Norwest Mortgage Co.'s controversial low-cost substitute for title insurance is taking hits from more state regulators.

A Pennsylvania regulator is the most recent to demand that the Des Moines-based lender stop selling Title Option Plus. At least 11 states have expressed concern about Norwest Mortgage's product.

In Virginia, a hearing regarding the plan will be held Sept. 27. A district court in Nebraska suspended a cease-and-desist order from the state insurance commissioner pending a trial on the matter, probably sometime this summer.

But despite all the tumult, Title Option Plus, or TOP, has been a great success for Norwest Mortgage, company officials say. And they say they have no intention of discontinuing the product.

Many believe that the title insurance industry would change dramatically - and become far more competitive - if Norwest's product gained acceptance.

At issue is whether Title Option Plus is itself insurance. If it is, Norwest Mortgage must register as an insurance agent in most states. The cost of registering could take away Norwest's price advantage of 10% or more over title insurers in most states.

Title insurance protects borrowers and lenders against prior liens or fraud.

Title Option Plus is a substitute for one of kind of policy: lender's title insurance. Instead of the standard lender's insurance, Norwest offers a comprehensive title search and limited lender protection. Borrowers are not covered. The product fully insures only Freddie Mac, the loan purchaser.

Colorado, Connecticut, Idaho, Illinois, Nebraska, New York, Oklahoma, Tennessee, Utah, North Carolina, Virginia, and Texas have all voiced concerns about Title Option Plus. Each has in varying degrees said that since Norwest insures Freddie Mac, TOP is indeed insurance.

Norwest has been steadily increasing sales of the product. In November, 330 homeowners bought Title Option Plus. Last month, 1,100 bought TOP. That figure has already been surpassed in June, according to a company official.

The increase in home loan refinancings has helped TOP take off. Most borrowers who are refinancing already have owner's title insurance. That makes the desire for lender's insurance less pressing.

Stephen D. Morrison, Norwest Mortgage's senior vice president and general counsel, says the American Land Tile Association, or Alta, is the cause of the "ruckus" because it pressed insurance commissioners to take action against TOP.

"This is strictly a turf battle between Alta and Norwest," he said.

Mr. Morrison said most of the states were just "piling on" to the Nebraska insurance commissioner's initial complaint. He emphasized that Norwest firmly believes that there is nothing illegal about Title Option Plus.

"As soon as the first court says this is legal, the rest of them will get up and go away," he said.

Officials at the American Land Title Association scoffed at Norwest's attitude. Edmond R. Browne, general counsel of the association, said that 12 state regulators can't all be wrong when they say TOP is indeed title insurance and should be regulated.

Norwest "ought to be subject to the same laws and regulations as we are," he said.

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