Reforming the Housing Transaction

If policymakers truly want to make things better for home buyers, they should look for ways to streamline and modernize the housing transaction itself.

The process of buying a home in the United States is archaic and expensive. To understand why, you have to remember that one person's wasted expense is another person's income. What to consumers are unnecessary fees are the bread-and-butter of real estate agents, attorneys, and mortgage lenders. And remember that these interest groups make up one of the most successful lobbying coalitions in all of politics.
When the government looks for ways to help home buyers, it usually thinks in terms of subsidies in the mortgage market. However, if policymakers truly want to make things better for home buyers, they should look for ways to streamline and modernize the housing transaction itself. Some suggestions I have include reforming the title process, fostering more competition in real estate sales and mortgage lending, and making the foreclosure process less costly and more streamlined.
The Title Process
Today, title insurance is recommended for every home owner — and is required by nearly every mortgage lender. Title insurance provides protection against a lawsuit claiming an improper change of title somewhere in the history of the property. Part of the problem is that while buyer A and seller B may be acting in good faith, former owner F might claim that he was improperly deprived of ownership by former owner E, who sold to D, who sold to C, who sold to B. Former owner F then brings this claim against buyer A.

Read more: http://www.american.com/archive/2012/november/reforming-the-housing-transaction