Minnesota Attorney General's Office is Misleading Consumers

The Minnesota Attorney General's Office ("AG") has got it all wrong on the section of their webpage dedicated to housing.  And apparently they don't care as we've been trying to call their attention to this problem for over two months. In these difficult times when the housing industry has financially wiped out so many consumers, how is it possible that the AG's office could be so apathetic about the information they provide to the consumers they're supposed to be representing.

From dual agency to title insurance, apparently the AG in Minnesota doesn't understand the consumer housing industry and has no qualms about spreading mis-information to Minnesota consumers.   

For example, shopping and comparing title insurance is a complex and often intimidating process for those consumers who attempt it.  However, if consumers rely upon the AG's office for advice in this matter, they can expect to over pay for their title insurance.

Here's mis-information from two different sections on title insurance quoted directly from the Minnesota AG's website:

"Re-issue Credit (click to see page): A savings on the cost of title insurance, when the buyer uses the same title company that the previous owner used. Because the company is “re-issuing” the insurance, it can offer a lower rate."

"Asking Can Save You $$$ (click to see page) Be sure to ask for a re-issue credit on your title insurance. If the seller bought an owner's title insurance policy within the past few years, the same title company the seller used may issue you a new policy without redoing all the paper work. This can save you a lot of money!"

This is important because reissue credits can often save consumers as much or more than $500 on title insurance.   The truth is that reissue credits are available at ANY title company that offers them, not just the one the previous owner used as the AG's site proclaims.  In fact, today one very large title underwriter, Old Republic National Title, eliminated reissue credits from their rate filing on new purchase transactions, so if a consumer follows this advice they could easily be out several hundred dollars if they select a title company that uses that underwriter, like Burnet Title or Edina Realty Title.  And the discount has nothing to do with "reissuing" the title insurance, it is a discount offered because of the reduction in liability exposure.  Essentially, the new title insurer can "piggy back" upon the coverage offered in the previous policy.

But there's more...

Reading through the AG's website on "housing" is almost a lesson on how NOT to buy or sell a house.  Dual agency is explained in impossible to understand and incorrect terms.  The forms cited are all from the Realtor trade association perpetuating the myth that the Realtor forms are the "standard forms."  We could go on and on...

Here's the short list of problems with the AG's website in regards to their "Home Buyer's Handbook" starting with Section Four:

1. "Visit Open Houses."  Very bad advice.  Visiting open houses almost ensures that a commission dispute will arise if you later hire your own agent.   Open houses are traps that lead to dual agency and the listing broker "hogging" the entire commission.   Avoid Realtor open houses.  
2. "You can also view listings online at: www.mls.com..."   Hang on a minute, www.mls.com is a commercial entity - from their website:  "MLS.com is independently owned and operated and is not affiliated with any of the over 900 local MLS systems. We offer the public access to multiple listings throughout the United States by providing advertising services for real estate agents and real estate related industries."  Since when does the AG's office offer free advertising to for profit firms?
3. "Understanding the Purchase Agreement."  Not one mention of using an attorney to draft this form.  Rather, they instruct the buyer to "read the purchase agreement thoroughly."   This is the most important document in the whole transaction and contains numerous complex legal terms -  HIRE AN ATTORNEY.  And don't wait until after your Realtor has drafted it - it's too late then.
4. "Arbitration."  There is no mention of the extraordinarily high filing fees if you want to file an arbitration which can often be in excess of $600.   In addition, there is no mention of the boilerplate arbitration clauses that are often contained in listing and buyer representation contracts.
5. "Title Insurance."   No mention of the difference in costs or the very large difference in insurance coverage offered by different types of policies.
6. "Dual agency...The term refers to an agent representing a buyer in an offer on a house when that agent actually owes a duty to the seller of the house." SERIOUSLY?  Dual agency is an impossible conflict of interest where the agent owes duties to BOTH parties.  This section goes on to discuss "equal" representation and other made up terms that confused even us:  "Unfortunately, not agreeing to dual agency may prevent you from buying a home listed by your agent’s company. You can cancel an agreement to dual agency for a particular property, if you choose."  None of this is accurate.
7.  "Business Relationship Disclosure."   Poorly written, lacking in logic and completely inaccurate.  "Your agent may receive a referral fee or other benefits if he or she directs your business to these companies. Agents can be paid according to the number of referrals they make to an affiliated company."  Referral fees are ILLEGAL!
8. "Sample Purchase Agreement."  It's an out of date Realtor form on their site...
9. "Appendix E: Explanation of Closing Costs."   It is possible that 50% of their quoted fees are completely out of date or inappropriate.  For example, most title companies have bundled all their fees together in an attempt to comply with new RESPA rules.
10. "HUD-1 Settlement Statement."  Again an outdated form.

We give Minnesota Attorney General's website an "F" for causing consumers who rely upon a trusted resource to be terribly misled about the housing industries.