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Who Is Your Competition?
by Robert Franco | 2007/01/18 |

It used to be easy to spot your competition... they had a sign our front just like yours. But now it is getting tougher to figure out. We have had underwriters with direct operations competing with their agents for some time now. One of the biggest "hooks" of some of the smaller, regional underwriters is that they don't have any direct operations - "they don't compete with their agents." The underwriters used to refer orders to their local agents, now they send those orders to the nearest corporate office.

Next were the Affiliated Business Arrangements (AfBA) and Joint Ventures (JV). These allowed lenders, realtors, and anyone else with a few orders to refer to get into the business. Now small agents are competing with their clients as well as their underwriters. You have to ask... is that really "competition?"

I have even seen a local title agent underbid the local independent abstractors for current owner searches for a large vender management company. Why would a title agency want to travel 50 miles to do current owner searches for $32.00? I would have to imagine that the squeeze from competition with their underwriter and clients forced that decision.

Now, the underwriters are developing automated searching databases and the small agents and abstractors are forced to compete with technology that promises a complete title search in less than 1 minute! TitleSmart, by First American, claims to offer advantages of "instant title." For a great blog-post on the topic of TitleSmart, please see Diane Cipa's post on Radical Title Talk.

What will be next? Borrowers getting their loan and a title policy at the ATM machine? Will we have title insurance kiosks at Home Depot for the builders? Will we have drive through loan closing windows?

Those of us in the industry know that there is more to title insurance than a quick search and a generic title policy with several blanket exceptions. The real value in our services is work we do to make sure that the title is clear. That takes time and expertise to review the title and ensure that any potential problems are rectified before the closing. What value is there in an instant product?

With competition from all sides, what will happen when the title professional is forced out of the market? Title insurance will become nothing more than another line of casualty insurance and the consumers will be left with the headaches of hiring attorneys to clear their titles or filing claims under their title policy.

With so many outsiders attacking the title industry for practices such as fee splitting, re-insurance, over-charging, etc, why isn't someone thinking of a way to restore the integrity of the industry? The focus of the title industry seems to be on taking a buck out of someone else's pocket rather than on improving the value of their services.

Robert A. Franco

Source of Title Blog ::


Categories: Competition

705 words | 2684 views | 3 comments | log in or register to post a comment

The really wild thing about Titlesm...
The really wild thing about Titlesmart is that it's the old Radian product in a different cloak. First American, whether they know it or not, has justified the Radian argument and nullified the title industry position.

BTW It's not just small title agents impacted, it's attorneys and all title agents including all those joint ventures. The only ones who win in this scenario are notaries. Interesting, huh?
by Diane Cipa, General Manager, The Closing Specialists® | 2007/01/18 | log in or register to post a reply

Good point... thank you for posting...
Good point... thank you for posting. I think that TitleSmart may be one step above Radian, but it is still an enitre flight of stairs below what I would consider to be traditional title services. At least TitleSmart is linked to "something" that resembles title evidence, though still no substitute for a "real" title search.

Besides, I don't think the underwriters had a problem with Radian's product. It was more a case of the title industry not getting any premiums. They fought Radian by establishing that their product was really mortgage impairment insurance, not just a guarantee, and that they were not licensed to sell insurance. Now that Radian has established that there is a market for the product - well... we can see what's happening.
by Robert Franco | 2007/01/18 | log in or register to post a reply

Robert's article about underwriters...
Robert's article about underwriters competing for agents' business is absolutely accurate. The national underwriters are taking premium money from agents and using it to expand their direct operations and "ancillary offerings" such as title search databases. Most of these "offerings" are just ways for the underwriters to make more money from the independent agents by forcing them to pay for these services just to stay competitive. Moreover, the national underwriters have the deep pockets to lobby for favorable legislation that puts more money into their pockets, while placing additional burdens on the small independent agent.

I'm going to get on a soapbox here, but effective and comprehensive land ownership records are the foundation of a peaceful and democratic society. What has been the basis for most of the wars fought throughout history?--land ownership. Bastardizing the title industry by moving towards "quick and easy" as opposed to "thorough and accurate" is a recipe for disaster. Title to real estate is more important than just a name on Schedule A of a lender's policy. The trend towards a casualty insurance view of title insurance is misguided. Perhaps we should look to different leaders in the industry and get away from blindly giving premium money and stature to the national underwriters who are undermining the business.
by Janice | 2007/06/27 | 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



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