First, let me highlight a few of the reasons that caused me to cancel my membership in ALTA. It basically boils down to two things: 1) I felt that they were not representing my interests as an independent title agent; and, 2) they seemed to be more in the business of soliciting me than representing me.
On the representation issue, there is an inherent conflict of interest between the big underwriters and agents, and the small, independent agents. It seems to me that ALTA either stands with the large companies that line its pockets or they duck the issues that small agents really care about. There are a few areas where those interests overlap, such as RESPA reform, but even there it only goes so far.
As a small agent, the issues that I care about the most, and where I need the representation of a national association, are the ones that seem to slip through ALTA's fingers. For years, this industry has been giving away profits to Realtors, lenders, and builders through Affiliated Business Arrangements ("AfBAs") and ALTA has blindly accepted the practice.
The underwriters have largely embraced AfBAs because it allows them, or their largest agents, to capture referral sources and lock out competitors. They get the same split of the premium whether it comes from an independent agent or an AfBA. Meanwhile, small agents are being excluded from more and more of the market. Where was ALTA as the small agents suffered?
Similarly, a few years ago there was an "off-shoring" craze that hit the title industry. Orders that used to get handled by local title professionals are now being done in India and the Philippines. What did ALTA do? ALTA began incorporating off-shoring segments at their conferences. They embraced the practice as local title professionals saw work leaving the country to boost the profits of ALTA's largest members.
In 2007, when I wrote the blog about ALTA's position on off-shoring, I checked its directory to see who the members were in my county. Surprisingly, they were overwhelming small, independent title professionals.
What is most perplexing to me is the make-up of the ALTA membership. I checked their online directory to see what their membership looked like in my home county. There are seven ALTA members here: six are single-person, independent abstractors and one is a title agency. Of the three large title agencies in town, only one is listed. There are four small independent title agencies here and none of them are listed as members. We no longer have any of the large direct operations in town.
The conclusion that I drew was that ALTA did not really represent the majority in terms of numbers, it represented the majority in terms of dollars of dues paid. Since I was never going to be in the latter category, I saw no representation from ALTA that made me want to be a member.
So, what other benefits did ALTA offer? Well, there was the opportunity to acquire E&O insurance through ALTA's risk retention group, TIAC. But, once I priced insurance through a traditional insurer, I found that I was able to get a lower premium elsewhere. This was surely not a reason to pay dues to ALTA when I wasn't getting the representation I wanted.
ALTA also offers various educational and marketing materials. I have purchased a few items in the past but I largely found them to be very expensive for a small agent. And, it seemed that I was solicited to purchase them quite frequently.
I hear that ALTA does put on a great conference, several of them actually. Unfortunately, they too are very expensive. The 2009 ALTA Annual Convention is $850 for members ($1,400 for non-members) and when you look at the topics they have covered in the past, you really have to wonder if they even had the independent title professional in mind.
The 2007 ALTA Tech Forum listed abstractors, searchers and examiners among those who should attend. But, take a look at some of the event sponsors:
GATORS® Unit of Fiserv Lending Solutions Introduces On-line Title Abstracting Tool:
"GatorSearch provides GATORS users the ability to execute self-service title searches, greatly reducing the turnaround times associated with traditional examiner/courthouse abstracting. Reports can be run from the office or home computer to provide searches that are fast, comprehensive, reliable and precise."
NEXTACE GIVES TITLE INDUSTRY FIRST AUTOMATED RESALE CAPABILITY THROUGH TITLE EDGE®
"NextAce is expanding its automated title software and services offering, Title EDGE®, to deliver full resale and long-form commitments. By automating the resale process, the consumer can benefit from a faster settlement, title insurers can deliver a faster and more consistent product while reducing their associated production costs, and lenders realize process improvement and faster application-to-close turn time.
NextAce has led the title technology charge to service both large and small title insurers with Title EDGE. Founded in 2003, NextAce has processed over 300,000 preliminary title reports and commitments, and is delivering on more than 80 percent of submitted orders. Title EDGE is the nation's leading automated title examination and report generation product".
String Real Estate Information Services:
"Online title examination current owner to chain of title and all varieties of searches in-between using online county plants and private sources."
Also from String Real Estate Information Services, Outsourcing Decision Has Benefits, Challenges:
"Another benefit of off-shoring results in (sic) a 24/7 processing. Since most of the outsourcing does go to India, many processes can be completed overnight, allowing U.S. businesses come back the next day with a day's work completed.
The more obvious benefits include lower labor cost. However, there is also the possibility of obtaining additional services."
Perhaps what they were really saying to the abstractors, searchers and examiners was "come and meet the folks that are going to put you out of business." Hardly an event I want to pay to attend. (see Lose Your Job And Win a High Definition TV!).
But, as I said, I hadn't completely given up hope on ALTA, largely due to one man - Mike Pryor, ALTA's current President. Mike seemed to understand the plight of the little guy. He wanted to reach out to small agents and title abstractors. When I first found out Mike was going to be taking the helm at ALTA, I wrote a blog about him. (see I Like Mike).
Just when it seemed to me that the traditional title insurance industry was giving up on thorough searches, Mike wrote about the importance of the title search. (see Mike's Email).
Oh, I know, we can argue all day about how good is good enough, but unfortunately, we as an industry, have spent too much time arguing about how good a search should be before issuing a title policy when we SHOULD be discussing how good a search is necessary to satisfy our duty to our customers.
Finally, someone seemed to "get it," and he was going to be the President of ALTA! I knew he would have an uphill battle in an industry dominated by the "short-search" and "off-shoring" mentality, but I had hope. I was skeptically optimistic.
I wished Mike luck and I told him that if ALTA could show me that it was going to represent my interests, I would re-join in a heartbeat.
Well... apparently, having a traditional title agent at the helm of ALTA just wasn't enough. Nothing changed... except ALTA's new plan to charge a licensing fee for ALTA forms. I find this despicable, deplorable, degrading, and, for lack of another word that begins with "d," offensive!
ALTA forms have become the standard in the title industry. Title agents are required to issue ALTA policies and endorsements. What choice will agents have but to pony up the money and pay ALTA's ransom? None at all... This much, ALTA knows.
"ALTA's uniform policy forms have become the 'gold standard' throughout the lending and legal communities. Because land title insurance coverage is standardized, the secondary market readily accepts mortgages that carry title insurance. This has greatly contributed to the growth of demand for title insurance across the country," said Mike Pryor, president of ALTA.
...
"Licensing of the policy forms will reduce the drain of critical resources to the association and protect the value of ALTA forms far into the future. "ALTA is doing more than ever to carry the banner for our industry. We want to keep up that level of advocacy on behalf of our members and for all in the title business. And, we want to do it in an environment where all beneficiaries share in the cost," Pryor continued.
The problem here is simple... ALTA does not advocate for "all in the title business." And, as a result, many have chosen not to join and support an organization that does not represent them or, more bluntly, an organization that seems content to see them go out of business.
ALTA could have chosen to direct more energy to representing the independent agents. It could have chosen to give them a reason to join voluntarily. But, it did not. It didn't float this idea for public comment from the masses of independent agents who have stayed away from ALTA. It didn't ask what it could do to help the independent agents. It simply said "support us, or get out of the business."
ALTA knows what troubles the independent agents face. If it doesn't, it has had its head buried in the sand deeper than I thought. Does ALTA think that forcing unwilling agents to fork over money to an organization they do not want to support is going to place them in a better light with those agents? No. It just doesn't care.
As a small agent, I am operating in an environment where I can't compete. The industry is experiencing a severe recession. AfBAs, many of them shams, have prevented me from accessing many referral sources for what work remains. Ohio now requires an expensive independent audit by a CPA every year. Work we used to do is now being outsourced to foreign countries. Remaining in business is a constant struggle and ALTA's response is to tell me that I have to pay them a licensing fee to do what little work I can manage to find. How does that help me?
This is just a shame. Mike said that "this program will be a small step toward reestablishing a level playing field for all industry participants." What Mike fails to realize is that it is precisely because ALTA has NOT advocated for a level playing field that I have chosen not to support it. Let me state in no uncertain terms that I am not interested in helping the industry maintain a playing field if they aren't going to fight for my right to play in the game.
Utterly disappointed,
Robert A. Franco
SOURCE OF TITLE