With all of the short sales and foreclosures taking place in the recent year or so, it is no surprise that the companies that issue title insurance are feeling the pain. These distressed sales are much more likely to lead to title problems than any other and when things go wrong, it is often the title insurance company that gets stuck paying. For those that may not know, title insurance is insurance that protects against claims to the title for real property (land and houses). As part of the settlement process, a title search is done to identify any potential problems and the closing cannot take place unless there is reason to believe that there is clear title on the day of the closing. However, often things come up after that fact and that is what title insurance protects against. There are typically 2 policies; one policy to protect the lender’s interest in the property and another to protect the owner. The state of Georgia is one of only a few states that do not require a home buyer to purchase an owner’s title insurance policy; but it is almost always a good idea to do so anyway. Due to the increased risk to the insurance company, the insurance companies are being forced to raise their rates. Therefore, it is not uncommon for title insurance to cost 25 – 30% more than it did just a year ago. Lenders should be aware of this when issuing Good Faith Estimates and home buyers should expect to have these additional costs at closing.