If you were hoping to see lower rates for title insurance and escrow charges associated with buying a home this spring, you will have to wait.

Regulations proposed last year by the state Department of Insurance that would have lowered costs for title insurance and escrow fees as early as March were rejected Wednesday by the Office of Administrative Law, which reviews regulation changes proposed by state agencies.

Insurance industry officials praised the ruling, but the state insurance commissioner said Thursday that he didn't think the verdict was the final word on the matter.

Insurance Commissioner Steve Poizner said the ruling leaves room for his office to make some changes and resubmit the proposal.

"The OAL has made it clear we do have authority and now are just looking for clarification before finalizing these new regulations," he said during a conference call with reporters.

But Craig Page, executive vice president of the California Land Title Association, said in a statement that the ruling said the regulations are flawed and amount to "replacing competition with government dictates in the title insurance marketplace."

The typical cost for title insurance on a $500,000 home runs about $2,350 while escrow costs are about $950, according to an industry estimate. The regulations did not specify how much rates would be lowered; the decrease would be worked out later, according to Poizner.


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In Northern California, title companies typically provide in-house escrow services. Rates for title insurance, meant to protect buyers against potential disputes involving property ownership, and escrow are tied to a home's value. The cost can be borne by the seller, the buyer or both.

The Insurance Department contends that current rates are too high due to a lack of competition and that rates should come down because the industry is more automated than it was 10 years ago.

Insurance industry officials say there is plenty of competition, and cite a study from Bankrate.com that said titleinsurance costs in California are lower than the national average.

The cost-cutting regulations were proposed last summer by Poizner's predecessor, John Garamendi, now the state lieutenant governor. Initially, the regulations also called for an immediate 23 percent rollback in title insurance rates, along with a 27 percent rollback for in-house escrow fees by title insurance companies.

During the conference call, Gary Cohen, the Insurance Department's top lawyer, said the final version of regulations called for rollbacks only if the department is unable to get data from insurers needed to establish reasonable rates.

If the department does prevail in this matter, Cohen estimated that consumers won't see lower rates for title insurance and escrow services until 2009.