
500 1000 1500 2000 2500
Total Title Charges
Source: HUD-1 National Sample; N=7,372 after trimming top and bottom 1% outliers
Source: National HUD-1 Settlement Cost Database: N = 7,372
after trimming top and bottom 1-percent outliers and weighted
to be nationally representative.

20
Metropolitan-Area Data
Title charges vary widely across the five
metropolitan areas. Both median and mean total
title charges in Philadelphia are roughly one-half of
the median and mean charges in Cook and Broward
Counties. Although total title charges are highest, on
average, in Cook and Broward Counties, premiums
and endorsements are the highest in Maricopa
County and Sacramento (table 7).
The effect of state-level regulations on
specific title fees is perhaps best illustrated by the
behavior of underwriter fees and premiums and
endorsements in Broward County. Although
Table 6. State Variation in Total Title Charges
State
25th
Percentile
Median
75th
Percentile
Standard
Deviation
State
25th
Percentile
Median
75th
Percentile
Standard
Deviation
CA
a
$1,548 $1,971 $2,556 $641 PA
a
$908 $1,101 $1,267 $236
NJ $1,360 $1,856 $2,425 $2,156 ME $975 $1,085 $1,170 $470
TX $1,471 $1,698 $1,879 $364 MI $873 $1,079 $1,320 $389
CT $1,497 $1,696 $1,894 $1,067 MT $898 $1,065 $1,174 $203
WA $1,319 $1,594 $2,009 $436 OH $864 $1,040 $1,405 $452
DC $1,373 $1,589 $1,885 $338 LA $882 $1,012 $1,285 $306
HI $1,286 $1,565 $1,832 $2,399 GA $846 $991 $1,131 $205
AZ
a
$1,363 $1,557 $1,699 $289 TN $805 $965 $1,195 $301
NY $1,129 $1,461 $2,307 $966 SC $860 $960 $1,084 $223
IL
a
$825 $1,457 $1,783 $660 DE $851 $927 $1,027 $202
MA $1,231 $1,412 $1,606 $377 IA $780 $904 $1,074 $239
RI $1,267 $1,388 $1,507 $319 AR $734 $880 $1,029 $284
UT $750 $1,382 $1,616 $430 WI $739 $877 $1,017 $236
NV $1,199 $1,371 $1,505 $291 WV $725 $839 $1,003 $443
OR $1,196 $1,339 $1,493 $230 KS $729 $829 $918 $175
MD $1,153 $1,331 $1,548 $331 IN $724 $828 $974 $190
MN $963 $1,294 $1,498 $321 AL $732 $825 $958 $210
AK $1,172 $1,275 $1,433 $212 KY $682 $799 $958 $218
VA $942 $1,245 $1,575 $407 SD $717 $783 $837 $153
FL
a
$1,064 $1,231 $1,550 $462 MS $695 $765 $875 $216
ID $1,063 $1,203 $1,318 $181 MO $649 $764 $890 $212
OK $1,000 $1,161 $1,347 $365 NE $605 $743 $869 $334
NH $1,032 $1,159 $1,236 $204 WY $633 $722 $805 $351
VT $965 $1,139 $1,271 $252 NC $636 $720 $790 $172
CO $940 $1,138 $1,304 $325 ND $575 $625 $682 $98
NM $946 $1,135 $1,315 $261
Data source: National HUD-1 Settlement Cost Database, 2001, N = 7,599. States are sorted by median values.
a
State analyzed in the current study using the Metropolitan HUD-1 Database for FHA mortgages, 2001.

21
premiums and endorsements in Broward are modest
compared with the other four metropolitan areas
(higher than Philadelphia, but lower than Maricopa
County and Sacramento), underwriter fees in
Broward are roughly two times the level of
underwriter fees in the other four metropolitan areas.
The reason for this discrepancy is that the State of
Florida mandates that settlement agents pass on a
much higher share of premiums and endorsements to
underwriters than what is typically passed on in other
states. The regulatory context of Broward County is
essential for understanding the title charges paid
there and estimating the association of other variables
with each title charge.
The coefficients of variation range from
0.15 to 0.30 and suggest that even after controlling
for regulatory or institutional environment by
focusing on specific metropolitan areas, substantial
Table 7. Summary Statistics in Title Charges (2001 dollars)
Metropolitan Area Total Charges
Net Service
Fee
Underwriter
Fee
Attorney Fee
a
Premiums &
Endorsements
Median
Philadelphia County, PA 914 793 113 450 750
Broward County, FL 1,867 1,559 261 425 869
Maricopa County, AZ 1,574 1,450 122 668 1,063
Sacramento County, CA 1,768 1,656 111 65 1,115
Cook County, IL 1,780 1,002 174 641 868
Mean
Philadelphia County, PA 1,007 855 117 457 779
Broward County, FL 1,885 1,565 266 462 886
Maricopa County, AZ 1,555 1,433 120 668 1,041
Sacramento County, CA 1,774 1,663 110 63 1,103
Cook County, IL 1,832 1,047 174 649 868
Standard deviation
Philadelphia County, PA 334 259 24 411 161
Broward County, FL 357 307 56 190 187
Maricopa County, AZ 228 209 18 238 160
Sacramento County, CA 258 246 17 21 166
Cook County, IL 464 227 29 352 146
Coefficient of variation
Philadelphia County, PA 0.332 0.303 0.206 0.899 0.206
Broward County, FL 0.189 0.196 0.212 0.411 0.212
Maricopa County, AZ 0.146 0.146 0.153 0.356 0.153
Sacramento County, CA 0.146 0.148 0.150 0.330 0.150
Cook County, IL 0.253 0.217 0.168 0.542 0.168
Data source: Metropolitan HUD-1 Settlement Cost Database. Top and bottom 1-percent outliers in total title charges are trimmed.
a
Statistics excludes zero fees for attorneys.
Note: The coefficient of variation is the standard deviation normalized (divided by) the mean.
DESCRIPTIVE RESULTS: HOW MUCH DO TITLE CHARGES VARY?

22
and unexpected variation in title charges persists.
11

Greater variation exists within Philadelphia (0.30)
and Cook County (0.25) than within any other
metropolitan area considered in this study. This
finding for Philadelphia is somewhat surprising.
Although Eaton (2009) suggests that premiums
set by the rating bureau in Pennsylvania are
unnecessarily high, it has not been widely suggested
that Pennsylvania experiences the wide variation in
title charges that have been identified in, for example,
Washington, D.C. (Woodward 2008). The greater
variation in Philadelphia is partly because of greater
variation in home prices than in other markets.
12
The five metropolitan areas also differ in
the distribution of net service fees. Figure 4 presents
histograms of net service fees by metropolitan area. In
Cook County net service fees are highly concentrated
around $1,000, while in Broward County they are
more dispersed. Maricopa County and Sacramento
have similar net service fee distributions. Net service
fees in Philadelphia are lower than any other market.
11
Coefficients of variation can meaningfully be compared
across metropolitan areas and title costs.
12
The coefficient of variation of home prices is 0.407 in
Philadelphia, much higher than in the other four markets: Cook
County, 0.302; Sacramento, 0.234; Broward County, 0.209;
Maricopa County, 0.191 (not shown in table).
Figure 4. Histograms of Net Service
Fee by Metropolitan Area
0
10
20
30
0 1000 2000 3000 4000 0 1000 2000 3000 4000
Philadelphia, PA Broward County, FL
Pe
rce
n
t
Net Service Fee
Graphs by Metropolitan Area
0
5
10
15
0 1000 2000 3000 4000 0 1000 2000 3000 4000
Maricopa County, AZ Sacramento, CA
Pe
rce
n
t
Net Service Fee
Graphs by Metropolitan Area
0
10
20
30
40
0 1000 2000 3000 4000
Cook County, IL
Pe
rce
n
t
Net Service Fee
Graphs by Metropolitan Area

23
DESCRIPTIVE RESULTS: HOW MUCH DO TITLE CHARGES VARY?
Figure 5. Scatterplots of House Prices and Total Title Charges
Data Source: Metropolitan HUD-1 Settlement Cost Database.
Scatterplots of the relationship between
house price and total title charges help explain why
variation in total title charges in Philadelphia is
greater than variation in the relatively unregulated
Cook County housing market. Figure 5 demonstrates
that, although considerable variation exists in title
charges in Philadelphia, that variation is highly
linear; higher title charges are typically paid on
higher priced houses, lower title charges are paid
on lower priced houses, and the incremental effect
of higher house prices on total title charges seems
pretty consistent. This linear relationship is not the
case in Cook County, where the large variation in
title charges is not as closely associated with house
price. In the next section, regression analyses explain
additional variation in title charges. Section VI
presents the portion left unexplained by the variables
that are controlled for in the regression analyses.

24

25
REGRESSION RESULTS: WHAT EXPLAINS VARIATION IN TITLE CHARGES AND COMPONENTS OF TITLE CHARGES?
V. Regression Results:
What Explains
Variation in Title
Charges and
Components of Title
Charges?
The second research question: What explains
variation in title charges and components of title
charges? is addressed using a series of regressions
described in section III. Two groups of variables—
cost-related factors and non-cost-related factors
(both together with settlement agent effects)—are
sequentially added to the models estimating their
association with the five categories of title charges
considered in this study. The model estimates are
presented in tables A1–A15 in the appendix and are
summarized in table 8, which follows.
13
13
The model premiums and endorsements are not reported
separately in table 8. Within any city, the premiums and
endorsements are a constant multiple of the underwriter fee;
because of this mathematical relationship, all findings of
statistical significance for models of underwriter fees apply
(exactly) to the models of premiums and endorsements.

26
Table 8. Regression Summary
Total Title Charge Net Service Fee Underwriter Fee Attorney Fee

PA FL
AZ CA
IL
PA FL
AZ CA
IL
PA FL
AZ CA
IL
PA FL
AZ CA
IL
Home price
Price + + + + + + + + + + + +
Price squared - - - - -
Cost related
Loan-to-value ratio + + + + -
Unit </= 5 years old - - - - - -
Unit > 30 years old - - - - - - -
Percent who moved to
block < 5yrs
- - - - - -
Property lot size/100 + - - + - + -
Non-cost related
Owner is minority + + + +
Owner race unknown + + - +
Lives in urban area - + + -
Monthly income +
Percent who are 25+ <
high school diploma
- - + +
Percent who are 25+
>/= college
+ - - +
Block average income - -
Median age - - - + - -
Number of significant
agency effects (out
of 10)
2+ 3+ 2+ 2+ 1+ 2+ 1+ 3+ 2+ 3+ 2+ 5+ 2- 1+
4- 3- 2- 1- 2- 3- 3- 2- 1- 1- 4- 4- 1- 1-
Joint significant of 10
agency-fixed effects
N Y Y Y N Y Y Y Y Y N Y Y Y Y N N N N Y
Note: This summary is based on the full model, with 10 settlement agent fixed effects. A + indicates a positive coefficient
significant at the 10-percent level, although a − indicates a negative coefficient that is significant at the 10-percent level. In the
Number of significant agency effects row, a 2+ and 3- indicate 5 out of 10 agency fixed effects are significant, 2 are positive,
and 3 are negative. Columns labeled PA, FL, AZ, CA, and IL report results for Philadelphia County, Broward County, Maricopa
County, Sacramento County, and Cook County, respectively.
Home Price
In the price-only models (appendix tables
A1–A5), the price a consumer pays for his or her
house has a strong association with total title charges
in all metropolitan areas except Cook County.
14
This
relationship is likely driven by the strong association
14
The lack of a relationship in Cook County is likely driven
by the importance of attorney fees—generally independent of
house price—in this market, unlike in the other four markets
studied. When all additional control variables are added, house
price becomes insignificant in Broward County as well.
between house price and premiums; premiums are
explicitly set as a function of house price in some
markets. An increase in house price from $100,000
to $110,000
15
is associated with an increase in total
title charges of $41 in Sacramento, a $59 increase
15
The median house price in the metropolitan sample is
somewhat higher than $110,000, so the change from $100,000
to $110,000 is used throughout the study to discuss the
marginal effect of house price. The marginal effect of price at
a specific house price is necessary because the models estimate
a nonlinear association between house price and title charges,
which has a slightly different incremental relationship with
charges as house price increases.

27
in Broward County, and $63 increases in Maricopa
County and in Philadelphia. House price has a
positive association with several subcategories of
title charges as well: it is positively associated with
net service fees in all markets (except for Sacramento
and Broward
16
in the price-only model) and with
increased underwriter fees and increased premiums
plus endorsements in all five markets. Most of these
associations persist as subsequent blocks of control
variables are added. Consumers in most markets,
from those that are stringently regulated to those
with light regulation, can expect to pay higher title
charges for more expensive houses. Only attorney
fees have no association with house price in any of
the five markets.
Cost-Related Factors
Characteristics of the household and
neighborhood that are expected to be related to title
costs had their clearest association with title charges
in Maricopa County and were often significant in
Philadelphia. Newer housing units are associated
with reduced total title charges and net service fees
in both Philadelphia and Maricopa County and
with reduced premiums plus endorsements and
underwriter fees in Maricopa County, Sacramento,
and Cook County. Other cost-related factors are
often significant in Maricopa County, but are not as
significant across markets. For example, in Maricopa
County, more recent housing stock turnover is
associated with a reduction in all title charges except
for attorney fees. Property lot size is associated with
all title charges except attorney fees in many of the
five markets, but its association with these charges is
highly inconsistent; in some markets larger lots are
associated with higher charges, although in others
they are associated with lower charges. Although cost-
related factors are regularly significant in Maricopa
County and occasionally significant in Philadelphia,
Sacramento, and Cook County, they are nearly never
associated with title charges in Broward County.
16
The lack of an observable relationship between house price
and net service fees in Broward County is unexpected, because
Broward is one of two markets in this study (the other being
Philadelphia) that enforces a formulaic relationship between
house price and the premium. In Broward, only title insurance
and abstract activities are included in the premium, leaving
an average of 64 percent of net service fees unregulated (as
compared with 21 percent in Philadelphia). The weaker
relationship appears to result from settlement agents charging
an amount for the unregulated portion that is unrelated to the
price of the home.
Non-Cost-Related Factors
Of the five markets, only Cook County
and Broward County show a consistent relationship
between title charges and non-cost-related factors,
such as demographic or educational characteristics of
the household or neighborhood. Minority homebuyers
pay higher total title charges than White homebuyers
in Broward and Cook County, although they pay
comparable charges in the other three markets.
Being a minority homebuyer is associated with
$73 more in total title charges in Cook County and
$90 more in Broward County (appendix table A11).
Minorities also pay higher net service fees in these
metropolitan areas. These higher prices may reflect
price discrimination in the title insurance market or
differences in the fees charged by settlement agents
operating in different neighborhoods.
Non-cost-related factors are occasionally
significant in Philadelphia but nearly never significant
in Maricopa County and Sacramento. When non-
cost-related factors are significant, they often do
not have a consistent direction of association across
markets and charges. For example, properties in
urban neighborhoods are associated with lower net
services fees but higher underwriter fees than those
in nonurban neighborhoods of Philadelphia and have
no consistent association with title charges in any
other market. Homebuyers moving to neighborhoods
with a larger share of residents with college degrees
paid $7 and $23 less in premiums and endorsements
in Philadelphia and Broward County (appendix table
A14), respectively, but $46 more in attorney fees in
Cook County (appendix table A15).
Thus, most non-cost-related factors have
inconsistent and insignificant associations with
title charges. The lack of consistent relationships
across most of the cities suggests that there is little
evidence indicating that price discrimination by the
neighborhood characteristics included in the model
is a problem in most of these metropolitan areas.
Settlement Agent Effects
The amount of title charges paid varies
substantially among settlement agents in all five
markets. Settlement agent fixed effects are jointly
significant and have a substantial range of values
across all title charges, although they have the most
pronounced association with total title charges and
net service fees and the weakest association with
attorney fees. A larger share of the settlement agent
REGRESSION RESULTS: WHAT EXPLAINS VARIATION IN TITLE CHARGES AND COMPONENTS OF TITLE CHARGES?

28
fixed effects is significant in Broward County than
in any other market. For example, of the 10 largest
settlement agents in Broward County, one receives an
average of $267 less in net service fees than smaller
settlement agents, although another receives $189
more than the smaller settlement agents in the sample
(appendix table A12). Some caution should be taken
in relying on the exact estimates, however, because
the coefficients on the agent effects are imprecisely
estimated. This wide variation in net service fees
charged in Broward County—located in a state with
tightly regulated premiums—is likely driven by
variation in nonpremium title charges.
The settlement agent fixed effects are
generally not significant for predicting total title
charges in Cook County, where low regulation might
have been expected to increase variation between
agents. The insignificance of the agent fixed effects
for total title charges in Cook County may be
related to the fact that premiums are the smallest
share of total title charges there of all five markets
studied (because of the importance of attorney fees).
Settlement agent fixed effects are more significant for
nonattorney fees, but the lack of association between
settlement agent fixed effects and attorney fees may
be dominating the total title charge regressions.
Significant settlement agent fixed effects do
not necessarily imply the exercise of market power.
Because the variation between settlement agencies
consists of charges that are both higher and lower for
consumers, depending on which agency they use, the
fixed effects may indicate that these settlement agents
are serving fundamentally different segments within
the markets. The findings also suggest significant
benefits to consumers from shopping around for
settlement services.
Attorney Fees and the Role of
Attorneys in Cook County
The presence of an attorney at a settlement
varies considerably across the five metropolitan areas.
Of settlements in Cook County, 93 percent involve
attorney fees, but only 7 percent in Philadelphia, 12
percent in Broward County, and nearly 0 percent of
cases in Maricopa County and Sacramento County
show attorney fees. Probit models to investigate the
factors associated with the presence of an attorney
at a settlement find few statistically significant
relationships.
A regression model estimating correlates
of the amount of attorney fees charged in Cook
County found that few of the house or neighborhood
characteristics expected to influence title costs have an
association with the amount of attorney fees charged.
House price, though significantly associated with
other components of title charges, is not associated
with attorney fees. Most demographic characteristics
are not associated with attorney fees either, with the
exception of education. In Cook County, attorney fees
increase by $46 when the percentage of residents in
the neighborhood with a college education increases
by 10 percent (appendix table A14). Only 1 or 2 of
the 10 largest settlement agents are associated with
larger or smaller attorney fees. This finding is also
unsurprising, because consumers may choose their
attorney independently.
Title charges, net of attorney fees, are
higher when only one party has an attorney present,
compared with cases in which both the buyer and
the seller have an attorney present. The same pattern
exists for net service fees (appendix table A16). These
findings are based on regressions to identify the role
that attorney fees play in the determination of total
title charges, title charges net of attorney fees, and
net title service fees in Cook County, where nearly
all settlements (93 percent) involve attorney fees.
These regressions include indicators for whether
an attorney was paid for by the buyer, the seller, or
neither. (Cases in which an attorney was paid for by
both the buyer and the seller serve as the reference
group.) These results seem consistent with the view
that having your own attorney at closing to respond
to issues raised by the other party’s attorney may
reduce other fees in Cook County. Total nonattorney
title charges are $48 lower when both buyer and
seller attorneys are present (compared with a case
in which only the seller’s attorney is present);
however, total title charges (including attorney fees)
are $242 higher in these cases. Therefore, if all title
charges (including attorney fees) are passed on to
homebuyers, the common practice of having two
attorneys present in Chicago does not appear to be
cost effective (after controlling for other cost- and
non-cost-related factors). Although the presence of
attorneys is associated with higher total title charges,
they could provide benefits to the parties involved
in the settlement, either in reducing some other
nontitle fee or in dealing with another aspect of the
transaction.

29
Loan Origination Fees and
Itemization of Fees on the HUD-1
The large amount of unexplained variation
in total title charges remaining after controlling for
cost-related factors, non-cost-related factors, and
settlement agent fixed effects provides motivation for
exploratory analyses into the possibility that certain
business practices that take advantage of vulnerable
customers play a major role in determining title
costs. For example, loan originators or real estate
agents might alert settlement agents of homebuyers
who are willing to pay higher than market rates out
of ignorance of the market. In this situation, loan
origination fees would be expected to be positively
associated with total title charges, even after
controlling for home price. Another possibility is
that settlement agents may itemize multiple charges
on the HUD-1 form knowing that itemization would
confuse or overwhelm homebuyers, enabling them
to charge a higher total title charge. This possibility
would imply a positive association between the
number of itemized fees on the HUD-1 and the
amount of total title charges.
Both of these hypotheses are tested in
a separate exploratory analysis (appendix A17).
They are tested separately because the information
available in the HUD-1 is not sufficient to conclusively
prove the hypothesis that vulnerable homebuyers are
paying higher charges as a result of these practices,
particularly in the case of fee itemization as a strategy
for increasing charges. Title insurers and title service
providers incur costs in conducting their searches,
and there is no way to ascertain from the data
whether an itemized cost is an attempt to confuse
consumers or the provision of an additional, valuable
service that the homebuyer is willing to pay for. Both
interpretations are plausible.
Two exploratory analyses are implemented.
First, net service fees are regressed on the loan
origination fee, a dummy variable indicating a no-
cost loan
17
(which would not have a loan origination
fee recorded), and the number of items recorded in
the 1100 series of the HUD-1.
18
In this initial model,
which does not control for house price, all of these
variables are statistically significant. Higher loan
17
A dummy variable is necessary so that the coefficient on the
loan origination fee can be interpreted as a marginal effect of
an increase in the loan origination fee (for those who have one)
on total title charges.
18
The counts of items in the 1100 series exclude attorney fee,
title insurance, and endorsements.
origination fees are associated with higher total title
charges, as are more itemized fees.
In the second analysis, house price is added
to these simple multivariate correlations. Adding
house price to the models eliminates the previous
positive association between loan origination fees and
net service fees (appendix A18). A similar relation
is also found in the model of total title charges. The
relationship between loan origination fees and net
service fees appears to occur because both depend
on house price. This relationship could result because
loan originators and settlement agents each charge
more when the house price is higher—perhaps
because of higher costs or greater willingness to
pay—or because loan originators or real estate agents
tell settlement agents that particular customers with
higher valued homes are willing to pay more than the
market rate.
The positive association between the number
of items on the HUD-1 and net service fees remains
positive and statistically significant after including
home price in the model. This association is largest
in Maricopa County, where an additional itemized
fee on the HUD-1 is associated with $113 more in
net service fees. This empirical association cannot be
interpreted definitively, because the HUD-1 data used
in this study do not have the capacity to distinguish
whether an item indicates additional value to the
consumer or additional costs to the settlement agent.
The $113 increase in net service fees associated
with the addition of a fee item in Maricopa County
may represent pure profit, but it may also represent
an additional $113 in value to the consumer. These
analyses suggest that future research using more
detailed data on costs incurred by settlement agents
would be valuable.
REGRESSION RESULTS: WHAT EXPLAINS VARIATION IN TITLE CHARGES AND COMPONENTS OF TITLE CHARGES?

30

31
REGRESSION RESULTS: HOW MUCH VARIATION REMAINS UNEXPLAINED?
XV. Regression
Results: How Much
Variation Remains
Unexplained?
The final research question considered in this
study is: How much variation remains unexplained?
Studies of the title insurance industry consistently
find that even after controlling for a variety of factors,
a substantial amount of unexplained variation in
title charges remains unexplained. This study is no
exception. Unexplained variation is estimated as one
minus the R-squared value for each of the regressions
discussed in section V and presented in table 9.
More than 50 percent of the variation in total
title charges is left unexplained by the models in each
of the five markets. The models are most capable of
accounting for variation in Philadelphia, Maricopa
County, and Sacramento. Models of Broward County
are not able to explain more than 25 percent of the
variation in total title charges, presumably because
a narrow segment of charges is regulated. Variation
in particular portions of title charges is much easier
to account for. More than 90 percent of the variation
in premiums plus endorsements can be explained
in Philadelphia as a result of the price setting by
the rating bureau. Premiums plus endorsements in
Broward County are also much better explained than
total title charges in that market; the models account
for more than 50 percent of the variation of premiums
in Broward County. In contrast, no model explains
more than 10 percent of the variation in attorney fees.
This result does not necessarily imply that attorney
fees are random. Although the regressions controlled
for factors known to influence title search costs, no
attempt was made to interview attorneys operating
in the five markets and model the determinants of
attorney fees.
Underwriter fees yield identical unexplained
variation for each model as premiums, as the
underwriter fees are simply a percentage of the
premium. Underwriters are not given any portion
of the miscellaneous additional fees charged by
settlement agents that are included in the net service
fee. These net service fees, because of the addition of
various miscellaneous charges, have more variation
left unexplained by the models than premiums and
underwriter fees but less left unexplained than total
title charges.
Stark differences in unexplained variation are
apparent across metropolitan areas. The Philadelphia
models explain the most variation in the dependent
variables, while the models of Cook County explain
the least. Maricopa County, Sacramento, and Broward
County all have more unexplained variation than
Philadelphia but less than Cook County. Although
these models assist in understanding the interaction of
regulations and institutions with house, demographic,
and neighborhood characteristics in determining
title charges, they reaffirm the conclusion of prior
research that title charges are highly variable and
largely unpredictable.

32
Table 9. Summary of Unexplained Variation (%)
Model
Philadelphia
County
PA
Broward
County
FL
Maricopa
County
AZ
Sacramento
County
CA
Cook County
IL
Total title charges 1 65 86 69 70 94
2 60 76 58 58 91
3 59 74 57 57 88
Net service fee 1 62 93 69 71 92
2 56 85 59 59 85
3 55 82 57 58 83
Underwriter fee 1 14 53 60 61 88
2 13 47 53 56 79
3 12 45 52 55 78
Attorney fee 1 99 100 100 100 99
2 95 97 99 98 95
3 92 95 96 97 92
Premiums plus 1 14 53 60 61 88
endorsements 2 13 47 53 56 79
3 12 45 52 55 78
Data source: Metropolitan HUD-1 Settlement Cost Database. Unexplained variation is one minus R-square of each regression.
Model one controls only for a quadratic function of home price, model two adds factors related to title costs, and model three
adds demographic and other characteristics that are not expected to affect title costs. The 100-percent unexplained variation in
the attorney fee models is because of rounding

33
SUMMARY, IMPLICATIONS, AND FUTURE RESEARCH
XVI. Summary,
Implications, and
Future Research
Summary of Findings
This study examines title charges for
a sample of FHA-insured closings within five
metropolitan areas, defined at the county level.
Previous research has shown substantial variation
between states in title charges and the associated
regulations and institutions. The current research
takes this between state variation into account by
examining the variation in charges within markets
rather than across markets.
The empirical models in this study describe
variation in five measures of title charges (total
title charges, net service fees, underwriter fees,
attorney fees, and premiums plus endorsements)
in five different metropolitan areas using three
classes of control variables: cost-related factors,
non-cost-related factors, and settlement agent fixed
effects. Cost-related characteristics of the home or
neighborhood, such as house sales price and age
of housing units, are generally associated with title
charges in Philadelphia and Maricopa County and
less consistently associated with these charges in
the other three markets. Factors not related to the
costs incurred by settlement agents are generally
insignificant across all five metropolitan areas,
although they play a modest role in explaining title
charges in Cook County. Some evidence of higher
title charges for minorities exists in Broward and
Cook Counties, although this disparity cannot be
definitively attributed to discrimination.
After controlling for various characteristics
of homebuyers, houses, neighborhoods, and
settlement agencies, more than one-half of the
variation in total title charges remains unexplained in
each metropolitan area. The unexplained proportion
differs by metropolitan area, and across various
components of total title charges. In four of the
five markets, substantial variation exists in charges
across settlement agents, with many of the 10 largest
settlement agents charging fees that are significantly
higher or lower than those of smaller settlement
agents or with unknown agents. The variation in
charges across settlement agents is most pronounced
in Broward County. In Philadelphia, significant
differences across agents are not observed, because
of the presence of the all-inclusive premium set by
the rating bureau. Substantial differences in title
charges between settlement agents may indicate
that settlement agents do business in fundamentally
different communities, or that they work with a
specific type of customer. Regardless, they also
suggest that homebuyers may benefit by shopping for
title insurance with more than one settlement agent.
This report also provides estimates of
the extent to which consumer shopping for title
insurance could reduce title charges in each of the
five markets. Regression analyses suggest that in a
market like Broward County, switching from a high-
cost settlement agent to a low-cost settlement agent
may save several hundred dollars. The potential
benefits of shopping are less pronounced in other
markets. These findings suggest initiatives to
encourage shopping and greater competition in the
title insurance market could be beneficial.
Implications
From the consumer perspective. Shopping
for title insurance across settlement agents would
be beneficial to consumers, given the wide range of
significant associations between specific title agencies
and various title charges in all metropolitan areas
considered in this study. For example, in Sacramento,
shopping around could save an average of $326
in total title charges, while, in Broward County,
a consumer could save an average of $528 in total
title charges.
19
Savings in terms of net service fees
are similarly large. In Sacramento, shopping around
could save an average of $312 in net service fees, and
in Broward County shopping around could save an
19
Calculated based on the range of estimates of agent effects in
table A11 in the appendix.

34
average of $456 in net service fees.
20
The multivariate
regressions that control for various cost-related or
non-cost factors also suggest that consumers need to
be aware of certain circumstances in which charges
could be higher or lower. For example, consumers in
Maricopa County and Philadelphia should expect a
lower title charge if the house is built within the past
5 years.
It is likely that the variation in charges
across agents exists, however, in part because of the
relationships and referrals between real estate agents
and settlement agents. These relationships may make
it challenging for consumers to compare the rates of
different agents. Consumers may also be constrained
in shopping by the location of the house. Some of
the variation between settlement agents identified
in the regression models may be due to settlement
agent specialization in specific neighborhoods or
developments. If such specialization occurs, then
observed differences between fees charged by
different settlement agents may be attributable to the
characteristics of the neighborhoods they serve. This
could limit the feasibility of comparison shopping
for title insurance, and, to the extent that there are
benefits, the geographic specificity of agents could
prevent consumers from taking advantage of those
benefits.
From the regulator perspective. The
fundamental finding of this study is that there is
large variation in title insurance premiums, but only
a small proportion of variation is attributable to
cost-related house and neighborhood characteristics,
such as the age of the unit. Regulators may consider
it in the public interest to reduce this variability.
The regulatory arrangements in place in the five
markets investigated in this study play an important
role in the determination of title charges. Although
section IV demonstrated that both Cook County
and Philadelphia have highly variable title charges,
the regression analyses establish that a large portion
of the variation in Philadelphia is explained by
deliberate policies to set rates according to house
price. Qualitative interviews suggest that the formula
leads to cross-subsidization of low-price homes with
premiums paid on high-price homes. This outcome
may or may not be desirable for states, but the models
presented in this study suggest that regulators have
considerable leverage to control variation in title
charges.
20
Calculated based on the range of estimates of agent
effects in table A12 in the appendix.
Although demographic characteristics are
not generally associated with title charges, some
title charges are higher for minority homebuyers,
after controlling for income and neighborhood
characteristics. (Total title charges are $73 higher
for minorities than Whites in Cook County and $90
higher in Broward County.) Although minority status
is usually not associated with title charges outside
of Cook and Broward Counties, the differences may
merit the attention of regulators.
To facilitate research and consumer shopping,
HUD may consider requiring the submission of
HUD-1 forms electronically. Information from this
nationally representative HUD-1 form database
could be accessible to consumers and agents in
an aggregated or firm-level form so that they can
compare closing costs.
Future Research
Future research is needed to further
explore the large portion of title charges that
remains unexplained. To account for this variation,
researchers can begin by mapping title charges using
Geographic Information Systems (GIS) software to
examine neighborhood patterns and scan for other
geography-related factors that might affect title
charges. Regression analyses reveal large differences
in the title fees charged by different settlement
agents. Although the differences have traditionally
been interpreted as an example of market power
or imperfect information, it is possible that these
differentials result from geographic segmentation in
the title insurance market. GIS analysis can determine
the extent to which variability is explained by the
operation of distinct markets below the metropolitan-
area level. It would also be informative to conduct
a small number of tests in which researchers call
settlement agents with homes of similar value to
gauge the extent to which quoted prices by individual
agents vary for properties. This exercise would
provide further evidence of the extent of variation
observed across agents for a single property. In
addition, it would provide some insight into the ease
with which a homebuyer can shop for title insurance.

35
REFERENCES
XVII. References

Bagwell, Marvin N. 2009. “Can’t Live
Without Air: Title Insurance and the
Bursting of the Real Estate Bubble,”
Pace Law Review 30 (1): 180–232.
Baker, Matthew, Thomas J. Miceli, C. F.
Sirmans, and Geoffrey K. Turnbull.
2002. “Optimal Title Search.” Journal
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Birnbaum, Birny. 2005. An Analysis of
Competition in the California Title
Insurance and Escrow Industry. Report to
the California Insurance Commissioner.
Dumm, Randy E., David A. Macpherson,
and G. Stacy Sirmans. 2007. “The
Title Insurance Industry: Examining
a Decade of Growth,” Journal of
Insurance Regulation 25 (4): 24–51.
Eaton, Joseph W. 2009. Title Insurance Reform: A
Long Overlooked Target of Opportunity—
the Governor and the Legislature
Should Embrace It. Testimony to
the Hearing on Title Insurance Rate
Regulation under the auspices of the
Pennsylvania Insurance Commission,
May 28, 2009. Harrisburg, PA.
Eaton, Joseph, and David Eaton. 2007. The
American Title Insurance Industry:
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Consumer. New York: NYU Press.
GAO. See U.S. Government
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Garcia, Suzanne M. 2009. “A Glance at the
Impact of the Subprime Mortgage
Crisis on the Title Insurance Industry,”
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Harney, Kenneth. 2002. “A Password to
Cheaper Refinance Title Insurance”.
Chicago Tribune, June 9.
Jaffee, Dwight. 2006. “Monoline Restrictions,
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Kay, Joan. 2007. “Why You May Be Paying Too
Much For Title Insurance,” Journal of
Taxation of Investments 24 (4): 364–373.
Lacko, James M., and Janis K. Pappalardo. 2010.
“The Failure and Promise of Mandated
Consumer Mortgage Disclosures:
Evidence from Quantitative Interviews
and a Controlled Experiment with
Mortgage Borrowers,” American
Economic Review: Papers and
Proceedings 100: 516–521.
Lehmann, R. J. 2005. “A New Chapter in Title
Insurance,” Best’s Review 106 (2): 33–36.
Leslie, William, Jr., and Neil A. Bethel. 1983.
“The Title Insurance Industry: A Case for
Affirmative Rate Regulation,” Journal
of Insurance Regulation 1 (4): 610–614.
Lewis, Holden. 2010. 2010 Closing Costs
Study. http://www.bankrate.com/
finance/mortgages/2010-closing-
costs/ (accessed February 28, 2011).
Lipshutz, Nelson R. 1994. The Regulatory
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McKernan, Signe-Mary, Doug Wissoker,
Caroline Ratcliffe, Bob Van Order,
and Molly Scott. 2009. Descriptive
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Report prepared for the U.S. Department
of Housing and Urban Development,
Washington, DC: The Urban Institute.
Miller, Michael J. 2006. Workshop Regarding
Title Insurance Competition Report
and Implications for Rate Regulation.
Statement to the Workshop Regarding
Title Insurance Competition on Behalf
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Murray, John C. 2007. “Attorney Malpractice
in Real Estate Transactions: Is
Title Insurance the Answer?”
Real Property, Probate, and Trust
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Owen, Bruce M. 1977. “Kickbacks, Specialization,
Price Fixing, and Efficiency in
Residential Real Estate Markets,”
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Roussel, H. Lee, and Moses K. Rosenberg.
1981. “The High Price of ‘Reform’:
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Stango, Victor, and Jonathan Zinman. 2011.
“Fuzzy Math, Disclosure Regulation,
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Turner, Margery Austin, Stephen L. Ross,
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Insurance Racket,” Forbes 178 (10): 148.

37
APPENDIX
XVIII. Appendix
Table A1: Total Title Charges, Model 1
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 79.66*** 87.10** 153.0*** 33.84* 25.74
(18.67) (43.46) (29.37) (19.25) (21.00)
Price/$10,000, Squared -0.791 -1.355 -4.270*** 0.320 0.0102
(1.071) (1.912) (1.330) (0.688) (0.708)
Constant 481.8*** 1,080*** 408.4** 1,227*** 1,471***
(72.95) (241.6) (159.0) (130.5) (148.7)
Observations 559 543 616 576 757
R-squared 0.347 0.142 0.313 0.301 0.056
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A2: Net Service Fees, Model 1
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 55.41*** 56.89 135.0*** 27.42 23.74**
(14.05) (38.76) (27.16) (18.50) (10.17)
Price/$10,000, Squared -0.0845 -0.961 -3.680*** 0.439 -0.304
(0.806) (1.706) (1.230) (0.661) (0.343)
Constant 461.4*** 1,049*** 411.0*** 1,182*** 780.4***
(54.92) (215.5) (147.0) (125.4) (72.04)
Observations 559 543 616 576 757
R-squared 0.384 0.075 0.307 0.286 0.077

39
APPENDIX
Table A5: Title Premium Plus Endorsements, Model 1 (cont&rsquo;d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(4.094) (17.88) (19.27) (11.55) (6.664)
Price/$10,000, Squared -0.768*** -0.549 -3.445*** -0.978** -0.0867
(0.235) (0.787) (0.873) (0.413) (0.225)
Constant 370.1*** 204.0** 126.5 486.5*** 676.0***
(16.00) (99.41) (104.3) (78.24) (47.19)
Observations 559 543 616 576 757
R-squared 0.864 0.473 0.399 0.391 0.118
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A6: Total Title Charges, Model 2
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 84.88*** 73.93* 144.9*** 50.24*** 30.33
(18.81) (43.58) (28.12) (19.34) (22.27)
Price/$10,000, Squared -1.886* -0.564 -3.592*** -0.248 -0.140
(1.096) (1.924) (1.285) (0.668) (0.730)
Loan to Value Ratio Exceeds 97.5% -53.25* 20.18 30.19* 11.24 32.51
(28.71) (28.64) (16.26) (26.02) (53.05)
Unit <=5 Years Old -160.4** -15.76 -60.36*** -79.45* -102.4
(74.69) (46.66) (22.22) (47.36) (85.41)
Unit > 30 Years Old -98.70*** 19.04 -79.70*** 18.17 -50.25
(30.80) (35.66) (18.41) (19.30) (36.83)
Pct. Of HH Moved to
Block in Last 5 Yrs
127.4 100.1 -192.2*** -76.14 156.1
(90.31) (104.4) (45.77) (69.39) (125.8)
Property Lot Size/100 1.785*** -0.0590 -0.439 0.313 -1.324**
(0.540) (0.564) (0.322) (0.353) (0.553)
Largest Agency 7.736 148.3** 5.462 146.8*** -87.76*
(39.95) (66.82) (24.71) (39.00) (48.96)
Second Largest Agency -57.63 -322.0*** 66.08*** 76.88* 56.80
(53.00) (81.45) (24.75) (39.23) (55.67)
Third Largest Agency -10.37 -410.4*** -71.71*** 14.84 31.76
(49.01) (96.43) (26.96) (40.50) (60.59)
Fourth Largest Agency 98.24* 178.9** 73.46*** -52.99 24.82
(52.74) (89.57) (27.74) (42.81) (64.20)

40
Table A6: Total Title Charges, Model 2 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Fifth Largest Agency -67.87 172.0* 4.140 -109.6** -9.121
(68.08) (93.61) (30.48) (44.06) (65.59)
Sixth Largest Agency -59.90 -94.14 10.62 -20.62 81.06
(67.49) (90.80) (32.09) (45.24) (72.67)
Seventh Largest Agency -60.51 -190.4** -74.79** 30.33 -158.3
(67.96) (94.36) (35.19) (48.12) (97.53)
Eighth Largest Agency 26.40 21.14 -148.4*** -181.4*** 143.1
(70.18) (97.38) (35.98) (48.77) (125.3)
Ninth Largest Agency 127.0* -240.5** -45.32 24.97 50.66
(75.90) (101.9) (38.96) (52.41) (135.2)
Tenth Largest Agency -99.42 70.87 -10.66 -59.99 109.9
(75.98) (101.9) (37.95) (58.92) (140.8)
Constant 548.1*** 1,076*** 562.1*** 1,113*** 1,479***
(96.30) (248.2) (153.2) (150.4) (179.3)
Observations 559 543 616 576 757
R-squared 0.396 0.238 0.418 0.425 0.090
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A7: Net Service Fees, Model 2
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 55.91*** 51.33 128.5*** 43.32** 27.27***
(14.06) (39.47) (26.02) (18.55) (10.55)
Price/$10,000, Squared -0.747 -0.575 -3.123*** -0.118 -0.415
(0.819) (1.742) (1.188) (0.641) (0.346)
Loan to Value Ratio Exceeds 97.5% -0.491 6.160 22.70 8.867 3.911
(21.45) (25.94) (15.04) (24.96) (25.13)
Unit <=5 Years Old -130.9** -10.91 -50.64** -71.76 0.0655
(55.81) (42.26) (20.56) (45.43) (40.46)
Unit > 30 Years Old -82.24*** 0.241 -71.81*** 18.76 20.09
(23.02) (32.29) (17.04) (18.51) (17.45)
Pct. Of HH Moved to
Block in Last 5 Yrs
90.78 96.44 -184.5*** -71.79 -87.23
(67.48) (94.56) (42.35) (66.56) (59.59)
Property Lot Size/100 1.441*** 0.0534 -0.400 0.270 -0.740***

41
APPENDIX
Table A7: Net Service Fees, Model 2 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(0.403) (0.511) (0.298) (0.338) (0.262)
Largest Agency 3.051 105.8* 12.27 142.2*** -70.18***
(29.85) (60.52) (22.86) (37.41) (23.19)
Second Largest Agency -81.40** -263.4*** 62.41*** 74.53** -23.16
(39.61) (73.77) (22.90) (37.63) (26.37)
Third Largest Agency -40.28 -306.7*** -62.92** 12.04 -21.97
(36.62) (87.34) (24.94) (38.85) (28.70)
Fourth Largest Agency 119.0*** 100.5 74.97*** -57.34 63.70**
(39.41) (81.13) (25.67) (41.07) (30.41)
Fifth Largest Agency -62.57 198.3** 13.19 -107.3** -30.27
(50.87) (84.79) (28.20) (42.26) (31.07)
Sixth Largest Agency -53.63 -68.18 13.16 -21.73 75.00**
(50.43) (82.24) (29.69) (43.40) (34.42)
Seventh Largest Agency -31.86 -108.2 -60.46* 29.55 -40.46
(50.78) (85.47) (32.56) (46.16) (46.20)
Eighth Largest Agency -74.70 69.96 -133.6*** -172.3*** 53.80
(52.44) (88.20) (33.29) (46.78) (59.34)
Ninth Largest Agency 33.44 -196.3** -39.38 26.72 141.0**
(56.71) (92.33) (36.04) (50.27) (64.06)
Tenth Largest Agency -63.73 64.12 1.024 -59.80 228.0***
(56.77) (92.26) (35.11) (56.52) (66.71)
Constant 506.7*** 1,014*** 550.9*** 1,074*** 823.0***
(71.96) (224.8) (141.7) (144.3) (84.92)
Observations 559 543 616 576 757
R-squared 0.438 0.153 0.412 0.415 0.150
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A8: Underwriter Fees, Model 2
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 9.445*** 17.76*** 13.41*** 6.587*** 3.340**
(0.626) (5.364) (2.169) (1.222) (1.362)
Price/$10,000, Squared -0.102*** -0.0316 -0.341*** -0.117*** -0.0287
(0.0365) (0.237) (0.0991) (0.0422) (0.0447)
Loan to Value Ratio Exceeds 97.5% 2.458** 3.701 2.142* 2.900* 0.264

42
Table A8: Underwriter Fees, Model 2 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(0.955) (3.525) (1.254) (1.644) (3.246)
Unit <=5 Years Old 3.209 6.359 -5.862*** -7.380** -9.955*
(2.484) (5.743) (1.714) (2.993) (5.225)
Unit > 30 Years Old 0.771 3.711 -4.134*** -0.240 3.032
(1.024) (4.388) (1.420) (1.220) (2.253)
Pct. Of HH Moved to
Block in Last 5 Yrs
-6.143** -11.12 -13.35*** -3.169 5.612
(3.003) (12.85) (3.530) (4.384) (7.696)
Property Lot Size/100 0.00355 -0.137** -0.0178 0.0287 -0.0672**
(0.0179) (0.0694) (0.0249) (0.0223) (0.0338)
Largest Agency 3.696*** 31.60*** -0.983 4.230* 3.237
(1.328) (8.224) (1.906) (2.464) (2.995)
Second Largest Agency 1.541 -18.86* 2.580 2.440 0.0909
(1.763) (10.02) (1.909) (2.479) (3.406)
Third Largest Agency 3.521** -39.38*** -3.921* 1.256 -2.405
(1.630) (11.87) (2.080) (2.559) (3.707)
Fourth Largest Agency 3.518** 18.61* 4.123* 4.450 15.97***
(1.754) (11.02) (2.140) (2.705) (3.927)
Fifth Largest Agency 1.819 27.04** -3.560 -3.811 -3.171
(2.264) (11.52) (2.351) (2.784) (4.012)
Sixth Largest Agency 2.149 0.642 2.454 1.326 14.12***
(2.244) (11.18) (2.475) (2.859) (4.446)
Seventh Largest Agency -2.711 -32.07*** -7.790*** 0.761 0.240
(2.260) (11.61) (2.715) (3.041) (5.966)
Eighth Largest Agency 1.418 12.25 -9.109*** -8.937*** -0.545
(2.334) (11.99) (2.775) (3.081) (7.664)
Ninth Largest Agency 4.048 -35.82*** -1.508 -1.770 23.32***
(2.524) (12.55) (3.005) (3.312) (8.273)
Tenth Largest Agency 0.465 31.14** -5.777** -0.0462 47.22***
(2.527) (12.54) (2.927) (3.723) (8.616)
Constant 53.61*** 78.48** 25.34** 40.19*** 128.8***
(3.202) (30.55) (11.81) (9.504) (10.97)
Observations 559 543 616 576 757
R-squared 0.872 0.535 0.468 0.443 0.210

43
APPENDIX
Table A8: Underwriter Fees, Model 2 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A9: Attorney Fees, Model 2
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 19.52* 4.837 2.975 0.333 -0.283
(11.69) (22.41) (6.314) (0.527) (18.36)
Price/$10,000, Squared -1.037 0.0429 -0.128 -0.0132 0.303
(0.681) (0.989) (0.288) (0.0182) (0.602)
Loan to Value Ratio Exceeds 97.5% -55.22*** 10.31 5.351 -0.529 28.34
(17.84) (14.72) (3.651) (0.709) (43.74)
Unit <=5 Years Old -32.74 -11.21 -3.853 -0.302 -92.51
(46.42) (23.99) (4.990) (1.290) (70.41)
Unit > 30 Years Old -17.23 15.09 -3.756 -0.350 -73.38**
(19.14) (18.33) (4.135) (0.526) (30.36)
Pct. Of HH Moved to
Block in Last 5 Yrs
42.76 14.82 5.624 -1.185 237.7**
(56.13) (53.68) (10.28) (1.890) (103.7)
Property Lot Size/100 0.341 0.0250 -0.0210 0.0140 -0.517
(0.335) (0.290) (0.0724) (0.00960) (0.456)
Largest Agency 0.989 10.95 -5.823 0.303 -20.82
(24.83) (34.35) (5.549) (1.062) (40.36)
Second Largest Agency 22.22 -39.83 1.090 -0.0845 79.87*
(32.94) (41.88) (5.558) (1.069) (45.89)
Third Largest Agency 26.38 -64.24 -4.866 1.546 56.13
(30.46) (49.57) (6.054) (1.103) (49.95)
Fourth Largest Agency -24.30 59.70 -5.638 -0.101 -54.85
(32.78) (46.05) (6.230) (1.166) (52.92)
Fifth Largest Agency -7.118 -53.40 -5.491 1.587 24.32
(42.31) (48.13) (6.843) (1.200) (54.07)
Sixth Largest Agency -8.412 -26.60 -4.993 -0.216 -8.064
(41.94) (46.68) (7.206) (1.232) (59.91)
Seventh Largest Agency -25.94 -50.11 -6.538 0.00994 -118.1
(42.23) (48.51) (7.903) (1.311) (80.40)
Eighth Largest Agency 99.68** -61.08 -5.716 -0.161 89.85

44
Table A9: Attorney Fees, Model 2 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(43.61) (50.06) (8.080) (1.328) (103.3)
Ninth Largest Agency 89.48* -8.431 -4.432 0.0213 -113.7
(47.17) (52.41) (8.748) (1.428) (111.5)
Tenth Largest Agency -36.15 -24.39 -5.904 -0.149 -165.3
(47.22) (52.37) (8.522) (1.605) (116.1)
Constant -12.24 -16.54 -14.13 -1.842 527.3***
(59.85) (127.6) (34.39) (4.097) (147.8)
Observations 559 543 616 576 757
R-squared 0.054 0.028 0.012 0.025 0.049
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A10: Premium Plus Endorsements, Model 2
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 62.97*** 59.20*** 116.7*** 65.87*** 16.70**
(4.171) (17.88) (18.86) (12.22) (6.812)
Price/$10,000, Squared -0.680*** -0.105 -2.968*** -1.173*** -0.143
(0.243) (0.789) (0.862) (0.422) (0.223)
Loan to Value Ratio Exceeds 97.5% 16.38** 12.34 18.62* 29.00* 1.319
(6.364) (11.75) (10.91) (16.44) (16.23)
Unit <=5 Years Old 21.39 21.20 -50.97*** -73.80** -49.78*
(16.56) (19.14) (14.91) (29.93) (26.13)
Unit > 30 Years Old 5.143 12.37 -35.94*** -2.403 15.16
(6.829) (14.63) (12.35) (12.20) (11.27)
Pct. Of HH Moved to
Block in Last 5 Yrs
-40.95** -37.07 -116.1*** -31.69 28.06
(20.02) (42.83) (30.70) (43.84) (38.48)
Property Lot Size/100 0.0236 -0.458** -0.155 0.287 -0.336**
(0.120) (0.231) (0.216) (0.223) (0.169)
Largest Agency 24.64*** 105.3*** -8.551 42.30* 16.19
(8.856) (27.41) (16.57) (24.64) (14.98)
Second Largest Agency 10.27 -62.88* 22.44 24.40 0.454
(11.75) (33.42) (16.60) (24.79) (17.03)
Third Largest Agency 23.47** -131.3*** -34.09* 12.56 -12.02
(10.87) (39.56) (18.08) (25.59) (18.53)

45
APPENDIX
Table A10: Premium Plus Endorsements, Model 2 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Fourth Largest Agency 23.46** 62.04* 35.85* 44.50 79.85***
(11.69) (36.75) (18.61) (27.05) (19.64)
Fifth Largest Agency 12.12 90.14** -30.95 -38.11 -15.85
(15.09) (38.41) (20.44) (27.84) (20.06)
Sixth Largest Agency 14.33 2.141 21.34 13.26 70.58***
(14.96) (37.25) (21.53) (28.59) (22.23)
Seventh Largest Agency -18.07 -106.9*** -67.74*** 7.607 1.198
(15.07) (38.71) (23.61) (30.41) (29.83)
Eighth Largest Agency 9.455 40.84 -79.21*** -89.37*** -2.724
(15.56) (39.95) (24.13) (30.81) (38.32)
Ninth Largest Agency 26.98 -119.4*** -13.11 -17.70 116.6***
(16.83) (41.82) (26.13) (33.12) (41.36)
Tenth Largest Agency 3.100 103.8** -50.24** -0.462 236.1***
(16.84) (41.79) (25.46) (37.23) (43.08)
Constant 357.4*** 261.6** 220.3** 401.9*** 643.8***
(21.35) (101.8) (102.7) (95.04) (54.84)
Observations 559 543 616 576 757
R-squared 0.872 0.535 0.468 0.443 0.210
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A11: Total Title Charges, Model 3
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 72.05*** 67.99 120.0*** 48.40** 31.60
(21.80) (44.17) (29.86) (19.96) (22.83)
Price/$10,000, Squared -1.786 -0.279 -2.939** -0.187 -0.138
(1.182) (1.940) (1.360) (0.689) (0.735)
Loan to Value Ratio Exceeds 97.5% -43.76 17.62 28.72* 13.63 34.56
(28.71) (28.63) (16.32) (26.17) (52.57)
Unit <=5 Years Old -164.8** -9.888 -58.62*** -63.89 -128.2
(74.35) (46.83) (22.33) (48.23) (84.76)
Unit > 30 Years Old -93.10*** 26.81 -66.86*** 16.76 -61.63*
(30.88) (36.05) (18.98) (19.45) (36.80)
Pct. Of HH Moved to
Block in Last 5 Yrs
91.22 142.2 -228.0*** -180.1** -157.4

46
Table A11: Total Title Charges, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(102.2) (131.1) (53.66) (86.83) (149.9)
Property Lot Size/100 0.952 -0.154 -0.257 0.416 -0.835
(0.598) (0.626) (0.329) (0.365) (0.582)
Owner is Minority 31.42 90.36*** 8.644 28.17 72.92*
(28.48) (31.28) (17.83) (18.89) (37.27)
Owner Race Unknown 2.423 -41.23 -26.79 -136.0 150.0*
(34.41) (56.32) -36.66 (143.2) (79.60)
Live in Urban Area -104.4*** 23.39 -13.49 -20.32 7.584
(39.69) (29.58) (16.82) (44.91) (39.88)
Monthly Effective Income/$1,000 3.491 3.292 3.979 1.946 18.23
(10.84) (9.356) (5.239) (5.073) (11.19)
Pct. Of HH 25+ with no HS degree 0.217 -172.9 -252.0*** -179.0 294.3
(146.5) (233.5) (82.20) (125.9) (184.5)
Pct. Of HH 25+ with college degree 210.4 -203.0 74.67 93.66 430.6*
(160.9) (322.4) (111.5) (132.4) (242.6)
Block Avg HH In-
come/$10,000 Last Yr.
2.088 -0.0931 -0.918 -1.277 -3.569**
(1.526) (1.870) (0.757) (1.066) (1.629)
Median age -0.486 0.756 -1.199 -4.732* -8.732*
(2.585) (2.055) (1.686) (2.510) (4.536)
Largest Agency 19.95 125.8* -4.477 143.5*** -80.12*
(40.34) (67.13) (24.87) (39.17) (48.39)
Second Largest Agency -55.60 -314.7*** 58.56** 79.46** 74.27
(53.15) (81.56) (24.97) (39.47) (55.07)
Third Largest Agency 14.80 -360.5*** -71.27*** 14.33 52.34
(49.51) (100.1) (26.99) (40.63) (60.20)
Fourth Largest Agency 104.1** 165.3* 66.35** -55.77 17.32
(52.61) (90.73) (27.89) (43.00) (63.38)
Fifth Largest Agency -36.98 167.1* 4.779 -117.5*** -24.39
(68.34) (94.32) (30.62) (44.29) (65.12)
Sixth Largest Agency -40.86 -98.47 8.891 -11.53 94.97
(67.94) (91.36) (32.09) (45.58) (71.99)
Seventh Largest Agency -29.74 -193.4** -72.81** 34.68 -147.6
(68.56) (94.81) (35.32) (48.24) (96.63)
Eighth Largest Agency 44.09 21.77 -149.9*** -182.2*** 150.3
(70.42) (97.73) (36.00) (49.09) (124.4)

47
APPENDIX
Table A11: Total Title Charges, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Ninth Largest Agency 165.8** -259.5** -58.55 27.56 17.81
(77.36) (101.8) (39.10) (52.53) (134.7)
Tenth Largest Agency -102.6 31.51 -20.19 -71.48 48.02
(75.86) (102.8) (38.07) (59.31) (140.2)
Constant 607.1*** 1,066*** 875.6*** 1,393*** 1,780***
(167.4) (323.2) (193.8) (212.1) (259.9)
Observations 559 543 616 576 757
R-squared 0.414 0.257 0.433 0.434 0.125
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A12: Net Service Fees, Model 3
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 53.35*** 50.57 105.6*** 41.67** 25.26**
(16.34) (39.89) (27.60) (19.14) (10.89)
Price/$10,000, Squared -0.834 -0.242 -2.505** -0.0524 -0.363
(0.886) (1.752) (1.257) (0.661) (0.351)
Loan to Value Ratio Exceeds 97.5% 3.491 6.283 22.33 10.77 3.184
(21.53) (25.86) (15.09) (25.11) (25.09)
Unit <=5 Years Old -129.8** -7.192 -49.29** -57.16 -6.382
(55.75) (42.29) (20.65) (46.26) (40.45)
Unit > 30 Years Old -79.15*** 3.495 -60.16*** 17.23 17.84
(23.15) (32.56) (17.55) (18.66) (17.57)
Pct. Of HH Moved to
Block in Last 5 Yrs
63.85 93.55 -215.6*** -170.7** -133.9*
(76.63) (118.4) (49.61) (83.30) (71.53)
Property Lot Size/100 0.973** -0.403 -0.250 0.359 -0.618**
(0.448) (0.565) (0.304) (0.350) (0.278)
Owner is Minority 20.68 76.13*** 10.21 27.36 42.51**
(21.36) (28.25) (16.48) (18.13) (17.79)
Owner Race Unknown -30.84 -39.07 -51.91 -127.1 78.93**
(25.80) (50.87) (33.89) (137.4) (37.99)
Live in Urban Area -70.07** 13.78 -9.145 -19.40 19.60
(29.76) (26.71) (15.55) (43.08) (19.03)
Monthly Effective Income/$1,000 1.436 -5.412 5.212 2.122 10.12*

48
Table A12: Net Service Fees, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(8.129) (8.449) (4.844) (4.867) (5.343)
Pct. Of HH 25+ with no HS degree 39.96 -123.8 -233.1*** -165.5 2.613
(109.9) (210.9) (76.00) (120.8) (88.08)
Pct. Of HH 25+ with college degree 108.5 -208.7 47.67 83.80 -30.99
(120.6) (291.2) (103.1) (127.0) (115.8)
Block Avg HH
Income/$10,000 Last Yr.
0.667 -0.881 -0.816 -1.298 -0.541
(1.145) (1.689) (0.700) (1.023) (0.777)
Median age -0.568 -1.241 -1.064 -4.416* -1.285
(1.938) (1.856) (1.559) (2.408) (2.165)
Largest Agency 9.436 86.06 1.897 138.6*** -68.00***
(30.25) (60.63) (22.99) (37.58) (23.10)
Second Largest Agency -77.71* -254.8*** 53.46** 76.30** -18.65
(39.85) (73.66) (23.08) (37.86) (26.28)
Third Largest Agency -27.51 -266.9*** -64.82*** 11.26 -12.20
(37.13) (90.38) (24.95) (38.97) (28.73)
Fourth Largest Agency 121.9*** 80.08 66.86*** -60.50 62.75**
(39.45) (81.94) (25.79) (41.25) (30.25)
Fifth Largest Agency -44.29 189.2** 11.27 -115.1*** -34.23
(51.24) (85.19) (28.31) (42.48) (31.08)
Sixth Largest Agency -33.87 -70.27 10.72 -13.56 77.88**
(50.94) (82.51) (29.67) (43.72) (34.36)
Seventh Largest Agency -17.91 -109.2 -61.66* 33.27 -43.36
(51.41) (85.62) (32.65) (46.27) (46.12)
Eighth Largest Agency -52.93 68.56 -136.5*** -172.9*** 60.68
(52.80) (88.26) (33.28) (47.09) (59.38)
Ninth Largest Agency 72.78 -213.3** -54.54 28.59 117.0*
(58.01) (91.97) (36.15) (50.39) (64.28)
Tenth Largest Agency -72.25 17.98 -10.30 -71.19 214.3***
(56.88) (92.87) (35.20) (56.89) (66.91)
Constant 557.2*** 1,134*** 833.3*** 1,340*** 847.7***
(125.5) (291.9) (179.2) (203.5) (124.0)
Observations 559 543 616 576 757
R-squared 0.452 0.179 0.429 0.424 0.170
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001

49
APPENDIX
Table A13: Underwriter Fees, Model 3
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 9.712*** 18.21*** 12.37*** 6.377*** 3.041**
(0.711) (5.404) (2.313) (1.258) (1.418)
Price/$10,000, Squared -0.0958** -0.0244 -0.319*** -0.121*** -0.0176
(0.0386) (0.237) (0.105) (0.0434) (0.0456)
Loan to Value Ratio Exceeds 97.5% 1.971** 3.375 2.225* 3.398** 0.819
(0.937) (3.503) (1.265) (1.650) (3.265)
Unit <=5 Years Old 3.556 8.221 -5.884*** -6.340** -10.93**
(2.427) (5.730) (1.730) (3.040) (5.265)
Unit > 30 Years Old 0.324 4.014 -3.536** -0.107 2.388
(1.008) (4.411) (1.471) (1.226) (2.286)
Pct. Of HH Moved to
Block in Last 5 Yrs
-2.226 11.49 -13.52*** -8.282 3.665
(3.336) (16.04) (4.158) (5.473) (9.309)
Property Lot Size/100 0.0473** -0.163** -0.00543 0.0441* -0.0692*
(0.0195) (0.0766) (0.0255) (0.0230) (0.0361)
Owner is Minority 0.675 5.424 0.425 0.458 0.184
(0.930) (3.827) (1.381) (1.191) (2.315)
Owner Race Unknown -0.788 -14.65** -4.310 -9.239 -2.876
(1.123) (6.891) (2.840) (9.029) (4.944)
Live in Urban Area 5.751*** 6.906* -0.708 -0.600 -4.267*
(1.296) (3.619) (1.303) (2.831) (2.477)
Monthly Effective Income/$1,000 0.0342 -0.177 0.117 -0.0842 0.159
(0.354) (1.145) (0.406) (0.320) (0.695)
Pct. Of HH 25+ with no HS degree 2.293 -4.993 -10.15 -12.91 18.36
(4.782) (28.57) (6.369) (7.936) (11.46)
Pct. Of HH 25+ with college degree -10.22* -68.13* 6.176 10.62 -0.305
(5.250) (39.45) (8.641) (8.344) (15.07)
Block Avg HH
Income/$10,000 Last Yr.
-0.0398 0.211 -0.0502 0.0151 -0.0182
(0.0498) (0.229) (0.0587) (0.0672) (0.101)
Median age 0.120 0.454* 0.0689 -0.310* 0.172
(0.0844) (0.251) (0.131) (0.158) (0.282)
Largest Agency 2.621** 29.29*** -1.721 4.518* 3.303
(1.317) (8.214) (1.927) (2.469) (3.006)
Second Largest Agency 0.920 -19.48* 2.049 3.270 0.456

50
Table A13: Underwriter Fees, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(1.735) (9.979) (1.935) (2.488) (3.420)
Third Largest Agency 1.898 -34.88*** -4.016* 1.466 -2.114
(1.616) (12.24) (2.091) (2.561) (3.740)
Fourth Largest Agency 2.858* 19.51* 3.417 4.852* 15.66***
(1.717) (11.10) (2.161) (2.711) (3.937)
Fifth Largest Agency 0.485 28.13** -3.783 -4.085 -2.551
(2.230) (11.54) (2.372) (2.792) (4.045)
Sixth Largest Agency 1.843 -3.050 2.553 2.135 14.66***
(2.217) (11.18) (2.487) (2.873) (4.471)
Seventh Largest Agency -4.099* -31.06*** -7.828*** 1.386 1.280
(2.238) (11.60) (2.737) (3.041) (6.002)
Eighth Largest Agency 0.875 9.540 -9.316*** -9.142*** -0.586
(2.299) (11.96) (2.790) (3.095) (7.727)
Ninth Largest Agency 3.256 -39.48*** -2.332 -1.057 24.30***
(2.525) (12.46) (3.030) (3.311) (8.366)
Tenth Largest Agency 0.687 27.94** -6.242** -0.128 45.24***
(2.476) (12.58) (2.950) (3.739) (8.708)
Constant 43.26*** 43.84 34.67** 55.29*** 123.3***
(5.462) (39.55) (15.02) (13.37) (16.14)
Observations 559 543 616 576 757
R-squared 0.880 0.552 0.477 0.455 0.217
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A14: Attorney Fees, Model 3
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 8.990 -0.784 2.030 0.362 3.303
(13.58) (22.76) (6.692) (0.547) (18.91)
Price/$10,000, Squared -0.856 -0.0124 -0.116 -0.0135 0.242
(0.736) (1.000) (0.305) (0.0189) (0.609)
Loan to Value Ratio Exceeds 97.5% -49.22*** 7.960 4.166 -0.532 30.56
(17.89) (14.76) (3.658) (0.718) (43.56)
Unit <=5 Years Old -38.59 -10.92 -3.446 -0.393 -110.9
(46.32) (24.14) (5.005) (1.323) (70.23)
Unit > 30 Years Old -14.28 19.30 -3.174 -0.359 -81.86***

51
APPENDIX
Table A14: Attorney Fees, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(19.23) (18.58) (4.254) (0.534) (30.50)
Pct. Of HH Moved to
Block in Last 5 Yrs
29.60 37.20 1.092 -1.167 -27.21
(63.67) (67.56) (12.03) (2.382) (124.2)
Property Lot Size/100 -0.0683 0.411 -0.00201 0.0134 -0.148
(0.372) (0.323) (0.0737) (0.0100) (0.482)
Owner is Minority 10.06 8.809 -1.990 0.359 30.23
(17.74) (16.12) (3.996) (0.518) (30.89)
Owner Race Unknown 34.05 12.49 29.42*** 0.259 73.93
(21.44) (29.03) (8.216) (3.929) (65.95)
Live in Urban Area -40.11 2.707 -3.636 -0.320 -7.744
(24.73) (15.25) (3.770) (1.232) (33.04)
Monthly Effective Income/$1,000 2.021 8.880* -1.351 -0.0919 7.954
(6.754) (4.822) (1.174) (0.139) (9.276)
Pct. Of HH 25+ with no HS degree -42.03 -44.19 -8.742 -0.612 273.3*
(91.28) (120.4) (18.42) (3.453) (152.9)
Pct. Of HH 25+ with college degree 112.1 73.84 20.83 -0.761 461.9**
(100.2) (166.2) (24.99) (3.631) (201.0)
Block Avg HH
Income/$10,000 Last Yr.
1.461 0.577 -0.0514 0.00526 -3.009**
(0.951) (0.964) (0.170) (0.0292) (1.350)
Median age -0.0371 1.542 -0.204 -0.00540 -7.619**
(1.610) (1.059) (0.378) (0.0689) (3.759)
Largest Agency 7.898 10.42 -4.653 0.312 -15.42
(25.13) (34.60) (5.574) (1.075) (40.10)
Second Largest Agency 21.20 -40.36 3.059 -0.102 92.46**
(33.11) (42.04) (5.596) (1.083) (45.63)
Third Largest Agency 40.42 -58.74 -2.437 1.597 66.66
(30.85) (51.58) (6.049) (1.114) (49.89)
Fourth Largest Agency -20.63 65.75 -3.926 -0.129 -61.09
(32.77) (46.76) (6.252) (1.180) (52.52)
Fifth Largest Agency 6.821 -50.24 -2.712 1.601 12.40
(42.57) (48.62) (6.862) (1.215) (53.96)
Sixth Largest Agency -8.836 -25.15 -4.382 -0.107 2.433
(42.33) (47.09) (7.193) (1.250) (59.65)
Seventh Largest Agency -7.737 -53.15 -3.327 0.0275 -105.5

52
Table A14: Attorney Fees, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
(42.71) (48.87) (7.916) (1.323) (80.07)
Eighth Largest Agency 96.14** -56.32 -4.055 -0.187 90.18
(43.87) (50.37) (8.069) (1.347) (103.1)
Ninth Largest Agency 89.80* -6.772 -1.680 0.0253 -123.5
(48.20) (52.49) (8.763) (1.441) (111.6)
Tenth Largest Agency -31.04 -14.41 -3.649 -0.163 -211.5*
(47.26) (53.00) (8.533) (1.627) (116.2)
Constant 6.642 -112.0 7.651 -1.720 808.5***
(104.3) (166.6) (43.44) (5.818) (215.3)
Observations 559 543 616 576 757
R-squared 0.079 0.047 0.042 0.027 0.077
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A15: Title Premium Plus Endorsements, Model 3
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Price/$10,000 64.74*** 60.70*** 107.6*** 63.77*** 15.20**
(4.743) (18.01) (20.12) (12.58) (7.089)
Price/$10,000, Squared -0.638** -0.0814 -2.771*** -1.209*** -0.0878
(0.257) (0.791) (0.916) (0.434) (0.228)
Loan to Value Ratio Exceeds 97.5% 13.14** 11.25 19.35* 33.98** 4.097
(6.248) (11.68) (11.00) (16.50) (16.33)
Unit <=5 Years Old 23.71 27.40 -51.16*** -63.40** -54.66**
(16.18) (19.10) (15.05) (30.40) (26.32)
Unit > 30 Years Old 2.160 13.38 -30.75** -1.071 11.94
(6.718) (14.70) (12.79) (12.26) (11.43)
Pct. Of HH Moved to
Block in Last 5 Yrs
-14.84 38.29 -117.6*** -82.82 18.33
(22.24) (53.46) (36.16) (54.73) (46.55)
Property Lot Size/100 0.315** -0.543** -0.0472 0.441* -0.346*
(0.130) (0.255) (0.222) (0.230) (0.181)
Owner is Minority 4.501 18.08 3.693 4.581 0.922
(6.198) (12.76) (12.01) (11.91) (11.58)
Owner Race Unknown -5.256 -48.83** -37.48 -92.39 -14.38
(7.488) (22.97) (24.70) (90.29) (24.72)

53
APPENDIX
Table A15: Title Premium Plus Endorsements, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
Live in Urban Area 38.34*** 23.02* -6.158 -5.998 -21.33*
(8.637) (12.06) (11.33) (28.31) (12.38)
Monthly Effective Income/$1,000 0.228 -0.589 1.017 -0.842 0.796
(2.359) (3.816) (3.530) (3.198) (3.477)
Pct. Of HH 25+ with no HS degree 15.29 -16.64 -88.29 -129.1 91.78
(31.88) (95.23) (55.39) (79.36) (57.31)
Pct. Of HH 25+ with college degree -68.12* -227.1* 53.71 106.2 -1.524
(35.00) (131.5) (75.14) (83.44) (75.34)
Block Avg HH In-
come/$10,000 Last Yr.
-0.265 0.704 -0.437 0.151 -0.0908
(0.332) (0.763) (0.510) (0.672) (0.506)
Median age 0.798 1.514* 0.600 -3.103* 0.859
(0.562) (0.838) (1.136) (1.582) (1.409)
Largest Agency 17.47** 97.63*** -14.97 45.18* 16.52
(8.779) (27.38) (16.76) (24.69) (15.03)
Second Largest Agency 6.132 -64.95* 17.82 32.70 2.278
(11.57) (33.26) (16.82) (24.88) (17.10)
Third Largest Agency 12.65 -116.3*** -34.92* 14.66 -10.57
(10.77) (40.82) (18.19) (25.61) (18.70)
Fourth Largest Agency 19.05* 65.03* 29.72 48.52* 78.28***
(11.45) (37.00) (18.79) (27.11) (19.68)
Fifth Largest Agency 3.232 93.76** -32.90 -40.85 -12.76
(14.87) (38.47) (20.63) (27.92) (20.22)
Sixth Largest Agency 12.28 -10.17 22.20 21.35 73.29***
(14.78) (37.26) (21.62) (28.73) (22.36)
Seventh Largest Agency -27.32* -103.5*** -68.07*** 13.86 6.400
(14.92) (38.67) (23.80) (30.41) (30.01)
Eighth Largest Agency 5.837 31.80 -81.01*** -91.42*** -2.931
(15.32) (39.86) (24.26) (30.95) (38.64)
Ninth Largest Agency 21.71 -131.6*** -20.28 -10.57 121.5***
(16.83) (41.53) (26.34) (33.11) (41.83)
Tenth Largest Agency 4.582 93.14** -54.28** -1.281 226.2***
(16.51) (41.94) (25.65) (37.39) (43.54)
Constant 288.4*** 146.1 301.5** 552.9*** 616.6***
(36.42) (131.8) (130.6) (133.7) (80.70)
Observations 559 543 616 576 757

54
Table A15: Title Premium Plus Endorsements, Model 3 (cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
R-squared 0.880 0.552 0.477 0.455 0.217
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001
Table A16: Title Charges in Chicago with Attorney Indicators
Total Title
Charges
Non-Attor-
ney Title
Charges
Net Service
Fee
Underwriter
Fee
Attorney
Fee
Price/$10,000 30.12 27.80** 24.81** 2.988** 2.320
(20.73) (11.44) (10.82) (1.415) (15.83)
Price/$10,000, Squared -0.286 -0.338 -0.323 -0.0150 0.0528
(0.668) (0.368) (0.348) (0.0456) (0.510)
Loan to Value Ratio Exceeds 97.5% 11.81 1.065 0.705 0.360 10.74
(47.96) (26.46) (25.02) (3.275) (36.63)
Unit <=5 Years Old -79.05 -21.39 -10.54 -10.86** -57.66
(77.31) (42.66) (40.34) (5.278) (59.05)
Unit > 30 Years Old -11.66 15.97 13.71 2.258 -27.63
(33.66) (18.57) (17.56) (2.298) (25.71)
Pct. Of HH Moved to
Block in Last 5 Yrs
-249.9* -109.8 -114.8 4.980 -140.0
(136.5) (75.32) (71.23) (9.320) (104.3)
Property Lot Size/100 -0.902* -0.659** -0.592** -0.0667* -0.243
(0.529) (0.292) (0.276) (0.0361) (0.404)
Owner is Minority 49.17 45.19** 45.00** 0.192 3.978
(34.03) (18.78) (17.76) (2.324) (25.99)
Owner Race Unknown 165.9** 70.99* 74.50* -3.512 94.88*
(72.83) (40.18) (38.00) (4.972) (55.62)
Live in Urban Area 40.99 12.68 16.93 -4.247* 28.31
(36.42) (20.10) (19.00) (2.487) (27.82)
Monthly Effective Income/$1,000 14.55 10.70* 10.53** 0.164 3.851
(10.18) (5.617) (5.312) (0.695) (7.775)
Pct. Of HH 25+ with no HS degree 160.7 31.95 13.40 18.55 128.8
(168.0) (92.69) (87.65) (11.47) (128.3)
Pct. Of HH 25+ with college degree 342.9 -26.61 -26.49 -0.120 369.5**
(220.5) (121.7) (115.0) (15.05) (168.4)

55
APPENDIX
Table A16: Title Charges in Chicago with Attorney Indicators (cont’d)
Total Title
Charges
Non-Attor-
ney Title
Charges
Net Service
Fee
Underwriter
Fee
Attorney
Fee
Block Avg HH
Income/$10,000 Last Yr.
-2.519* -0.665 -0.641 -0.0241 -1.854
(1.483) (0.818) (0.774) (0.101) (1.132)
Median age -8.950** -1.017 -1.197 0.180 -7.934**
(4.120) (2.273) (2.150) (0.281) (3.147)
Largest Agency -96.85** -67.25*** -70.27*** 3.016 -29.60
(44.01) (24.28) (22.96) (3.005) (33.61)
Second Largest Agency 53.45 -15.94 -16.48 0.532 69.39*
(50.04) (27.61) (26.11) (3.417) (38.22)
Third Largest Agency 88.13 -29.31 -26.08 -3.227 117.4***
(55.16) (30.43) (28.78) (3.766) (42.12)
Fourth Largest Agency 104.3* 69.26** 53.92* 15.34*** 35.08
(58.03) (32.02) (30.28) (3.962) (44.32)
Fifth Largest Agency 24.16 -36.86 -34.50 -2.357 61.01
(59.29) (32.71) (30.93) (4.048) (45.28)
Sixth Largest Agency 128.9* 79.33** 65.40* 13.93*** 49.62
(66.02) (36.43) (34.45) (4.507) (50.42)
Seventh Largest Agency -63.34 -50.74 -51.74 1.003 -12.60
(88.06) (48.59) (45.94) (6.012) (67.25)
Eighth Largest Agency 244.4** 27.14 29.89 -2.749 217.3**
(114.2) (63.01) (59.59) (7.797) (87.22)
Ninth Largest Agency 57.32 128.2* 104.5 23.72*** -70.90
(122.9) (67.81) (64.13) (8.391) (93.87)
Tenth Largest Agency 173.7 245.9*** 201.0*** 44.87*** -72.15
(127.9) (70.57) (66.74) (8.733) (97.69)
Buyer Attorney Only -258.9*** 129.1*** 118.3*** 10.78** -388.0***
(71.77) (39.60) (37.45) (4.900) (54.82)
Seller Attorney Only -241.5*** 48.04*** 45.81*** 2.238 -289.5***
(33.10) (18.26) (17.27) (2.259) (25.28)
No Attorney -796.9*** 19.73 21.14 -1.409 -816.6***
(66.84) (36.88) (34.87) (4.563) (51.05)
Constant 2,018*** 932.8*** 811.1*** 121.7*** 1,085***
(237.5) (131.1) (123.9) (16.22) (181.4)
Observations 757 757 757 757 757
R-squared 0.282 0.204 0.185 0.223 0.356

57
APPENDIX
Table A18: Net Service Fee with Lender Fee and Number of Items, Controlling for Price
(cont’d)
Philadelphia
Broward
County
Maricopa
County
Sacramento
Cook
County
R-squared 0.475 0.261 0.496 0.371 0.182
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1
Data source: Metropolitan HUD-1 Database for FHA mortgages, 2001

U.S. Department of Housing and Urban Development
Office of Policy Development and Research
Washington, DC 20410-6000
June 2