By James McNair
The Cincinnati Enquirer

Fewer than two thirds of home buyers in Greater Cincinnati are insured against flawed titles. State Rep. Michelle Schneider wants future home buyers to think twice about going without the coverage.

This week, in the waning moments of the Ohio General Assembly session, Schneider introduced a bill that would require title insurance agents to tell buyers of the availability of homeowners title insurance. The bill would not require the coverage, but would make sure that consumers know what it is for. It would, however, force title agents to insure themselves against their mistakes.

"It is absolutely standard to buy homeowners title insurance in Columbus and Cleveland and other parts of the state - and the seller buys it," said Schneider, R-Madeira. "But not in Cincinnati."

The legislation comes more than two years after the collapse of the Erpenbeck Co. exposed a regional disinterest in homeowners title insurance. Erpenbeck was one of Greater Cincinnati's biggest home builders. Three employees, including co-owner Bill Erpenbeck, have pleaded guilty to bank fraud.

Erpenbeck Co. took buyers' money in nearly 300 transactions, but kept the money instead of paying off his construction-loan mortgages. As a result, the buyers faced the threat of foreclosure. And since most did not have homeowners title policies, they would not have been covered against Erpenbeck's intentional lapses had the construction lenders foreclosed.

Banks that loaned money to Erpenbeck's victims, however, were covered because they required their clients to pay for lenders' title insurance.

Homeowners title insurance lasts as long as you hold a title. It costs roughly $750 on a $150,000 house purchased with 10 percent down. The insurance, however, is sold at a discount if you buy it and lender's coverage.

With the legislature adjourned until after November's elections, Schneider's bill might have to be re-introduced in the 2005 session. She wanted to introduce it earlier, but said the Erpenbeck fraud did not generate urgency outside Cincinnati. "It's been a very slow and tedious process trying to ... offer protection to people making the single largest purchase of their entire lives," she said.

In Kentucky, state Rep. Jon Draud, R-Crestview Hills, introduced measures in 2002 to license title agents and require home builders to issue affidavits that they paid off their construction loans, but the bills were never brought to a vote.

Mike Fletcher, vice president of Lawyers Title of Cincinnati, said his company has for years made it a point to stress the availability of title insurance for home buyers. Nevertheless, no more than 30 percent of buyers in his firm's closings opt for the policy, an improvement over the 20 percent who did before the Erpenbeck scandal.

Fletcher said Schneider's bill "might help" persuade homebuyers to insist on the coverage. "It's a good idea they get it," he said.

E-mail jmcnair@enquirer.com