When trade groups seek to limit competition, a major goal for most of them, they usually just ask the legislature to provide state regulation and licensing.

But the title insurance folks are going beyond that. Apparently the licensing they already have isn’t doing the job.  Now they want to make sure the business is handled only by title companies which have a physical office inside Colorado’s borders.

Regulation is never promoted as limiting competition, of course. It’s always sought as being in the best interest of the consumer, who might otherwise suffer from lower prices—oops, make that shoddy goods and services.

Indeed, no licensing campaign has ever been launched by consumers.  They can’t afford lobbyists, and their response to shoddy goods or services is to stay away from them.

The sponsor of House Bill 1211 is Rep. Matt Jones, D-Boulder, but the driving force is the Land Title Association of Colorado.  The bill does have the virtue of being short.  All it demands is that title insurance agents in Colorado “maintain a physical office within this state” that is “the primary work place for one or more full-time employees.”  For some reason, lawyers are exempted.

To most of us, title insurance is just one of those numerous documents that they shove at us to sign during the paper blizzard that accompanies the closing on a house we’re selling or buying.  There’s a fee, of course; it’s usually borne by the seller.

Theoretically the insurance protects the owner and the lender from any loss resulting from liens, unpaid taxes, homeowner association dues, errors in the legal description and other possible clouds on the title that haven’t been cleared before the sale.  It’s backwards insurance, supposedly protecting you against past events instead of future ones.  You pay a one-time fee instead of regular premiums.

The title association argues that out-of-state companies too often provide “poor quality and/or incorrect title insurance commitments.”  The result could force the owner to pay extra fees that should have been the responsibility of the prior owner. Sometimes these errors aren’t discovered until the new owner tries to sell the property many years later.

Who could be against such a worthy measure?  Well, Colorado’s banks, for one.

“It’s a solution without a problem,” maintains Jenifer Waller, senior vice president of the Colorado Bankers Association. Title insurance agents doing business in Colorado already have to be licensed here, she said, even if they live elsewhere.

And if someone lives in Campo or Walsh, for instance, near the Kansas border, why shouldn’t they be able to pick someone in Kansas if they want to?

“If you pay, you pick,” she said.  “What makes the state line a deciding point?”

So why would the title insurers bring the bill?  “It’s anti-competition,” said Waller.

Meghan Pfanstiel, executive director of the title insurers association, said there are 325 licensed agencies doing business in the state.  But those with Colorado addresses number only 148—less than half.   You can see the impact the bill might have on supply, and consequently on price.

As for the banks’ opposition, they’re not just worrying about the freedom to choose for those who live in border towns.

“Some large banks have long-term contracts with out-of-state title agencies,” Pfanstiel said, or they own the title companies.  They use them when trying to unload all the repossessed houses that came their way during the housing collapse.

She noted that Colorado is the only state in the nation that that has a public trustee foreclosure process.  “If your responsible producers are located here, they will pay more attention to what’s happening here,” she said.

It’s true that property owners who discover that their title insurance somehow didn’t cover a claim against their land can complain to the division of insurance, which licenses the agents.  “But they just want to move into their house,” Pfanstiel said. “They’re not necessarily going to complain to the division of insurance.”

The Colorado Association of Realtors says it is studying the bill and hasn’t taken a position on it yet.

A hearing on the bill is expected shortly in the House State Affairs Committee.

A veteran lobbyist who stayed too long at the fair once described the numerous (but often little publicized) economic fights at the legislature as “the greedy big bastards vs. the greedy little bastards.”  The only trouble here is it’s not easy to tell which is the big one and which is the little one.

Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for the Colorado News Agency. Contact him at pblake0705@comcast.net You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.ColoradoNewsAgency.com