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Source of Title Blog

Still In Business?
by Robert Franco | 2007/11/19 |

I am getting more phone calls and e-mails from people wanting to know if certain companies are still in business. I wish I could be of more help, but I find out just like everyone else - when its posted on the Source of Title forums. The problem is that it is tough to tell when a company has actually closed down. There is that interim period when they just aren't paying (and there are a lot of those companies) and then you have the companies that conveniently re-open under a new name to escape paying their abstractors.

Here are a few of the companies mentioned recently in the forums:


  • Express Financial - out of business, rumors of bankruptcy.

  • LSD Lender Services Direct - complaints of non-payment.

  • Tower City Title - out of business, rumored to have opened under a new name.

  • Title Stream - complaints of non-payment.

  • TitleSearch USA - complaints of non-payment.

  • Home Connects - out of business.

  • JPS Title - out of business.

  • Ricter Abstract - complaints of non-payment.

  • Southeast Equity Title - complaints of non-payment.

  • AmeriStar - complaints of non-payment

  • Optimais.com - out of business.


With all of the companies that are experiencing difficulty paying their abstractors, how on Earth is an honest, hardworking abstractor supposed to stay in business? The amount of uncollected invoices abstractors have, from what I have heard from some of them, is staggering. But, the risk of non-payment is one of the risks of being self-employed - it comes with the territory. In my opinion what makes this worse is that many of the clients have found ways to manipulate the system to escape their liabilities. Some of these games they play should be criminal!

Source of Title Blog ::


The "New Name Game" is a favorite these days. The company runs up unpaid invoices with all of the abstractors and then conveniently closes up and re-opens as a new entity. The new entity maintains the same staff, clients, and abstractors, but informs their abstractors that they old company no longer exists and they are not responsible to pay the old invoices. What amazed me is that the abstractors continue to work for the new company because they "promise to pay them" this time. Did they not "promise to pay" the last time?

Another slick move is the "Middleman Shuffle." The company runs up unpaid bills with abstractors until they can't find anyone to do their searches. Then, they find a smaller regional vendor management company (VMC) and start placing orders through them. Usually, its the same abstractors that wind up doing the work. However, now the VMC is responsible to pay them. When the VMC doesn't get paid, the company goes back to trying to find abstractors themselves again; as if the passage of a few months has made them forget that they were not paid.

I was contacted by one of these companies. When they called me they promised to pay my past-due invoices (over $2,000) but I never heard from them again. Of course, I refused to do more work. I spoke with another abstractor, a few counties over, that had a similar experience with the company. I'm not sure who is doing their work now, but I suspect is another VMC that is clueless to their ways.

What's going to change? Right now it's just too easy to get away with not paying abstractors. Abstractors have demonstrated that, for the most part, they are not willing to take any actions against these deadbeat clients. Often times, it costs more to try to collect than they would likely recover. Abstractors don't make enough profit to spend a couple of thousand dollars for a not-so-good chance at collecting what is usually less than what they would spend on legal fees.

I think the best we can hope for is creating an environment where these "tricks" can be exposed. The underwriters and the departments of insurance need to take notice. Not because it is their job to help abstractors collect, but because if these companies aren't paying their abstractors, it is likely a sign of worse things to come. These companies need to be audited and if anything is out of place they need to have their license or agency agreement revoked. Put these companies out of business and ban the principals from re-opening a new company that will likely do the same thing again. Get rid of the bad apples and create more work for the good agents that actually pay their abstractors.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com



Rating: 

Categories: Abstractors, Billing Issues

1078 words | 2823 views | 18 comments | log in or register to post a comment


Nothing I say should be construed a...
Nothing I say should be construed as advocating non-payment of title search vendors. My company pays promptly, and typically offers above market rate for searches that we order.

That said, I get plenty annoyed when I find out that parties we use to search are doing the same search a competitor as well. While my main annoyance is with the customer for ordering the same property with two competitors, ensuring that only one company has a chance to recoup the cost, this is nice gig for the searchers.

Search once, bill twice. I don't know what the answer is for this, but it's obviosly becoming a more prevalent practice, as evidenced closing ratios approaching 50% for the industry. In fact, I was told by a very large lender's VMC liason that virtually all small population county seacrhes are ordered through at least two title providers.

I'll leave it for later comment whether I believe local searchers sell orders placed with them as leads to local mortgage companies. Oops, paid again.
 
by John Povejsil | 2007/11/19 | log in or register to post a reply

It's very unfortunate that many abs...
It's very unfortunate that many abstractors aren't being paid for their services. The truth is many of these large title vendors, such as the ones listed above, look at title abstractors as nothing more than an expense.

I learned early on how important it is to have competent abstractors. In large part they have contributed to the success of my company.

Many of the title examiners I encounter are disgusted and are seriously contemplating leaving the business. This greatly concerns me due to the fact that I am very dependent upon my examiners. The actions of these title vendors is going to adversely effect all title companies.
 
by Shane Kane - TitleSuccess.com | 2007/11/19 | log in or register to post a reply

"Nothing I say should be construed ...
"Nothing I say should be construed as advocating non-payment of title search vendors...I get plenty annoyed when I find out that parties we use to search are doing the same search a competitor as well...this is nice gig for the searchers."

So, what ARE you saying, Mr. Povejsil?
 
by Scott Perry | 2007/11/20 | log in or register to post a reply

John: Do you also get annoyed when...
John: Do you also get annoyed when you go to the movies and the guy in front of you buys a ticket for the same movie you want to see? After all, if they sell him a ticket they have to show the movie anyway... how dare they charge you too?!

If I get the same order from two different clients, first I check my driver license to see if its my birthday, then I do a little "happy dance" and we do the search and bill them both! There are several reasons. First, the abstractors' clients, generally have been successful in commoditizing the title search. If the client orders the search and gets the search, they should pay for the search.

Second, we incur liability on the search to both clients. We just did a search on the same property for two different clients. As it turned out, it was a split and the parcel was being sold to two different buyers. Both clients ARE going to bill for the search and recoup their costs. How are we to know if this isn't the case?

Third, if your clients are ordering title from two different companies, or they are ordering the title work before they have a firm order, the problem isn't with the abstractor. If you got what you ordered, it shouldn't matter what the abstractor did for someone else. Remember, they are "independent" abstractors, they work for other clients. Where would you draw the line? If the order comes in the next day or the next week or the next month, should you get a refund? I don't think so.

Just my opinion, but abstractors are paid to deliver the search as ordered - if two clients ask for the same property and they both get what they ordered, they should both pay.
 
by Robert Franco | 2007/11/20 | log in or register to post a reply

In this vein though somewhat unrela...
In this vein though somewhat unrelated, I had a call yesterday from a title agent doing pre-foreclosure work. They were in a hurry and wanted to buy a copy of my owner policy to use as back title.

This is a new one for us. Anybody doing this on a regular basis? If so, how much are you charging?
 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/11/20 | log in or register to post a reply

Diane: What possible good can "your...
Diane: What possible good can "your" owners policy do for anyone but you? This is the basis of most of the big insurance companies back title work- they use the next door neighbors policy for their next case - ignoring the fact that each is unique and do not have the same basis, except acreage back title information- the new information does not work that way - but that is how they do it- extremely shoddy at the very best-I have worked for a few of the big ones, and that was how it was done- even with my protests. Lot files can never provide the corect information for "all" the lots in that subdivision- there has to to be info on each lot for it to work, and very few databases provide for that kind of detail. 
by Steve Meinecke | 2007/11/20 | log in or register to post a reply

Diane - In Ohio this is most common...
Diane - In Ohio this is most common. Depending on the Title Agency, getting a faxed copy of the OP is pretty easy and very inexpensive. Most don't charge a cent while others will charge up to $30.00 to $50.00 for pulling the file from storage (total junk fee). I request the prior OP or LP on all transactions to help our examiners. It is a judgement call on wether you want to trust the prior title company though. Around here we have a few that are not reliable.

We also give the re-issue rate, which requires the prior OP or LP per our underwriter guildlines (there are other ways to verify premium but Policy is the best proof).
 
by Clanci Moloney-Nelson, Eagle Land Title Agency, Inc. | 2007/11/20 | log in or register to post a reply

Diane:

My guess is tha...
Diane:

My guess is that your underwriter may have a problem with you selling your policies to companies doing pre-foreclosure work or for anything not directly related to issuing a new policy. Their concern would primarily be for liability reasons.

Title insurance agents routinely (should) require the production of a prior title policy to permit someone to get any available reissue discount. Many redo the search anyway, but the main point is that they are collecting an insurance premium for the new policy they issue based on a search of the public records even if they are relying in part on the prior policy.

If you sell your policies to a third party and there is a problem later on, them may come after you and your underwriter since you have liability policies that they can go after. This could happen even if you didn't make a obvious error - plaintiff's attorney's look for insurance policies wherever they can find them.

You should either be charging them for a new search or asking them to pay for a new policy. Anything else and I think you are setting yourself up for future liability in case something is missed in the foreclosure. And you will be doing this without the benefit of getting a price commensurate with this amount of liability you are potentially incurring.
 
by David Jenkins | 2007/11/20 | log in or register to post a reply

"Title insurance agents routinely (...
"Title insurance agents routinely (should) require the production of a prior title policy to permit someone to get any available reissue discount."

old TIRBOP rule

I'm not issuing their insurance. Our abstractor have full access to our underwriter's title company plant for copies of old policies. If a new insurer wishes to use a prior policy as their base, I don't care and my/our liability is no more or less as it doesn't extend to the new insured at all.
 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/11/20 | log in or register to post a reply

Thank you all for your thoughts on ...
Thank you all for your thoughts on this. I think it's shoddy work on their part but also a chance for us to pick up some cash for all those scanned policies. I charged $25 and it was no big deal because I can prepare an invoice, access the old file and fax or e-mail both from my desktop. I do think I'll raise the price a little next time. ;) 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/11/20 | log in or register to post a reply

DIANE - When did this rule change?<...
DIANE - When did this rule change?

"5.3 REISSUE RATE - A purchaser of a title insurance policy shall be entitled to purchase this coverage at the reissue rate if the real property to be insured is identical to or is part of real property insured 10 years immediately prior to the date the insured transaction closes when evidence of the earlier policy is produced notwithstanding the amount of coverage provided by the prior policy."

Actually, what I am saying is that your liability will be more. From the sounds of it, the person doing the pre-foreclosure work is not issuing a new policy. That means that if there is a mistake, your company is the next in line for liability. I doubt your underwriter will cover any claim since you did not issue a title insurance policy in their name; you only sold the results of the search.

When your own searchers use the underwriter's policies or even the policies of other companies, your underwriter probably isn't too concerned since they are collecting a premium to cover the liability and because in some cases those prior policies can be brought in to help with coverage in case of a claim.

If there is a mistake in your work, the only insurance company that you may be able to call on is your E&O policy. I not as familiar with E&O policies, but I'm sure that at least some of them are written not to cover claims where your are operating outside of the scope of what your underwriter covers.
 
by David Jenkins | 2007/11/21 | log in or register to post a reply

I would like to add something to my...
I would like to add something to my comments above (my reply to John) regarding abstractors doing the same search for two different clients and billing them both. The industry has applied a great deal of pressure on abstractors to lower fees. One of the biggest factors in our ability to keep our fees as low as they are is our investment in technology that makes it easy for us to pull our back title work and use it efficiently.

When we get another order for a property we searched a few days ago, a month ago, or even years ago, we now have everything scanned and indexed on the computer so we can use it again. If we could not do that, if we could not bill for both orders, our fees would be much higher today.

Just thought that was worth throwing out there.
 
by Robert Franco | 2007/11/21 | log in or register to post a reply

David: Here's the matter I was ref...
David: Here's the matter I was referring to regarding TIRBOP on reissue:

2.8 Sections 5.3, 5.4 and 5.6 of this Manual provide that reduced rates are applicable when evidence of previous insurance is provided within a specified period of time. As evidence of previous insurance, an Insurer shall rely upon:

(a) the recording (within the period of time specified within the applicable Section of the Manual) of either:

(1) a deed to a bona fide purchaser for value, or
(2) an unsatisfied mortgage to an institutional lender; or in the alternative,

(b) any of the following documents produced by or on behalf of the purchaser of the title insurance policy:

(1) a copy of the prior policy;
(2) a copy of the marked-up commitment;
(3) a settlement sheet showing payment of a title insurance premium; or
(4) other written evidence acceptable to the Insurer that title insurance coverage was purchased for the property.

[The title insurer is required to use evidence found in the title to give a reduced rate. The title insurer may only ask for documentation if the title report itself does not produce relevant recording data to support a reduced rate.]

I believe the requirement to give reissue without a copy of a prior policy was issued in August of 2005.

On the issue of liability, I just don't see where the liability is any greater to me or the title underwriter if they have a copy of a policy or not.

An action to recover damages follows it's chain back through the deeds and mortgages and is put to whomever is on the instrument. That party then has to contact their title insurance company to make a claim. The insured owner or lender HAS a copy of their own policy. It's no secret.

A title insurer who decides to rely upon a copy of a prior policy as a base does so at their own risk. The copy of a policy is not the same as an indemnification letter which extends coverage from the old policy over and to the new policy.

There is no new liability created at all.

That said, I am interested in any other viewpoints as it is an interesting topic and I want to thank you, David, for engaging it.
 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/11/23 | log in or register to post a reply

2 commets, first Mr. Povejsil....wh...
2 commets, first Mr. Povejsil....which one of of my requesting clients do I tell they can't have the search because someone else ordered it too? And second, the problem is with the cut-throat nature of our own business, that doesn't promote communication as to which companies are the ones not paying. Companies can easily move from searcher with relative ease. Even when you post someone as a non-payer, someone is still going to move in and do the work thinking that they will get paid....and they will for a short time before they stiff them too! 
by Robert Weber | 2007/11/26 | log in or register to post a reply

Non Payers

I recorded a mortgage for Land America in July 2007, and after many inquiries as to payment for this I have never heard from them. How can a Company as big as them refuse to pay a bill this small? Thats why independant searchers like myself are finding it impossible to stay in business. After 25 years of searching, I may have to find work in another field. I was also one of the searchers screwed by CCR Search and Abstract .

              Pam Jones,

              A.A.Abstracting

 
by Pam Jones | 2008/05/27 | log in or register to post a reply

Non-Payers

As with many of you, I too have experience with non-paying "clients", and have suffered loss of income. I have, however, a solution which has worked for me and might for you. When taking an application from a new client, if they are an agency, I inquire as to their underwriter. Should the situation arise that payment from the agent is not forthcoming, I contact the Underwriter and ask for the name of the Agency Rep. I then contact the Rep by phone, explain the situation, and follow up by mail with copies of the invoices and a cover letter rehashing our conversation. In any case in which I have been forced to deal this way, the Underwriter has made payment in full. I don't use this method unless I have exhausted all possibilities with the deadbeat client ; however, I can attest that it does work. If it is an attorney with whom you are having payment problems, you may want to contact the Bar Association ; perhaps they can apply some pressure. I wish you luck.

John Glatthaar

 
by John Glatthaar | 2008/05/29 | log in or register to post a reply

struggling abstractor

sorry, maybe some companies do that.  I don't get files that are doubles.  But if I did, what am I supposed to do, someone else paid me you get your file for free?

Most of us local searchers don't have time to sell leads, I work all the time even on weekends to try and keep my business up and pay my bills,  I barely have time to do my own personal things, because companies don't want to pay us for the time, and gas, and copies that we pay out, they want us to do files for nothing and want to bend over backwards for them.  Sometimes they don't realize it costs me 16.00 in gas to go to one of the courthouses that I go to round trip, then I have to charge the copies at the courthouse, the copies are not cheap they want 25 dollars in copies and pay you 2 dollars for the deed.  so out of the 60 they want to give me a file 46 just went into getting the stuff for the file that means for my office over head and supplies i have 14 dollars a file to pay for this stuff. 

but we are the bad people because once in a blue moon we get a double file, I may get a double file once a year. So we are not making out quite as good as you think we are.

 
by Patricia Ochs | 2008/08/25 | log in or register to post a reply

struggling abstractor

when i get double filings... i charge the individual price for filing a mortgage plus put on a fuel fee.

which means that i charge twice for filing as there are two mortgages plus the fuel fee

i hope this helps

 
by charles jetter | 2008/08/25 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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