Have you ever looked at the fees associated with a home purchase and wondered: Why am I paying so much for title insurance? Why do I have to pay $1,000 to $2,000 for coverage when payouts on claims involving actual title defects are minuscule?

A congressional subcommittee held a landmark hearing in late April on that very subject, along with a related question: To what degree do illegal tie-ins among realty agents, mortgage brokers, home builders and title agents inflate the premiums that consumers pay at closing?

In Colorado, according to Erin Toll, that state's deputy insurance commissioner, "the pervasiveness of kickback schemes in the residential real estate process has created a black market that makes it impossible for those who play by the rules to compete. The cost of providing kickbacks is passed on to consumers and rolled into" the premiums consumers are charged.

Toll said the situation is similar in other states, based on her observations as co-chairperson of a National Association of Insurance Commissioners task force examining title insurance practices.

An independent title insurance agent from Minneapolis, Douglas Miller, president and CEO of Title One Inc., testified that in Minnesota, "the title insurance industry and the real estate industry have locked up almost the entire marketplace through controlled business schemes." The arrangements take varying forms, Miller said, but they all add up to the same result: "steering real estate consumers into overpriced ancillary services for secret profits."

Miller's firm refuses to take part in joint ventures with realty brokers or lenders and, despite charging what Miller said are the lowest premiums in the area, it struggles to attract business.

State insurance commissioners nationwide recently have levied close to $50 million in fines and penalties against title insurers and title agencies for illegal kickbacks. In Colorado alone, $25 million has been returned to consumers. In California, three large insurers paid $12.5 million to settle charges alleging illegal kickbacks and referral fees.

At the federal level, regulators have uncovered dozens of kickback and "sham" title agencies that exist solely to funnel referral payments back to realty brokers, loan officers and builders. Gary Cunningham, deputy assistant secretary for housing, told the hearing about a $675,000 settlement recently with an unnamed home builder that used its own affiliated title company to illegally split consumers' title premiums with a major title insurance company.

Representatives of the title insurance and realty brokerage industries deplored the evidence of kickbacks and law-breaking presented at the hearing, but argued that title premiums are not excessive, and that referral fee payments are not the norm.

RandeYeager, president and CEO of Old Republic National Title Insurance Co., said title insurance is unique in that premiums pay mainly for searches of public records in advance of the issuance of the actual insurance policy. In effect, he said, most of the premium goes toward identifying and eliminating the bulk of the risks the insurance is intended to cover. That's why payouts for claims represent just 5 percent of premium dollars, versus 60 percent for auto insurance and 86 for HMO insurance.

The president of the National Association of Realtors, Thomas Stevens, said his industry is "greatly concerned" by allegations of hanky-panky between title agents and realty brokers.

Joint ventures involving realty firms and title agencies typically are bona fide, law-abiding business arrangements that benefit consumers, he testified.

What should you as a consumer take away from the hearing testimony? You might start by considering what J. Robert Hunter, former Texas insurance commissioner and currently insurance director for the Consumer Federation of America, had to say: Title insurance is grossly overpriced in most parts of the country.

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