Fidelity Title Calls Off the LandAmerica Merger

Update: Since I wrote this post, Fidelity is back on with the LandAmerica merger (11/26/2008).

LandAmerica has released a statement to the public regarding this recent debacle which has many wondering what will happen to this large title insurance underwriter.   As I write this post, their stock is sitting at $0.54 a share.  LandAm’s 52 week high is $53. 

From Inman News:

The deal was announced on a Friday. The following Monday, LandAmerica detailed record third-quarter losses and said the company was in violation of financial debt covenants of its note-purchase agreement and credit agreement (see story).

LandAmerica said it was in discussion with creditors to obtain waivers. If not waived, the covenant violations “constitute an event of default under the agreements, giving the lenders the right to declare all principal and accrued interest payable immediately,” LandAmerica said at the time.

LandAmerica’s public statement, which is in a question and answer format clearly states that their ability to pay claims is adequately covered by the reserves.   Locally, LandAmerica has joint ventures with Commonwealth of the Puget Sound  (Windermere), Rainier Title (John L. Scott and Coldwell Bank Bain) and Northpoint Title.   From the statement:

What about other LandAmerica entities?

LandAmerica is comprised of many separate legal subsidiaries with separate profit and loss statements.  Some entities are performing well and others are not performing well.  We are working closely with the Nebraska Department of Insurance, which is where major underwriters are domiciled, to resolve our situation in a way that benefits our policyholders.”

This leaves a bigger question of what percentage of ownership does LandAmerica have in these joint ventures and what will happen to these ownership shares?

What is the financial viabililty of LandAmerican underwriters?

The LandAmerica underwriters, Lawyers Title and Commonwealth have over $300 million in combined statutory surplus.  And we have some of the industry’s most stringent requirements for reserves in place to protect our policyholders.  The LandAmerica underwriters’ claims reserves are backed by over $1.1 billion in cash and investments.”

Reserves are mandetory…what about operating expenses?

191 thoughts on “Fidelity Title Calls Off the LandAmerica Merger

  1. LandAmerica Exchange Services LES (1031s) has issued a notice they are “accepting no new custmers and is terminating it’s operations. Although the total per value of our 1031 exchange funds exceeds the value of all funds received from our customers, portions of the 1031 funds are invested in illiquid aution rate securities. Our inability to sell or borrow against these securities has precipitated our decision to terminate operations….

    This situation involves only LES and not any other LandAmerica companies.”

  2. The auction rate securities problem has been around quite some time, maybe a year. I hope they weren’t taking new 1031 money to pay off old 1031 debt.

    One of the risks of doing a 1031 is having the exchange facilitator go under.


    This indicates they terminated operations today.

    It also indicates they have $250M in 1031 funds they cannot access. This is potentially disastrous for the people involved. Unless I’m missing something, they won’t be able to complete their 1031 transactions. That means they will have sold their property, incurred a tax debt, and not have the proceeds from the sale to buy new property OR pay their taxes.

    The only question I have is how old the transactions are that were affected. The article mentions few people have been doing 1031s over the past year. IMHO, they haven’t made much sense in most situations for over a year given the current tax rates.

  4. Huh — looks like it’s misspelled “Ranier” so it didn’t show up when I keyword searched for it.

    So if anybody is wondering, [LandAmerica] claimed a 25 percent stake in “Ranier Title LLC” as of Dec. 31, 2007.

    They reported 100 percent interest in “Rainier Title Co.” at end of 2005.

    If anybody works at or with any of these subsidiaries we’re looking for your input on Inman Blog.

  5. The problem is, their holding a stake in the companies doesn’t mean much by itself. The local companies could very well be healthy. The only thing it would mean is that if they’re not healthy, then they can’t count on additional contributions from LandAmerica. But we can’t tell that.

    I wonder though if this might affect some ratio that the Insurance Commissioner might look at?

  6. Kary, I’m hearing of a few lenders (large and small) who are not allowing transactions involving LandAmerica underwritten policies or escrow transactions during this time (if LandAm pulls out of this, lenders may react accordingly).

  7. Kary, if the local companies are doing well with marketshare, thats one thing. However, if LandAm has for example 50% ownership in the local company (and is the underwriter) then it is a big deal. How can the local company separate itself from LandAm? They would need a new underwriter and investors (assuming LandAm is agreeable).

  8. I’m not that familiar with the way title companies are set up. Is having a large underwriter done as an alternative to having reserves? If so, I could see that would be a major issue.

    If lenders are not allowing policies issued by these companies, that would hold up closings. Yet another reason to have the automatic extension for things that happen beyond the control of the parties. The problem is, you might have a hard time getting another title company to jump in fast enough to be within the term of the extension, but at least it would give you time to get a new extension filed.

  9. Kary,
    For starters, in Washington State, the title company must own a title plant (where the records are kept) to originate title commitments and collect a title premium. Last I heard, a title plant in King County runs about 2.5-3 million dollars. In other parts of the country, you could be just an agent and have a title company as your underwriter–not here. It’s done differently everywhere.

    This is why the ABA’s have partnered with LandAmerica title companies. LandAmerica was game for this (locally) as some of their direct operations at that time were not performing well with marketshare.

    It’s my understanding that only underwriters are required to have reserves.

    Real estate agents and consumers who are currently involved with a transaction using a LandAmerica company (mentioned above) should check with thier lender ASAP in case they do need to make changes with the title.

    This is all happening very quickly.

  10. If they own the plant, I could see where that would cause issues.

    As to your last piece of advice, probably not bad advice at all. I’d only caution that you might want to just go ahead and change (or get a backup), because getting a title company to write a new policy on short notice can be problematic. I know because I tried it once. I’d say you need at least a week, especially if it’s title with many items on it. So if there is concern, I’d not necessarily wait for the lender to raise the issue. By the time they raise it, it might be too late to allow for a change without a delay in closing. Also, if this does become a major issue, the other title companies will get backed up, making them take even longer.

  11. Kary, That surprises me that it’s taking a week to get a title report–at least not a “cookie cutter” one. However, if many of the LandAm reports are pulled to the non-LandAm title companies, they could get backed up. Best to address sooner rather than later.

  12. Some companies are faster than others. I’ve had some with 24 hour and some almost a week. But where you have a request on a pending transaction, I think that would raise some eyebrows, at least at until they see a lot of transactions due to this, at which time they would be backed up.

    Hopefully they’d service their existing clients before new clients, sort of like what FedEx does during a UPS strike.

    The lack of news on this is amazing! I think it’s maybe too complex of a situation for the press to get their heads around.

  13. Kary, the plant really isn’t an issue (I only brought it up to let readers know how expensive the entry fee is in the title arena in Washington State).

    The two real issues are (1) that any title company that exclusively uses LandAmerica as an underwriter faces an uncertain future; (2) what happens if your business partner in your joint venture goes bankrupt?

  14. I just received this email from a local real estate agent:

    “Is Land America primarily, Transnation? I have one with First American. I use Pacific Northwest Title . Now using mostly Commonwealth since I’ve moved to Windermere a couple years ago. Are escrows of these three involved?

    What about people who have Title Insurance through Transnation from years ago?”

    This almost calls for a post on it’s own…but here goes.

    Here’s who’s who locally in title insurance:

    Commonwealth of the Pacific = LandAmerica (Windermere ABA)
    Rainier Title & Escrow = LandAmerica (Coldwell Banker Bain and John L Scott ABAs)
    Northpointe Title & Escrow = LandAmerica
    (TransNation/Transamerica have not been originating titles locally since late this summer).

    First American Title = First American Title
    The Talon Group = First American Title
    Pacific Northwest Title = First American Title

    Fidelity Title = Fidelity Title
    Chicago Title = Fidelity Title
    Ticor Title = Fidelity Title

    Stewart Title = Stewart Title
    Old Republic = Old Repubic

    I can easily imagine that other title companies will require a sub-escrow if a LandAmerica affiliated escrow company is being used on a transaction.

    As far as “what about those old title policies?” Title insurance actually insures from the point of recording the specific transaction through the past. It does not cover most future events. People with older LandAmerica policies should be reserved for…(hopefully the reserves are not invested in the same place the 1031 invested).

  15. the locally owned landam companies need to issue a formal statement. The market may act out of fear and pull orders, which would be devastating. Also, where is our newly re-elected insurance commissioner on this? He should also make a statement as well. Let’s put Aubrey Cohen on it.

  16. Jillayne, I think you’re right. The local landam companies and re broker/owners should be issuing statements…but they may not know what to say or understand how this may impact them.

  17. LandAmerica files for Chapter 11 (from Reuters):

    “Separately, Fidelity National Financial said it would buy LandAmerica’s underwriting units Lawyers Title Insurance Corp and United Capital Title Insurance Co for $139.4 million.

    Also, Chicago Title Insurance Co will buy LandAmerica’s Commonwealth Land Title Insurance Co for $158.6 million, Fidelity said.

    Both Lawyers Title and Commonwealth units are entirely solvent and none of the other many businesses are seeking bankruptcy protection, LandAmerica said.”

  18. Bankruptcy could prove to be highly problematic for the local ABA’s due to the likelihood that the underwriting agreements will be viewed as assets of LandAm Corporate and may need to stay apart of the BK. If Fidelity or CTi purchase Commonwealth or Lawyers separately; they may be forced to terminate the existing agreements and re-write them. I’m certain this would not be in the favor of the ABA partners. One would think that our Insurance Commissioner would view unfavorable one entity underwriting under 6-8 different brands due to possible “consumer confusion/deception”.
    In any case; I was at Ticor many years ago when we were part of a failed sale before being picked up for pennies by CTi; hummmmm looks and smells familiar to me.
    Won’t be pretty for anyone I’m certain of that.

  19. Statement from Fidelity National Financial (As the small print says, more uncertainty is certain):

    This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: the possibility that the proposed stock purchase agreement will not be completed due to the failure to secure necessary regulatory approvals; the possibility that there are unexpected delays in obtaining regulatory approvals; the possibility that the revenues, cost savings, growth prospects and any other synergies expected from the proposed transaction may not be fully realized or may take longer to realize than expected; changes in general economic, business and political conditions, including changes in the financial markets; continued weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; our dependence on operating subsidiaries as a source of cash flow; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; and other risks detailed in the “Statement Regarding Forward- Looking Information,” “Risk Factors” and other sections of the Company’s Form 10-K and other filings with the Securities and Exchange Commission.

  20. The sales will need to be approved by the bankruptcy court (and probably some insurance commissioners). Buying an asset on the eve of bankruptcy would be very risky, and thus they’ll run it through the court.

    Note that the price of each sale is more than the price would have been to purchase the entire company!

  21. Hi Curtis, I think we worked a few months together at CTI…I left for Transamerica shortly after the Ticor merger. I worked at Safeco Title when CTI bought us…and it was not pretty. One of my co-workers in the title unit kept old phone lists of both companies and would actully line out who was laid off…just to keep stats, I guess. I was also at Washington Title when Fidelity bought Chicago Title (who owned WA Title). I’ve been through my fair share of title co. aquisitions.

    I wonder how the employees of the local ABA’s are dealing with all this news…not to mention the many brands of FNF.


    Yesterday, we signed an agreement to sell our principal title operations to Fidelity. This positive development is good news for our title insurance customers, employees and those who support them. Some employees will become part of the Transition Services team to assist with the orderly transition of our title operations to Fidelity. For those working in non-title subsidiaries, we will continue to assess the ongoing operations of those businesses. As we move forward, we will know more about the general impact of this transaction and will share that with you.

    In order to make this transaction happen, we’ve had to take two important steps. First, we filed for Chapter 11 bankruptcy protection for our holding company, LandAmerica Financial Group, Inc. and for our 1031 company, LandAmerica 1031 Exchange Services. Chapter 11 is a relief provision that enables a company with financial pressures to take care of its customers, employees and creditors in an orderly process. In effect, Chapter 11 is the way we will address the significant level of debt at the holding company.

    It’s important to note that LandAmerica has over 150 separate legal entities and only two of them are in protection under Chapter 11. All of our other companies are in operation as part of LandAmerica.

    The Nebraska Department of Insurance (NEDOI) is taking the other step that must occur to move our business to Fidelity. On Monday, the NEDOI filed a court order to take over our underwriters in a process called “rehabilitation.

  23. By the time CTI merged the two operations locally (King Co.) there were two title people, and two sales people from Ticor that made the transition. Rich Jones (CWLTC) and Bill Quast (Rainier) from title operations and Cynthia Tibbets and myself from sales. I have to believe that the future of CWLT and Rainier are likely to be more positive than Ticor’s demise as they both currently have decent market share given the joint partner relationships. The biggest question is; since we know Fidelity and CTI have actively chosen NOT to participate in ABA’s in the recent past ; will they compromise their previous stance on these partnerships or take this opportunity to choke them off?
    I’m taking bets; if anybody wants to ante up!!

  24. I find the lack of coverage on what is happening with the 1031 victims disturbing. This is truly a disgusting example of corporate capitalism, and someone or some group within the company needs to be very ashamed at what they’ve done. I suspect they also need to be very worried. I’d not sure whether any criminal laws were violated, but I’d hope to at least see an investigation. As I said in my own thread, I’m not sure what the proper course of action is when a 1031 company invests in an illiquid asset, but I’m pretty sure it’s not continue to operate normally allowing a staggering loss to fall on new customers.

    Stated differently, the effect on title operations in Washington isn’t the biggest story here. The biggest story is the 1031 angle, and that doesn’t seem to be getting covered.

  25. One thing I mentioned elsewhere should be mentioned here too. If you’re an agent and have a pending closing with one of the LandAmerica related companies, it probably would be prudent to let your buyer know so that they can decide whether or not to switch. Banks are not the only ones with a say in this. Both buyers and banks get policies issued by title companies.

  26. Kary, the consumer really should be advised that the company that currently owns the title division is going through a BK. I agree with you 100%. It would not only apply to the closing–but also the title that is suppose to protect the buyer (and lender).

  27. Kary, the reinsurance issue is interesting… I don’t see where this addresses the ownership issues (which separate from insurance/underwriting) with the local joint ventures.

    If you refer to Matt’s comments 8 & 12, LandAmerica has actual interest in the local ABA’s/joint ventures.

  28. I just received a memo from one of our lenders stating they will not permit LandAmerica title policies on loans they purchase. Several others banks, including Countrywide, Bank of America and Chase have also made similar statements. Perhaps they’ll reconsider after “the dust settles” with the reinsurance…we’ll see.

    From Flagstar Bank:

    LandAmerica’s holding company and one of it’s subsidiaries filed for bankruptcy protection today. Until we receive further clarification on the status of LandAmerica:

    – Effective immediately, all funding for any loans which have LandAmerica or it’s affiliates as its title insureres HAVE BEEN SUSPENDED.
    – Also effective immediately, we will no longer be accepting any new title commitments which involve LandAmerica or its affiliates. Loans currently which have title commitments issued by LandAmerica or its affiliates will be conditioned to provide an additional commitment from another title underwriter prior to closing.

  29. I had to chew on this a while.

    It seemed nearly impossible to go broke as a title company. How many title claims do they have to pay, compared to the premiums they charge?

    But it turns out the problem is the 1031 escrow accounts; they decided to invest the funds (conservatively, they thought), to earn a higher return, instead of holding them in cash.

    Who profits from the earnings of the 1031 escrow accounts? The investors who have the proceeds from the sale of the rental property?

    Or the title company?

    If the investors earned the profit, and were advised of the risks, then it could be merely viewed as unfortunate.

    If the title company keeps the proceeds, and does not inform the investor that their money may be at risk, then that is another matter.

    I’ll be quite sorry to see more consolidation, and virtually no price competition in the title insurance business.

    Maybe the state should consider getting into the business of insuring title, like they do in Iowa.

    It sure makes their title insurance policies cheaper.

  30. Roger, it is a lot to chew on. And if you break it down to a smaller local bite…it still is a mouthful because we (loan originators) are dealing with “the big 3” real estate companies who are accustomed to having control of their title, escrow and mortgage relations. The “big 3” owners/brokers are having to decide how to sell this to their clients (re agents)…it’s all pretty amazing.

    I have a transaction where the two agents (listing/selling) are 2 of the big 3…one day I may just write about what went down today when we had to transfer the title from the LandAm company. It was ugly…why you’d almost think the re broker/owners were making money on title…nuf said.

  31. Roger, I think the 1031 thing is “only” a 250 million problem, and they lost over 500 million in one recent quarter. So it’s more than just the 1031 problem that brought them down. The 1031 might have resulted in the timing of the bankruptcy.

    As I’ve said, I’ve seen a lot of sloppy title reports lately, and sloppy reports lead to claims. Also, I think both CA and WA have fined some title companies recently–not sure whether they were any of these companies.

    Get back to the offer that fell through. It was a lower offer to buy the entire mess than either of the two offers to buy just pieces. Apparently there’s a lot of problems there. I’m not sure of the scope of their legal issues that go beyond just not having enough money, but I suspect they’re severe. That’s probably what made the sale fall through.

  32. Kary, thanks for the link. One of the brokers all ready has a title company lined up to step in their ABAs place if a lender will not accept their policy…shouldn’t the title (and escrow) be the consumers choice? It is the consumer who is paying for it and it’s the buyer and lender who will be insured…the broker/owners are merely receiving compensation on the profits. Maybe we need TSP (Title Spread Premium) so consumers can see what the profits are on the broker’s “back end” when they control the the title and escrow.

  33. I think the benefit of one stop shopping should include a lower cost to the client for ancillary services than they can get elsewhere. It should be a win-win scenario for both the Broker and the Client. Clearly consumers rely on their agent to handle many things including ordering Preliminary Title when the property is listed. Diluting the agent’s service level, by forcing them to use a Company they have no contacts in, serves no one.

  34. Local Custom of Seller Choosing Title and Buyer Choosing Escrow makes the most sense. There’s much more to Title Services than the Insurance Policy, and many of those services are needed long before the buyer is in the picture.

  35. Ardell, its actually not a lower cost. Some of the ABAs do not have the title/escrow combo which provides a deeper discounted rate.

    I keep trying to picture a RE agent reviewing a purchase and sale with a buyer and recommending a LandAm company…how do you explain that the title you’re selecting for their insurance is going through bankruptcy (with no guarantee that the sale to Fidelity will be complete or how the bankruptcy will be resolved).

    How can any RE agent who is not part of the LandAm joint-ventures accept an offer that has LandAm at this time?

    Don’t get me wrong…I have a soft spot for LandAm…I worked at Transamerica Title in the 90’s…but shouldn’t we be looking out for the clients best interest instead of the owner/broker who’s being compensated?

  36. Rhonda, I think it’s the call of both the bank and the buyer. In some cases that might result in split title if they buyer wanted one company and the lender another, even though that would cost more.

    I could easily argue buyers should be more cautious than lenders. Let’s just assume the worst case scenario and that the sales don’t get approved for some reason. Buyer A has a policy written by one of these entities, where reinsurance was done through Fidelity. A claim against the owner comes up 7 years from now. Further worst case scenario: The entity that wrote the buyer’s policy is out of business. What’s the chance that the buyer will remember (or even know) that the policy was reinsured through Fidelity? And if they do remember, how do they make their claim? Lenders are in a better position to assess these things than buyers. And assuming the worst case scenario came to be, a lender would be in a better position to deal with it as a result of likely repetition from having numerous claims (and in-house attorneys).

    As to the title spread premium idea, I’m not so sure that’s the issue as is simple disclosure of the facts. Here’s what I’m thinking: Lawyer’s malpractice insurance is done on a “claims made” basis. Thus it’s not having insurance at the time of the incident that’s important (as say with a car accident), but instead insurance at the time a client makes a claim. In certain situations a lawyer will get a “tail” policy, that covers all their prior acts. That makes their annual insurance less expensive going forward because they only have to cover acts since the date of the tail. Anyway, I mention this because I know an attorney who bought a tail from a company that was in financial difficulty at the time of the transaction, and the broker didn’t disclose that. Fortunately all worked out well in the end, but the attorney might not have spent the $5,000+ on the tail if they’d known what the status of the company.

  37. The selection of title insurance is often based on the quality of service. Which gets the preliminary titles done fastest? Which is most accurate?

    If escrow is done through a title owned entity, the service of the escrow can also determine where title is done, since there are often discounts involved using the same company.

    Now there is the financial condition factor which hasn’t been present in the past. I agree with Rhonda that it’s something the agent should consider.

    BTW, I’m glad I’ve never been with a brokerage that pressured me into using a certain lender, title or escrow. If that’s not illegal, it probably should be.

  38. Kary, I agree w/comment 59 completely. When a brokerage has the “one stop shop” other vendors are typically not allowed the same access as the brokers “preferred vendor”. Competition is good for the consumer.

    How would you advise your client if you received a purchase and sale with a LandAm company (Commonwealth, Rainier or Northpoint) for title insurance?

  39. “Some of the ABAs do not have the title/escrow combo which provides a deeper discounted rate.”

    Buyers should NEVER use the seller suggested and requested escrow company to save $50 bucks (normal discount I’ve seen) in my opinion. It is never good for the buyer to use “all seller services”. Title = Seller; Buyer = Escrow. Best if they are split up. More checks and balances and better service for the buyer, based on my experience.

    You would not believe how often seller costs erroneously show up on the buyer side when the buyer agrees to use seller’s choice of escrow. And when there is a problem on the buyer side, they tend to pick up the phone and call the seller’s agent…first call…when you use seller’s choice of escrow. Not good for the buyer in any way, shape or form. In a hot market sometimes you had to…but in a buyer’s market…not a good practice.

  40. “Rhonda, I think it’s the call of both the bank and the buyer. In some cases that might result in split title if they buyer wanted one company and the lender another, even though that would cost more.”

    I have not seen this happen, but I have recently heard it is happening more.

    To clarify for readers, “splitting Title” is not the same as splitting Title from Escrow. Splitting Title involves the seller providing an Owner’s Title Policy, which the seller pays for, from one Company and the buyer purchasing “Lender’s Title” which the buyer’s mortgage company requires, from a different Title Company. Escrow is a separate issue and is always a split service, even when it is bought from the same company as Title Insurance and services.

  41. Rhonda, re #60, we’ve been changing away from Rainier Title for over a year where the seller has them listed. 😀

    As to the others I think I’d just advise them of the fact that they are in bankruptcy and go from there. Rather obviously, it’s easy to change if you do it early.

  42. Regarding the LandAmerica 1031 issue…

    I’m unfamiliar with the contractual (if any) arrangements between the investor entering into a 1031 and the company facilitating (LandAmerica or others), but my kneejerk reaction is ….

    1) The bankruptcy protection is to thwart massive claims by those who have placed money with the 1031 firm (money that has apparently since vanished) and to keep lawsuits from going after other assets (Commonwealth, Rainier etc..)

    2) It is unbelievable that the money’s were invested into suspect securities

    3) this is criminal

    4) regulation is coming for 1031’s.

  43. Auction rate securities weren’t suspect until the whole thing melted down. A lot of entities/people ended up in the mess. It’s a story all by itself. So I don’t fault LandAmerica for using them. What they did after the securities became illiquid–that’s another matter.

  44. Regarding comments 62 and 58 on splitting the title order on a purchase. This is actually very costly to the buyer. Typically, when financing is present on a purchase, there is an owners policy (usually standard coverage) and a lenders policy (extended coverage). When two policies are issues at the same time, the second policy receives a “simultaneous issue” discounted rate. If there is no simultaneous policy, then there would be no discounted rate for the lenders policy (which the buyer pays for).

    For example, with a $500,000 sales price and $400,000 loan amount, the policy for the buyer with a simultaneous issue rate would be about $650 (same title company for the owners and lenders policy. If two different title companies are used for the policies, the lenders policy (which the buyer generally pays for) would be approx. $1000 for extended coverage (stand alone) policy.

  45. Tim, have you experienced any issues with lenders not funding due to LandAmerica title policies? Flagstar’s memo to brokers/lenders late Wednesday (#49) states they will not fund on any loans involving LandAmerica or it’s affiliates.

  46. Thanks for giving the discount numbers. On a $500,000 transaction I could see where a buyer would decide to pay an extra $350 to have less concern over whether they were wasting $650. Others would not.

    Any idea how difficult it is to get the lender to switch too if the buyer wants to switch but the lender doesn’t think it’s necessary? If that happens the buyer would only have to pay a $50-75 cancellation fee.

  47. Kary, the policy that insures the buyer is the owners policy, which is paid for by the seller. The lenders policy is paid for the the buyer. (typically).

    With a purchase, the mortgage company is going to order title where ever they are instructed to based on the purchase and sale agreement…unless the are being instructed by their lenders that the loans will not be bought if they are insured by a specific title insurance company, such as LandAmerica and their affiliates.

    Title companies probably won’t care if they’re insuring one policy and another company is insuring the other since they’re both being paid full premiums (no discounts).

  48. As to the first paragraph, I realize that. And the problem is the buyer might not have any contractual ability to change the owner’s policy. The contract says it will be with company X and it will be with company X absent the seller agreeing to a change (which presumably wouldn’t cost the seller anything because the cost should be similar and the buyer would pay any cancellation fee.)

    Which I guess that raises the opposite issue too. The lender requires a change on their policy, but the seller won’t agree to change on the owner’s policy. Maybe the listing agent really likes Company X, and convinces the seller there’s no reason to change. The buyer would then be forced to pay more for the lender’s policy.

    But my question in 68 was was this: If the seller will agree to change the owner’s policy, how likely is it that the lender will also change so that the buyer doesn’t have to pay more on the lender’s policy? If the owner’s policy is changed mid-stream, will the lender be likely to agree and go along with the change in title companies?

  49. Kary, the lender should be find as long as they receive the title commitment in time for underwriting purposes and as long as the title company is not on a ‘non approved vendors list’.

    Your scenario is possible. I think if anyone’s reading the paper (like Aubrey’s column in the PI) they’re going to be cooperative to the change. I don’t think it’s going to be the seller fighting it as much as it will be the agents because of the joint-venture relationships and the financial benefit to the broker/owners.

  50. I’d agree with the last comment about the broker/agents being more of a problem than the seller. Unfortunately, they’re the connection to the seller in most cases.

    Even ignoring any financial considerations, every agent probably has a title company they love and one they hate. Other than mailing lists and free cancellations, I never did try to get anything significant of value from a title company. I don’t even usually get their listing packages because I don’t find them that useful. But I did once though get two BBQ hotdogs and a Coke! For me it’s more about quality of service.

  51. Ardell, regarding your comment 56 of the perceived savings with using the ‘in house’ title company–most title companies offer a filed savings of 10% off of title when they receive the escrow as well. Here’s the filed rates for Rainier (Coldwell Banker Bain’s and John L Scott’s LandAmerica affiliated joint venture):

    Page 11, Letter S shows Rainier Titles “combo rate” discount. Unless the in-house escrow company is part of the title company, I don’t see where they would qualify for the savings.

    Rainier Title’s rates (from their rate sheet) based on a $500k sales price and $400k loan amount = $1036 for the owners policy (sellers cost) and $633 for the lenders policy (buyers cost).

    If the escrow were to go to Coldwell Banker Bain’s escrow company, Escrow Professionals, and to Rainier Title, it appears to me that it would cost the seller $103.60 and the buyer $63.30 more on the title side.

  52. I’d consider those cost savings rather nominal when you’re looking at a $500,000 transaction. For me though, it’s still service. The $169.90 difference in price is insignificant either way if you end up with an escrow that waits till the last minute to do every task, and needs a reminder on almost every task, etc. If a deal falls through because you tried to save $169.90 going with an unknown escrow, you’d look pretty foolish to your client.

    On the other hand, I’m not sure if this is actually the case anywhere, but I’ve always suspected that if you had a last minute title issue pop up that escrow with the same company as title would have better contacts to get it resolved quickly.

  53. Kary, my point is that when a broker or agent tells their clients they’re using the “in house” title/escrow companies do provide a savings to the client, it may not be true.

    I agree this may not see like a huge difference–but then don’t say you use the “in house” brands because of savings if it doesn’t pan out.

  54. Kary, the local “big 3” with title/escrow ABA’s do have addendums disclosing the relationship. However, if agents believe or tell their clients they’re receiving a savings because of the joint venture, they may not be accurate.

  55. From a Windermere Affiliated Business Arrangement Disclosure:

    “…Neither your agent nor Windermere will be paid a referral fee for recommending Settlement Services or the Escrow Group. Because of this relationship, this referral to the Escrow Group, LLC may provide Windermere a financial or other benefit.”

  56. I’m saying not all disclaimer terms hold up. If an agent is saying to use the services of X because there will be savings, and there are no savings, having the language you mention won’t necessarily help them in a class action type situation. The saving grace (if you want to call it that) is that situations based on representations are not really the stuff which makes a class action lawsuit. I don’t think you’re going to see an individual lawsuit by a buyer over $69.30 (or whatever your number was).

  57. I just received this from Flagstar reinstating the ban on LandAmerica affiliated title companies:

    “On Wednesday 11/26/08 LandAmerica’s holding company and one of its subsidiaries filed for bankruptcy protection. In Memo #08249 we announced the suspension of funding on all loans with title insurance, title commitments or closing protection letters from LandAmerica or any of its subsidiaries.

    In order to accommodate our customers with LandAmerica loans already in the pipeline, we will be temporarily lifting this suspension and will continue funding LandAmerica loans until Friday December 5, 2008. On Saturday December 6, 2008 the suspension of funding these loans will be reinstated, and any loans with LandAmerica title insurance, title commitments, or closing protection letters will not be funded.

    No extensions or exceptions will be granted.”

  58. Roger, I just confirmed (minutes ago) that Countrywide/Bank of America is still not accepting LandAmerica and LandAmerica affiliates title reports. Late last week I confirmed that Chase not accept titles either.

  59. Thanks, Roger. The local LandAmerica affiliates (mentioned above) have been sending out emails to their client base stating information, such as this post, are rumors. I’ve had several of the emails forwarded to me, here’s a portion of one:

    “As many of you may have heard some rumors, here is some information to clarify that Rainier Title is not in trouble and you can still rely on us for your Title and Escrow needs. If you have a lender or someone else telling you, you need to change companies this is not true. If you have any questions please feel free to give me a call, and please be reassured we will close your transactions smoothly.

    It is important for all of you to know that our ownership group does not include LandAmerica Financial Group, our partner is and always has been Lawyers Title Insurance Corporation and our Underwriter is Commonwealth Land Title Insurance Company. Regardless of any rumors you may hear concerning Rainier Title, I want you to be assured that is business as usual for us. The reality of the situation is that both our underwriter and our corporate partner are engaged in a transaction that will enhance their already strong financial positions.”

    Call your Countrywide rep to see if they’re accepting title policies from the companies I’ve mentioned in the post.

    It’s not a rumor.

  60. Thanks Rhonda:

    As if it weren’t confusing enough, here is a memo form Amtrust (I’ve never used them), not allowing Landamerica, but listing exceptions for Commonwealth and Lawyers Title.

    I fear there is a bit of dirty fighting going on…the LandAmerica group in a fight for it’s continued existence, and its competitors piling on and hoping to snuff it out.

    Sure wil make the next title company think twice about allowing it’s 1031 exchange unit go into BK. I wonder if they will think it was worth it in the end (lost business, vs coughing up the losses in the escrow account.)?

    Investor: Amtrust Mortgage Banking
    Type: General Information
    Description: Effective 11.26.08, AmTrust Bank will no longer accept LandAmerica Financial Group, Inc., its subsidiaries and affiliated agencies as escrow agents and/or providers of title commitments and title insurance, except for the following companies, and their subsidiaries: • Commonwealth Land Title Insurance Company • Lawyers Title Insurance Corporation • United Capital Title Insurance Company Title insurance transactions in process written on commitments or policies with or by LandAmerica Financial Group, Inc., its subsidiaries and affiliated agencies, other than listed above, will not be accepted by AmTrust Bank.

  61. Roger, I wonder if AmTrust doesn’t understand “who’s who” in title–that’s amazing–thanks for sharing that.

    I don’t blame LandAm affiliates for “fighting for their existence. I do have an issue with sending out wrong information. It just adds to the confusion.

  62. Rhonda, what I’m not seeing in that link is a reference to Rainier Title (except for the web address).

    But I love this part of the email: “If you have a lender or someone else telling you, you need to change companies this is not true.”

    Right. If your lender is telling you that you need to change title companies for them to fund, that is not true. I wonder on what planet that’s true?

  63. The link is from Rainier Title’s website for their rate sheets. The cover of the rate sheet has LandAmerica and Commonwealth front and center. Commonwealth and Lawyers are affiliates of LandAmerica. Rainier Title’s email is trying to distance themselves from this.

    Lenders have no wish to cause any hiccups with transactions, including having to switch title companies. Lenders have no other motives for doing this except to follow our instructions from our banks/lenders.

  64. I’m re-reading the email in comment 87, I think the key word is “ownership” in stating their ownership does not include LandAmerica Financial Group.

    They are underwritten by LandAm or it’s affiliates and unless something has changed since the last SEC filing, LandAm reported a 25% interest in Rainier (see Matt Carter’s comment 12) as of Dec 2007. This could have changed…I’m sure we’ll know more details soon.

  65. I have 1031 funds being held hostage by LandAm Exchange Services. I thought I would post the section from the contract that I have with LES that is pertinent:

    “3. Investment of Exchange Funds

    (a) LES will deposit the Exchange Funds in an account maintained at SunTrust Bank in Richmond, Virginia, and guarantees Taxpayer will receive interest on the Exchange Funds at a rate equal to 50% of a one-month BBA LIBOR minus 200 Basis Points as reported on Bloomberg on the first business day of every month during the exchange period (the “Growth Factor”) from the first business day following receipt of funds via wire transfer at Richmond, Virginia, or from three business days after receipt in Richmond, Virginia if sent by check, to the day of withdrawal. LES and Taxpayer agree that the Growth Factor, if not applied to the acquisition of the Replacement Property identified by Taxpayer pursuant to Paragraph 4, shall be paid to Taxpayer after the Termination Date. Taxpayer acknowledges and agrees that the amount of the Exchange Funds may be in excess of the maximum amount of deposit insurance carried by the depository institution indicated above; however, LES unconditionally guarantees the return and availability of the Exchange Funds and the guaranteed interest stated above.”

    Nowhere does it state anything about investing the funds in Auction Rate Securities or anything like that. I was under the impression that the money was deposited in a trust account. I am at a loss as to what to do next.

    Who do I call to collect on the above mentioned guarantees? 🙂

  66. Rhonda:

    Any insight as to why lenders are not willing to fund loans with LandAmerica title companies? Are they worried they will run off with the funds? Are they concerned that they will not pay the claims, in the rare event that a title insurance policy actually has to pay a claim?

    BTW, Plaza Mortgage just sent the same notice a few minutes ago.

    If enough lenders will not fund loans thru Landamerica, then their business, and affiliates are dead. That is not good.


    It does not take much to push over a house of cards these days…

  67. Actually Roger, it’s not so rare to have a claim on a title policy. As a loan originator, you may not be involved with one as they typically are post closing. Our company has a potential claim right now with a local LandAm affiliate actually involving the escrow side. It was a purchase with title and escrow which closed in April of this year. Although the taxes showed paid on the HUD, they were not and the new homeowners have a shortage with their reserve account. The agents and our company were told 3 months ago this would be immediately resolved…we learned from the bank we sold the loan to, that the taxes are still unpaid.

    Odds are that most commitments will not have a claim, but if they do, you need someone to resolve it promptly. Since the claims take place after closing, you need a bona fide company to make your claim to.

    As a correspondent lender, we need to make sure that the ultimate lender will buy the loan from our credit line or it restricts how much we are able to fund (as it “clogs” up our credit line). The concern for correspondents is to be able to sell the loans.

    The bankruptcy and the merger are not guaranteed…we should know more soon. Fidelity expected the merger to be complete by the end of this month. I expect that once the bankruptcy is complete and/or the merger is successful, we may see lenders lighten up with accepting the local JV’s again.

  68. Nathan Buckley, have you contacted an attorney? I’m sorry you’re caught up in the LandAm 1031 mess.

    I wonder if anyone locally from the “big 3 brokers” has clients involved with LandAm’s 1031 company. Back when I was in title insurance, we were also encouraged to offer the 1031 services of the parent/family company.

  69. I am waiting on a return phone call from an attorney right now. I have pretty much come to the realization that my money is gone. I will hope and pray that I am wrong. Time will tell.

  70. Nathan:

    Thanks for the info! I was wondering what they did with the money they held!

    This is probably what the real problem is with the merger…they violated a slew of contracts, and will have to pay damages. Gonna get ugly.

    I wonder who thought it would be a good idea to ignore such specific obligations, and who tried to stop them?

    I think you will get you money back, but it will be tied up for a while. Once they are in BK court, a judge gets to decide who gets paid first. It should seem pretty clear to a judge that the depositors get first dibs. If there is any extra money, or deeper pockets to reach into, you may get it back and then some.


    Re 96, that does not sound so much like a title insurance claim, but an escrow error.

    I have always assumed the high cost of title insurance was to cover the possiblity that rightful ownership of the property you purchased came into question.

    I have seen escrow errors, and subsequent corrections before. Annoying, but not incredibly impactful.

    I have yet to see, or be involved with, a question of ownership of the property. I’m sure I’d rather not, any more than I’d want to watch surgery (and especially not my own!).

  71. Roger, for title I think the lenders’ concern would be a claim that comes in a while down the road time-wise. For escrow it may be a concern the entities might end up in bankruptcy, and that there might be preference claims or some such thing. Although I thought for some smaller escrow companies they would issue payoff checks directly. There seemingly would be work arounds for that type of issue.

    What’s interesting on the former is that buy cutting off new business they might be more likely to make the entity fail, and they almost undoubtedly have more existing title policies than pending title policies. So they might be endangering more than what they’re saving. In any case, I really doubt their exposure during the short time the sale to Fidelity will be pending would be a significant part of their exposure. Buyers on the other hand, the one transaction likely would be significant to them. Seemingly they’d be more concerned than lenders.

  72. Roger, they probably were depositing the funds into a bank account. I suspect there probably weren’t enough funds in that account due to the prior withdrawal for AR securities.

    I explained it somewhere as being similar to an attorney trust account. If the attorney has 200 clients which each deposited $1,000, the attorney could withdraw $190,000 without his defalcation being detected as long as he never went below 190 clients. Here I suspect that the money coming in from new 1031s replaced money going out, and that at times they probably had to supplement the account to prevent the issue from being detected. 1031s are apparently in decline in numbers, and that’s probably what caused the collapse. If they’d been increasing in number (and dollar amount) this problem could have gone undetected even longer, and other people would have been left holding the bag. It’s not the way the system is supposed to work.

  73. Kary:

    Interesting observations.

    Especially the part about lenders increasing their risks by choking off new business to Landamerica, thus ensuring its failure.

    A lender/bank takes an action to slightly decrease their risks, knowing that the action endangers a much greater community.

    Kind of like the kid with his finger in the hole in the dike, realizing that he is in some peril, and he better head to higher ground, rather than save the community. In reality, he was in no more peril with his finger in the dike, than he was in running for his life to escape the flood unleashed by the absence of the finger.

    An apt metaphor to describe a great deal of our current financial crisis.

  74. Roger, Besides vesting, probably the most important thing a title insurance policy insures a lender is lien position. If the property taxes are not paid, this can impact the lien position as real estate taxes take precedence over the mortgage with regards to lien rights.

    Title insurance companies will accept indemnities from escrow companies who are guaranteeing that the real estate taxes (or other matters) will be paid through closing. When the escrow company is also the title company and the taxes are not paid, it’s kind of a double oops.

  75. Nathan, thanks for the link. It looks like the next big day for LandAm, as far as the bankruptcy is concerned, is December 16, 2008.

    Lead Debtor:
    LandAmerica Financial Group, Inc./Case No.: 08-35994
    Related Debtors
    LandAmerica 1031 Exchange Services, Inc./Case No.: 08-35995

    On November 28, 2008, the Court entered an Order Approving Sale Notice and Scheduling Sale Hearing for December 16, 2008 at 10:00 AM. Please consult Docket #37 or click here for complete details with respect to the foregoing.

  76. Roger, Larry Cragun recently did a series of post about the value of title insurance:

    Most people do not understand title insurance. It’s more about the disclosure and research that’s done and the insurance aspect is when/if something is missed or things such as unrecorded lien rights (mechanics liens–which are more common right now w/builders not being able to pay subcontractors).

    If you compare other forms of insurance such as auto, home or medical–where you pay and pay and then may be penalized should you actually use it, title insurance is a bargain.

    Title insurance is only paid for by the consumer when a transaction takes place and cannot be cancelled should you use it.

    (regarding your comment about title companies not paying out claims).

  77. Historically title insurance was usually only insurance if they made a mistake in their search and missed an item. Thus it was more of a guarantee that they’d done their search right. Now they have items that are broader than that, although usually with more limited coverage. For example they may pay a few thousand dollars to move a fence, where before if a survey of the property wasn’t done with a more expensive policy, they wouldn’t cover such items.

    Another area for payoff is where the escrow messes up, either intentionally are due to negligence.

    So for the most part they’re insuring their own work and the work of the escrow.

  78. Thank you to the three of you for your input, it really is appreciated. I will keep you posted as the events unfold.

    Kary, Thank you for the link to the WSJ article.

    Here is a great brochure from LandAmerica about how you should really check out your Qualified Intermediary. Right clicking on the document shows that it was created 7-18-2008. Do you really think they had no idea this was going on in July. How sickening is this?

    Prior to signing the contract with LES to be the QI for our transaction, I spoke with Michelle Waddell, who is the Assistant VP and Senior Exchange Coordinator with LES in Portland, OR. Due to the bank fallout that was occurring at that time I specifically asked “Where is my money held during the exchange process” She told me that it was held in a client trust account at an FDIC insured bank. She made me feel totally comfortable that my money was safe during the process. I guess that her word is as good as the “guarantee” in the contract.

  79. Roger, I’m thinking more about Amtrust (comment 88) and I’m betting we may see more lenders actually go that route (now that I’ve had more time to think about this)… the lenders who have banned LandAmerica affiliated title companies are reacting (especially because of the climate our current financial system) and once more information becomes available, and perhaps the powers that be, have more time to chew on this, they may reverse their decision re: LA title polices. I hope that Fidelity’s merger is completed soon and then, they (LA) should not have to deal with many title cancellations.

    I’ll be sure to comment when I hear of lenders backing off their stance–I’m sure you will too.

  80. I just heard that Countrywide is backing off their stance LandAm title:

    “the Fidelity Reinsurance Treaties are acceptable when your title commitment shows Commonwealth or Lawyers as the insurer.”

    I expect other lenders to follow suit shortly.

  81. I dug a little more into this.

    1. The majority of lenders WILL accept LandAmerica titles. Flagstar and Countrywide are significant, but not market leaders.

    I had to know why other lenders WILL accept LandAm, and do not consider it a concern, considering how risk averse banks have become.

    Turns out that Fidelity (still in progress to buy LandAM) is specifically guaranteeing title policies from Land Am affiliates.

    Now, I’m having a hard time seeing why Flagstar and Countrywide’s have a problem.

    If you don’t accept Fidelity’s guarantee of title (soon to be THE dominant player remaining), then you probably shouldn’t be lending money at all.

  82. Roger, looks like you were commenting when I was…CW is accepting the LandAm policies now (see 114).

    You’re assuming that Fidelity will successfully complete the merger–which odds are they will. But this post, remember, started off with them pulling out. There’s more to the merger than just two parties saying “I do”.

    I can see why some lenders would be concerned and why they reacted how they did. Fidelity stepped in to re-insure a little later after this was all announced and I think this whole ball of wax takes a little time to digest.

    As I said in my earlier comment, I’m sure the other lenders will be quick to follow.

  83. This email is being distributed by Northpoint’s CEO, Mike Stevens. I think he does an excellent job explaining their current situation:

    “Northpoint is currently underwritten by Lawyers, a LandAmerica underwriter. Lawyers has been sold to Fidelity, along with the other Landam underwriters (like Commonwealth); the deal is set to close this month. In the mean time, Fidelity has issued a guarantee to cover all Lawyers policies. The underwriters are in good shape; Demotech, Inc., one of the industry’s premier rating organizations, has re-affirmed both Lawyers and Commonwealth with a financial stability rating of “A-Exceptional”. Additionally, Fidelity National Title will reinsure policies underwritten by Lawyers during the transition period.

    The flip-side of the Landam situation is that the business (store-front) side of Landam is going bankrupt; this is a separate situation from the underwriters, and one that mostly affects Landam operations in other states. This does not affect Northpoint at all. Northpoint is a completely separate company from LandAmerica. We are a viable company; we own our Title Plants in the tri-county area. We are here to stay, and will continue to serve you now and in the future. The only thing that will change is the name of our underwriter….”

    It’s a complicated situation–often confusing. This email is probably the most clear that I have seen.

  84. Roger wrote: “1. The majority of lenders WILL accept LandAmerica titles. Flagstar and Countrywide are significant, but not market leaders.

    . . .
    Turns out that Fidelity (still in progress to buy LandAM) is specifically guaranteeing title policies from Land Am affiliates.

    As to the second point first (and this pertains to Rhonda’s comment following this), this is the reinsurance that I spoke of earlier. It’s not dependent on the merger going through. They will be an underlying underwriter (if that’s a term) for the gap period policies. If the merger falls apart, that will most likely come to an end for any policies written afterward, but not those already written.

    As to the first point, it’s a bigger problem than what you’d think. If CW is a lender and a sale flips, the real estate broker will likely tell his agents not to use Landam on any transactions. Agents will switch. And they might not ever switch back, reducing the value of what Fidelity is buying.

  85. Rhonda wrote: “This email is probably the most clear that I have seen.”

    And probably the most accurate too! I received it about 30 seconds before reading your post about it.

    Still, it is the lender’s call and the buyer’s call.

  86. Joe P, I don’t know. That is pretty interesting.

    To me, the word “venture” does sounds like some sort of partnership. Matt Carter from Inman News (comment 8 ) “LandAmerica reported holding a…40 percent of Northpoint Escrow & Title”. Of course this may not be reflective of who the shareholders/investors in Northpoint are currently.

    This is part of the problem–there is just so much confusion around the language involved. Everyone is dancing around the right “verbage” and trying to do the right spin trying to avoid being tied to the “LandAmerica”.

    It’s a tough situation. From what I understand, the title company side should be solvent and I don’t blame anyone for trying to create distance from the LandAmerica issues. Transparency is what’s needed or at least what is expected in today’s climate.

  87. In most states a partnership (or joint venture) would be considered a separate legal entity. I’m not sure whether Washington state has gone that far. For bankruptcy it would be a separate entity, regardless of state law.

  88. Another lender, Provident Funding, just issued a memo regarding not using escrow or title of LandAmerica subsidiaries.

    “URGENT: LandAmerica, Commonwealth, Lawyers and United Capital Title Insurance Companies

    Due to recent events surrounding LandAmerica Financial Group, Inc, effective Friday, December 5, 2008, Provident Funding will not accept title policies underwritten or escrow services provided by a LandAmerica subsidiary, except where loan documents have already been sent for closing, in which case a Closing Protection Letter must be reissued by Chicago Title or Fidelity National Title. In addition, the Provident Funding branch will verify the closing agent’s ability to receive the wire, disburse funds and record the Mortgage.”

  89. The Provident Funding impact forced us to do an anticipatory move to another title co. for a file. Probably more to come. Not great for LandAm and subsidiaries, great for others trying to capitalize.

    While the sheer volume of transactions is down drastically for agents, those who are still involved in sales really need to pay attention to this.

  90. Tim, other than the emails that say Northpoint sent out, most agents probably are not even aware this is an issue. That email probably left a lot of them scratching their heads.

    The mainstream press has almost totally ignored it. So unless an agent had a suspect policy and a lender who cared, most would never hear of this.

  91. Kary, I’ve been trying to keep this thread up to date with lenders who have made statements regarding if they will (or won’t) accept LandAmerica policies and/or work with their escrow division (and what their requirements are, if they will work with them). I’m dealing with a purchase that involved a LandAm underwritten policy and having to move it wasn’t pretty.

    Aubrey’s article that you linked to above was a pretty good one, however he quoted some of the RE brokers who stated that lenders were retracting their position. Countrywide did…other major lenders have not yet. I’m guessing that the other lenders are waiting to see what happens with the title merger since we should know more soon.

  92. Flagstar Bank just issued a memo updating their stance with LandAmerica affiliates.

    “…for loans registered before 12/1/2008, we can continue to accept title insurance and title commitments from LandAmerica or any of its subsidiaries involved in bankruptcy (Lawyers, United Commonwealth, LandAmerica) if they are accompanied by a loan level closing protection letter from the following companies.

    Title commitments, title insurance and closing protection letters from Lawyers Title and United Title will need to be accompanied by a new closing protection letter from Fidelity National Title.

    Title commitments…from Commonwealth Land Title and Land America will need to be accompanied by a new closing protection letter from Chicago Title.

    For for loans registered on or after 12/1/2008, Flagstar will require all title commitments, title policies and closing protection letters to be in the name of the new entities.”

    This is interesting from Flagstar’s memo today:

    “…we announced that effective Friday, December 5, 2008 at 5:00 pm all agents with only Land America affiliation will be expired in our settlement agent database. However, in light of the updates, we will expire ONLY those agents who have NOT performed a closing disbursement since September 8 2008. These are agent that have NOT preformed a closing on behalf of Flagstar for the last three months.”

  93. Franklin American has issued a memo announcing they will accept reinsurance:

    “With evidence of reinsurance from Fidelity National Title or Chicago Title, FAMC will accept title insurance commitments, title insurance policies and insured closing letters from these LandAmerica Title subsidiaries: Lawyers Title Insurance Corporation, Commonwealth Land Title Insurance Company, and United Capital Title Insurance Company.”

  94. just in via email: “Rainier Title LLC… is pleased to announce we have become an authorized policy issuing agent for Stewart Title Guaranty Company.”

    Their previous email campaign stated “business as usual” (comment 87)…how usual is it to have to find another underwriter? I wonder if Rainier Title LLC is still a part of the Fidelity merger (there’s no mention in this email).

  95. Kary, imagine if in the beginning, they would have came out with an email campaign that was more sympathic to the transactions in progress instead of it’s “business as usual” and insinuating lenders were not telling the truth if they were not allowed to accept LandAm affiliated policies.

  96. Kary, I feel for the title reps and RE agents who have been “fed” this spin (as reflected in comment 87) by whomever…it causes additional friction when bad information is put out into our marketplace. There was a time when they might have been successful handling things this way–not in this day and age of transparency.

  97. I think alot of the confusion was caused by the fact that, once the bans were issued, a frenzy of communications at very high places would take place, agreements would be made but the word wouldn’t filter down nearly as fast as the ban.

    But I can tell you this – it’s a heartbreaking when a closer with a longtime good local customer finds out that her business is threatened. They don’t want to go anywhere else, she doesn’t want them to and there isn’t much her local management can do.

    Add to that all the misinformation and various different caveats all the different lenders had and it creates a hugely frustrating situation in an already stressful environment.

    And then the people who took it upon themselves to announce that “they’re closing their doors” they’re history” etc. when we are here at our desks working very hard and with the expectation that although the name on our letterhead may change, many of us will be here next month still doing our jobs.

  98. Nancy, thanks so much for your comment. It’s not easy going through a title (or any) merger…I’ve been through a few myself and wish I still had some of the letterhead that was issued from when Safeco Title was being bought by Chicago Title showing our logos coliding/merging. None of us knew if we were going to have jobs when it was all said and done. In fact, I was a Transamerica Title employee for a few years before I left to start Washington Title (now Ticor/Fidelity).

    I’ve been very careful with what I’ve posted about the situation which has been evolving since I wrote this post. No where have I (nor anyone in the thead, that I’m aware of) has anyone stated that any company is closing their doors or that they’re history.

    As a lender, I’ve had the pleasure of working on a transaction where we had to move the title (it closed today) to a non-LandAm company. This wasn’t my choice…but it happened. The reaction and treatment from the RE agents and one of their brokers was astounding. I wonder if it’s because they believed the emails they received (such as what’s shown in comment 87). Part of the reason why I’m keeping this post current with who’s accepting LandAm, who’s not and who’s insuring who is because of the confusion we’re going through locally.

    I don’t know what part of the country you’re in, Nancy. I do hope everything works out for you and your co-workers. At least this should be closer to being resolved.

  99. Nope. We closed on time. They just needed to do an addendum and we had the new title report in two days–without skipping a beat. I was quite surprised at the reaction as well.

    Especially when the Selling Office Broker sent a text (after being copied on emails) from his blackberry stating: “sounds like we should switch lenders.”
    The Listing Office Agent chimed in on a series of emails and agreed.

    This was after I’ve worked with the buyer for 6 months and over a title report that the buyer no longer wanted. It was actually the buyer who contacted me concerned about his title insurance–before I had a chance to contact them.

    As the lender, I don’t want any hiccups or delays in a transaction–this one was a real doozie with how the agents reacted. The selling agent (not the selling office Broker) was more professional about the whole ordeal. It wasn’t what I expected from agents 2 of the “big 3” brokerages…actually, I wouldn’t expect any agent to act that way.

  100. Back in August or September 2007 we did have to switch lenders pretty quickly, but that’s clearly not a fun process compared to simply switching title companies. As I said earlier, if there’s something unusual with the title then it might be difficult to switch title companies at the last minute, but on most properties it would be rather simple in comparison.

    As to your last comment, I’ve always said you can’t judge agents by where they hang their license. I’ve seen bad ones with the big ones and good ones with the small ones.

  101. Thanks Ronda, for the encouraging words. I’m down in Oregon and I think we’ve turned the corner. I have the highest praise for the top management at Fidelity, Chicago and some of the people at Landam in Richmond and around the country. They worked very hard to get all the nescessary CPL’s and reinsurance agreements in place so we could carry on.

    I love this blog because you all are very aware of the innerconnectedness of all the moving parts. There is some very deep knowledge here.

    Be that as it may, when we found that we were going to lose a deal (and we were pretty proactive about it) we took every step in working with the other title company to make sure we got the necessary releases so we could pass any the documentation (signed documents, pay offs etc. and any deposits) for which we had worked to have in our escrow file.

    It was very hard, but I’m really proud of the professionalism of our people who kept their eye on the ball of the goal which is to get the transaction closed on time for our customers and for the Buyers, Sellers and Borrowers.

    The best of the season to you all.

  102. I am one of the unfortunates that has a deposit with Land America 1031 exchange. Does anyone out there know if there is a legal firm initiating a class action suit on our behalf–I think there is some $300 million at stake. We are in dire cirumstances, not only to have lost substantial sums but also to have to pay capital gains tax as well. If ANYONE knows anything about such a possible action, please email me. Thanks.

  103. Pat, there is a google group, I think it’s called Landamerica 1031 Exchangers. I think you may be able to get some information there.

  104. The drama continues…a new suitor has emerged for LandAm’s underwriters in receivership, Commonwealth and Lawyers…from The Legal Description:

    “It had been expected Fidelity National Financial’s $298 million deal to acquire LandAmerica Financial Group’s main underwriters would close later this month. However, other suitors have appeared on the horizon this week, filing papers with the Nebraska Department of Insurance regarding their interest in LandAmerica’s underwriters.

    Stewart filed an application with the Nebraska Department of Insurance to acquire Commonwealth Land Title Insurance Co. and Lawyers Title Insurance Corp. Both underwriters were placed into receivership Nov. 26 after LandAmerica filed for bankruptcy in Virginia. The state insurance regulator will oversee these businesses until they are sold.
    Old Republic International also had filed an application to acquire Commonwealth and Lawyers Title, but withdrew its request Dec. 10.”

  105. As a Commonwealth Title Agent I have watched the currnet situation with trepidation.

    Their was a BK hearing yesterday and we are awaiting the decision of the trustee as it relates to who will be allowed to purchase Commonwealth as well as Lawyers Title.

    As it stands now Fidelity has moved in to purchase both, with Fidelity actually taking Lawyers and having Chicago Title purchase Commonwealth.

    Stewart Title has arrived on the scene and expressed an interest in buying Commonwealth’s book of business however they may be too late.

    Fidelity has already completed it’s due diligence and issued re-insurance letters for both companies.

    As an agent I would prefer a Stewart Title purchase. Fidelity has a reputation of not supporting the agency model, and if their purchase takes place many agents will surely be looking for a new underwriter.

    Stewart on the other hand is much more agency friendly and would be a better fit with the agency based business built by Commonwealth.

    One only need look at the recent acquisition of United General by First American. Within 4 months of that purchase the agencies that were underwritten by UGT were trimmed from over 500 agents down to 29 who were offered agency through First American. UGT has been sut down and eliminated by an industry giant in search of market share and less competition.

    I fear that a purchase of Commonwealth & Lawyers by Fidelity will result in the same outcome.

  106. Looks like this Monday could be the big day for LandAmerica and Fidelity National (from Inman News):

    Fidelity said it must still obtain a final approval order from the Nebraska Department of Insurance removing Commonwealth and Lawyers from receivership before the deal can close, on or before Dec. 22.

    Should the merger be a success, it will be interesting to see what happens to the title insurance rates with Fidelity National affiliated title companies. On a recent conference call in late October of this year, Bill Foley discussed his strategy to increase title premiums (click here for the transcript):

    Robert Napoli – Piper Jaffray

    Okay. Then I heard and I missed a little bit of discussion upfront about pricing increases. Wondering if maybe you could give a little bit of color on the pricing, on what your strategy is there.

    Bill Foley

    Sure, Bob. There really has been price compression or price stability over about the last four or five years, with basically the boom in the real estate market. And we haven’t – we frankly have not been able to file and hold higher prices until, really recently. What we have done over the last 60 days is become very aggressive with regard to pricing, and our intention is to increase prices across the country at least 10% and up to 20% in this initial pass that we are now working on.

    To date, we are underway in 22 jurisdictions, and the price increases are between 10% and 20%. And that will include states such as California. It will take longer in states such as Texas, New Mexico, Florida, where the rates are promulgated and they are basically industry-wide rates. But in all of those cases we’re going to be very aggressive about pushing for higher prices and also emphasizing higher agency splits. In other words, we need to retain more of the dollars that our agents are generating.

    We have gone back in now and reviewed our entire portfolio of agents. And if an agent was a 90/10, 89/11, 88/12, we basically have gone to those agents and said, you need to be 87/13, 86/14, 85/15; otherwise, we just can’t maintain this relationship with you. So we’re trying to be very aggressive relative to retention of dollars, and also increasing prices.

    By the way, the agency relationships are very supportive of price increases because, obviously, if the title rates go up by 20% in a particular state and we have an agent in that state, they generate 20% more dollars. If they have to give us 15% of those dollars instead of 12%, it’s not quite as painful for them. So that’s the approach we’re taking relative to pricing and agency splits. So it was a long answer to kind of a short question.

    Robert Napoli – Piper Jaffray

    What kind of feedback, though — I mean for years, you have had, you have been beat up by regulators to reduce prices, reduce prices, reduce prices. And what kind of initial feedback are you getting? How long do you think it takes to start getting those price increases worked through, if you get approved?

    Bill Foley

    In many states, it’s simply file and 30 days later or 60 days later the rates are effective once you’ve gone through the posting period. We are receiving — we are being supported in almost every state at this point in time, relative to increasing title insurance rates, simply because the industry is an important industry to our real estate economy or the portion of the economy driven by real estate.

    If title insurance is under pressure, just as mortgage insurance, it’s important that the industry be healthy. We really believe, on that basis, the insurance commissioners that we are dealing with not only will be supportive, but they actually have been supportive toward our rate increases.

    Robert Napoli – Piper Jaffray

    California included?

    Bill Foley

    California included.

    Robert Napoli – Piper Jaffray

    Okay, that’s a big change. And how are your competitors following the moves?

    Bill Foley

    Well, antitrust situations preclude us from communicating with our competitors. We have always been the leader in our industry, and hopefully our competitors will see that they too need to increase rates, and we won’t be operating at a competitive disadvantage.

    Frankly, rates are not a sale factor in this kind of economy. They just really are not part of the real estate sale. The 10% or 20% increase we are talking about, on a $700 policy, might be between $70 and $140. And the consumer and the lender can afford to pay it.

    Note: the lender typically does not pay for the title policy…it’s the consumer: buyer and seller.

  107. Rhonda, This should be it’s own post. I cannot believe some of the comments/quotes in this piece.

    Bill Foley….

    “Well, antitrust situations preclude us from communicating with our competitors. We have always been the leader in our industry, and hopefully our competitors will see that they too need to increase rates, and we won’t be operating at a competitive disadvantage.

    What?!!! Nonsense! OK, I’m a dominate west coast real estate broker and I’m discussing to the press and blogosphere increasing our fees from 6% to 8%…”but antitrust situations preclude me from communicating with our competitors…….but….hopefully our competitors will see that they too need to increase rates and we won’t be operating at a competitive disadvantage.”

    How many market controlling title insurance players are evolving in today’s environment? That quote/statement itself is as far over the antitrust line as I’ve ever read! It’s like, hey, all ….um…..three or four of us that dominate the market, let’s increase our rates! TOTAL B. S.

    and again…..”Frankly, rates are not a sale factor in this kind of economy. They just really are not part of the real estate sale. The 10% or 20% increase we are talking about, on a $700 policy, might be between $70 and $140. And the consumer and the lender can afford to pay it.”

    Lender pays for the insurance???? My word. This fellow does not even know who pays for what in his industry. Rates are not a sales factor???

    In a real estate transaction, if anyone ever treats my hard earned money as cavalier as this to infer that any portion of fees, commissions and closing costs I pay are meaningless, is fired immediately.

    CONSUMERS: Just read the above quote and see how cavalier your closings costs are really treated by some people who are charging you. Unbelievable. And people in the real estate food chain wonder why the industry has such a credibility problem?

    Hey TITLE INSURERS…..WHERE IN THE WORLD ARE THE BILLIONS IN EARNED INCOME FROM THE BOOM? Title insurers made copious amounts of bank during the boom insuring policies AND CLOSING TRANSACTIONS (you know, the very transactions putting your own escrow and title staff on the street!) and now that the market has turned they think they can increase fees to maintain earnings in a recession of which we as a country have never experienced????


  108. Tim, there are so many nuggets in the comments of this post that deserve to be their own post IMO… I’m surprised this isn’t getting more attention locally…we’ll see what happens Monday…as the title turns.

  109. Dan Harris,
    Are you referring to this w/regards to Fidelity National’s treatment of agents:

    “We have gone back in now and reviewed our entire portfolio of agents. And if an agent was a 90/10, 89/11, 88/12, we basically have gone to those agents and said, you need to be 87/13, 86/14, 85/15; otherwise, we just can’t maintain this relationship with you.” (from comment 148)

    How is Stewart different?

  110. Not really any progress on our side. You are correct there has been very little press. Here are a couple articles, but not much out there. I have written to several Senators & Reps and received one “Sucks to be you” type of response.

    There is discussion of a class action being filed, that may get us back another 20%-50%.

    Time will tell…

  111. Matt Carter @ Inman News has done a great job covering this title event. In his article today (may require a subscription) about how few competitors there will be in title insurance:

    “the alleged lack of competition in the title insurance industry is already the source of concern to regulators in Colorado, California, Florida, Washington and other states….

    Because consumers often don’t shop around for title insurance, regulators say they are often victims of schemes that provide incentives to real estate professionals who are influential in selecting a title insurer, such as real estate agents, mortgage lenders, attorneys and home builders. Regardless of whether the incentives are paid legally (through affiliated businesses) or are considered illegal kickbacks in the eyes of the law, they can add to the cost of obtaining a title insurance policy — a must for nearly every consumer buying or refinancing a home.”

  112. OK, this REALLY strikes a raw nerve!

    Consumers, industry professionals, listen up!

    I am a loan originator. I shop around for prices on behalf of my customers.

    I shop lenders, appraisers, title and escrow, looking for the best value for my clients. Lately, the snafu at LandAmerica forced me to update my search for title and escrow services.

    Here is the recent result of that search:

    Rate term refinance, $400,000 loan amount.

    Lender’s policy, refi rate. All rates are for identical service/product (title insurance only), and include tax.

    Old Republic $696
    Chicago $633
    Northpoint $500

    Several lenders will not allow use of Northpoint, which is affiliated with LandAmerica.

    Chicago is affiliated with Fidelity, whose CEO thinks they should be able to raise rates by 10 to 20%.

    The nerve of that guy! When the whole economy is walking on thin ice, and everyone in the lending industry is desperately trying to keep their heads above the water, he thinks it might be a good idea to hike the price of life preservers!

    Let’s end the kind of smug complacency that got us in this trouble to begin with!

    Frankly, I’m ready to lead the charge for the Iowa system, and throw them all out.

    If YOU wish to issue a pre-emptive complaint, write to

    For more about Iowa’s system, here is a little reading.

    Dan, Tim, you are spot on with your comments (#147,148, 149), Rhonda, thanks for keeping your eye on this.

  113. Kary, it’s a task to change your rates as a title insurance company, the rates need to be filed with the WA State Insurance Commissioner.

    BTW I’ll add Talon’s refi rate at $400k to Roger’s list of title co’s (#156) which is $581.

    Roger, this is a story that’s far from over. Even once the acquistion is complete, it will be interesting to see how it all unfolds locally–especially with the ABA’s. As I’ve stated somewhere in the comments above, I think we need RE Brokers to disclosue exactly what their earnings are from the ABAs with title companies…sort of a TSP (Title Spread Premium).

  114. Thanks Rhonda:

    I would also note that based on the amount of data at the WA Insurance Commissioner’s web site, regulating title insurance is a fairly low priority for Mike Kriedler.

    In the grander scheme of things, maybe health insurance is a higher priority for the state, but the title companies stand to rake in millions from regulatory inattention, all at the expense of the consumer.

    They have been successful in lessening the blatant payola recently, so we should be glad of that.

  115. The thing is, the benefits that they were paying to agents didn’t raise prices significantly, if at all. Getting rid of them just increased profits (net of the fines). Going forward the title companies would be laughing all the way to the bank, but the amount they have to carry might make they grunt a bit instead.

  116. Roger, if you really want to be riled, there is a hearing that will take on January 7, 2009 to finalize a new regulation permitting title companies to increase the amount allowed to be paid towards title produces (those of us who are in a position to direct title to the consumer) by 400%!

    What on earth could the State be thinking? How does this benefit consumers? Seems to me it will only benefit those of us who direct title insurance and who might take advantage of their legal “quota” = $100 per year on meals….it goes on and on. Including memorial gifts up to $200 should a family member of a “title producer” pass away or is seriously injurred.

    Again, how does this help the consumer?

    Here’s a link

  117. Kary, title co’s are about to have how much they can spend increased from $25 to $100 for meals & entertainment (see 162). I think we were commenting at the same time.

    The cost for tracking this stuff is significant and just think about how much this cost as far as taxpayer dollars with having our State’s office focus time and attention on a matter such as this: making sure those of us who order title insurance can now receive $100 instead of $25.

  118. My point was I wouldn’t assume the cost is being passed along, as opposed to the title companies charging as much as they can. If they were well regulated (e.g. like utilities) then it would be passed along. I’m just not sure they are well regulated.

  119. Kary, for the title companies to pay those of us who have the ability to direct title $100 a year will be a huge additional cost for them.

    The consumer will ultimately pay.

    I don’t understand why the State just doesn’t keep the limit to $25, as it’s been…or better yet, follow California and have zero dollars go to “title producers”.

  120. It looks like the actual hearing date appears to be January 9, 2009 at 1:30pm in Tumwater/Olympia.

    So once this passes, I can collect up to $100 of meals annually from each title company…and so can anyone who’s a “title producer” which incldes “associates of producers and any person in position to refer or influence the referral of title business to the title company”.

    I became a title rep back in the late 80’s…party on!

  121. OK the closing of the “deal” has been announced the following is the press realease issued today:

    Fidelity National Financial, Inc. Announces the Closing of the Acquisition of Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation and United Capital Title Insurance Company

    Jacksonville, Fla. — (December 22, 2008) — Fidelity National Financial, Inc. (NYSE:FNF) today announced the closing of the acquisition of LandAmerica Financial Group, Inc.’s two principal title insurance underwriters, Commonwealth Land Title Insurance Company (“Commonwealth

  122. Costs don’t necessarily get passed along to consumers, nor do consumers necessarily get the benefit of cost savings. If a title company can charge $600 for $XXX,XXX worth of coverage, they will do so. If they can’t, they won’t. Whether they can or not has nothing to do with paying an agent $100 in services over a year. If they can charge $600 and be prohibited from paying $100, then the title company will simply make $100 more. The consumer won’t save $100.

  123. Kary, I beg to differ. Title companies cannot operate “in the red” for long. There is a certain amount of profit that is expected and they will take what ever measures needed–if the cost appear to be a long term issue, you’ll see rates raised. You may also see reductions to staff.

  124. I think title companies will charge just as much as the competition, and regulation allow them to charge.

    Fidelity got the opportunity to buy out a significant competitor, for a bargain price, and will increase pricing wherever they are allowed to do so.

    If I were a shareholder, that’s what I would expect them to do. The owner’s (and existing shareholders) get richer.

    The change allowing them to spend $100 per year on “title producers” is kind of a non-issue (and possibly a convenient smokescreen), compared to the reduction in competition.

    Again, I would prefer the Iowa model.

    And I am not sure that they are “well regulated”.

  125. Roger,
    I know you and I are not like this…but as a former Title Rep, I can tell you that many “title producers” (loan officers, processors, builders, real estate agents, etc) will have their hands out expecting their State allotted $100 for meals/entertainment. (If you read the pdf @ 162, this just scratches the surface, there are also increases to what can be paid for education events and as I mentioned, MEMORIAL SERVICES–with all do respect, what does this have to do with title insurance?)

    Here’s some info for you on title premiums (read the entire article here):

    The premium price is based on five factors, starting with the
    largest percentage and descending to the smallest.
    1. The cost of maintaining current title information on property local to that operation, the “title

  126. On a side note, Foley, in his spare time, collects winerys. LA Times just reported that Foley has purchased the historic Sebastiani winery.

    With the acquisition, Foley Wine Group will increase its sales to about 500,000 cases across multiple labels.

    The company is a comparatively new creation of William P. Foley II, founder and chairman of Fidelity National Financial Corp., a multibillion-dollar title insurance and claims-management services company based in Jacksonville, Fla.

    Foley launched his first wine venture only 11 years ago, buying a small winery in Ballard, near Santa Ynez, and renaming it Lincourt. Within a year, he bought a 460-acre horse ranch close by in the Santa Rita Hills that he renamed Foley Estates Vineyard & Winery.

    Since then, Foley has bought Firestone Vineyards, another family winery, and hundreds more vineyard acres in the Santa Rita Hills. This year, he bought Three Rivers Winery in Walla Walla, Wash., and Merus, an expensive, cult Cabernet Sauvignon maker in Napa Valley.

    “I really like the wine business, and as a buyer there are some winery opportunities that are going to develop over the next 12 months,” said Foley, who divides his time among his Florida title insurance business, a ranch in Montana and his California wine holdings. But he concedes devoting an increasing amount of his attention and his millions to wine.


  127. Dan, is this disclosure typical (comment 162):
    “This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future economic performance and are not statements of fact, actual results may differ materially from those projected…”

  128. Rhonda:

    I realize your background in title operations makes you more qualified than I am, but in fairness (and no disrepect intended), where we come FROM influences what we believe, and choose to defend.

    I pre-emptively admit to such a bias myself.

    So with that preface, could you (or anyone with the required knowledge of Washington title practices) illuminate a couple of issues.

    1. The title plant.

    It’s cited as the major expense for producing title reports. However, isn’t the majority of that information provided by the government (Counties, right?), and available in electronic formatting? Why is there a need to maintain a separate title plant?

    2. Seems on the surface to be same as above. The local government is ultimately responsible for creating and maintaining a database of property titles, including making corrections where needed.

    3. Clearing title defects.

    This seems like it requires some expertise, but in Iowa, they somehow manage to find and correct errors. I find in my experience this service is required in less than 1 of 10 transactions.

    4. Paying claims for title defects.

    This was covered extensively in the articles I supplied. Title claims are reported to be paid out at astonishingly low rates compared to other insurance products.

    “…in 2001 collected $9 billion in premiums and
    paid only about $393 million
    in claims for a loss ratio of
    4.3 percent…,

    Other reports place that ratio between 5 and 10%.

    Additionally, reduction of title claim costs can be managed by careful research and issuance of title policies. Unlike most insurance which cover unknowable future events, title insurance generally covers past events, and recorded documents.

    Expense ratios

    Well, expense ratios can be manipulated, depending on how many are feeding at the trough. Outsized commissions, executive bonuses, shareholder dividends and gratuitous advertising expenses (payola), are ALL part of expense ratios (as are regular labor costs).

    Since there is very little price competition, and soon to be less, there is little market regulation of expense ratios. The government can only regulate what the law allows (like payola).

    I’m not suggesting that most people working at title companies are overpaid. I do not have that kind of information. Additionally, every person I have directly dealt with in title companies have been helpful and honorable. However, wherever there are large sums of money, some people are disproportionately paid.

    Regarding underwriting, I’m not exactly sure what that refers to, other than evaluating the risk of claims on title.

    Regarding nationalizing title insurance, I do not see any benefit, nor reasonable proposals for such. The state level seems to be the appropriate home for this kind of commerce.

    I confess to nearly as much ignorance as knowledge on the subject of Title insurance operations, and I am always open to new facts and opinions. I’m not even sure that an Iowa system would result in markedly lower costs. I am just disappointed that the current economic crisis is being used by some well-heeled companies to increase market share, and reduce effective competition.

    I have learned an amazing amount already at RCG, and look forward to learning more, regarding title insurance.

  129. Roger, I think most of your questions in your last comment are addressed in comment 22: (it’s up there a ways so I’m not sure if you had a chance to read it or not).

    It is the State that requires title companies to have their own plants (please read comment 22). It would make sense to have one county operated…but even so, there would be cost involved.

    I’m not familiar with the Iowa system. It’s my understanding that abstracts are created by the state and an attorney reviews it. What happens if a human error is made? Does the State of Iowa then compensate the policy holder when there is no policy?

    The policy rates that Iowa is quoting does appear lower–but I wonder what their average sales price/loan amounts are to our area?

    It’s interesting, Roger…I’ll give ya that.

  130. Kary,
    we’ll have to check back in a few months (now that the merger is moving forward) and see where title rates are.

    As I mentioned, the other factor we will see (if rates are not increased) will be reduction to staff.

    Will a landlord keep rents the same if taxes go up and they’re not having the same profit (if any) as they expect? Not if they can’t swing it or don’t want to. The landlord can sell the property or jack the rents if the rental is no longer suiting their financial plans.

  131. One of the curiousities of monopolies, and near monoplies, is that they give great lip service bewailing “regulation”, but secretly benefit immensely from it.

    Here we can see it in action.

    The state, which could operate it’s own title “plant”, requires a substantial upfront investment, thus limiting the number of qualified companies competing, and effectively removing price competition from the market place.

    Regarding the question of who pays title claims in Iowa, I would think it would be the state. The state underwrites the title policy, and manages the titles plant. Lenders would not accept a loan without title insurance. I wonder if it is a profit center for the state?

    Like in any insurance situation, you probably can sue the insurer if you do not feel you were justly compensated for your losses.

  132. The fewer competitors should result in increased rates, all things being equal, and absent any regulatory constraints.

    I wonder if the Iowa system covers things that are not of record like modern title policies? If not, I wonder if that’s why modern title policies are starting to cover such things? Maybe it’s to fend off such a system.

  133. Got word Friday that many lenders, including Provident, BOA , Flagstar and Countrywide has lifted the restrictions on Landamerica and on Northpoint.

    Did not see specifically if any others have, such as Chase.

  134. Hi Blair, I’m just beginning to review the article’s you’ve linked. This stuck out to me from Iowa Title Report (the first pdf) right away:

    “A pro-insurance lobby bloc comprising the title industry, bankers and
    Realtors has been pushing the Legislature to drop the prohibition ever
    since. Iowa’s influential bar association has stymied the push, and it
    succeeds annually in striking down pro-insurance bills before they
    make it out of the legislature’s commerce committee.
    Iowa attorneys charge a fee to render an opinion on the work of an
    abstractor before a guaranty is issued. Attorneys fees are unregulated
    but hover between $150 and $250, making the program a staple
    income source for local attorneys, including elected officials. Rural
    attorneys are an influential lobby group and the Iowa Bar Association
    (IBA) has been resolute in its fight to keep title insurance banned.”

    And from what I understand, title companies may still insure properties there (should it be requested)….they just cannot sell title insurance in Iowa…folks cross the state lines!

  135. Blair, thanks for the links.

    One thing struck me right off.

    Title policy costs in Iowa are not that much less expensive than in WA, and seemed to be forced to lower costs from threat of competition.

    I have seen title costs in other states and I was truly shocked at some of the outrageous fees.

    The other thing is that they are only now going electronic. The bigger counties in WA already have.

  136. Roger,
    I’m not understanding this part of your comment:

    “Title policy costs in Iowa are not that much less expensive than in WA, and seemed to be forced to lower costs from threat of competition.”

    Some states, like Oregon, have very expensive title insurance but escrow is ala carte. It’s an escrow driven market (independent escrow companies have been pretty much driven out–if there are any there–I don’t know).

    In Portland, there is one main plant that all the title companies invest in (kind of like you’ve talked about).

  137. “Title guaranty in Iowa runs around $500 on a $500,000 standard purchase transaction, assuming $110 for
    the coverage plus $200 each for the services of an abstractor and an attorney.”

    I had not seen title costs in Iowa previously.

    Title policies in WA would be in the range of $500-$750 for that size of loan, with those 3 functions unified.

    Escrow services would be separate

    Last time I checked, in Florida it would cost about $2,000.

    Do you think anyone still has a prohibition on using Landamerica?

  138. Roger, re: 186, is that for an owners or lenders policy? What are the escrow fees in Iowa for that type of transaction? Can you provide a link to a rate sheet?

    My mantra has always been that competition is good. I’d love to here from folks in Iowa…the grass is always greener from the other side.

  139. From Oregon:

    From our current rate chart for a $300,000.00 home sale
    Owners policy $950.00; simultaneous lenders $385.00 and escrow fee of $725.00.

    In addition to that there is a $15.00 to $50.00 Government Services fee charged to the Seller (it varies depending on which municipality is searched) There is a charge of $65.00 per side for all fees in association with handling papers. (wire fees, courier, overnight mail, postage, e-mailed docs etc etc.

    Lastly there is a $120.00 release services fee for each loan paid off in the transaction.

    So Seller would be:

    title $950.00
    1/2 escrow 362.50
    Govt svc fee $35.00
    Doc Services 65.00
    Release services, if any

    Buyer would be
    Title 385.00
    1/2 escrow 362.50
    Doc Services 65.00
    Recording (est) 126.00
    endorsements, if any


    Date: January 12, 2009

    Re: Fidelity National Financial Conference Call on January 13, 2009

    Fidelity National Financial will be holding a conference call for any customers that would like information on or are confused about Fidelity National Financial’s purchase of Commonwealth Land Title and Lawyers Title. Fidelity National Financial will discuss the transaction, the financial condition of the underwriters, ratings and answer any questions that customers may have.

    When: January 13, 2009 – 3 pm Eastern Time

    Dial in # 1-800-762-7308

    Participants are Al Stinson – CEO, Tony Park – CFO, Dan Murphy – Treasurer, Donald Cole – Chief Underwriting Counsel

    I strongly suggest that you pass this information on to any client who may still have a problem accepting Lawyers or Commonwealth paper.

  141. Fidelity has began hacking LandAm employees…according to the Richmond Times Dispatch, they’ve let 27% of the staff go and

    “Fidelity also closed 125 offices during the first month it owned Lawyers Title Insurance Co., Commonwealth Land Title Corp. and United Capital Title Insurance Co, according to an earnings report released today by the company….

    LandAmerica, which last year was ranked on the Fortune 1000 list, has since announced plans to sell off its remaining subsidiaries, lay off 291 employees and close down by the end of the year.”

Leave a Reply