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My Predictions for 2011
by Robert Franco | 2011/01/01 |

Typically at the end of a year, I write a blog about what we have seen change over the past year.  This year, however, I thought I would write about a few things that I think we might see coming in the year ahead.  I don't have a crystal ball, and I could certainly be wrong... but why not take a stab at predicting the title issues we will see forthcoming?

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Over the next few blogs, I'll more fully explain why I made these particular predictions.  But for now... here is the list.

  1. FORECLOSURES: The biggest issue in 2010 has been foreclosures.  Although the final numbers for 2010 aren't out yet, it has been estimated that there will be 1.8 million foreclosed homes in 2010. 

    I predict that in 2011, we will see more foreclosures, between 2.2 million and 2.5 million.

  2. FORECLOSURES: We also saw unprecedented delays in the foreclosure process due to clogged dockets, wrongdoing by lenders and foreclosure mills, and constantly changing government programs intended to help struggling homeowners.

    I predict that in 2011, we will continue to see delays.  however the courts will be spending more time on substantive legal issues than procedural mis-steps.
  3. HOME PRICES: After a steady decline of more than 30% from the peak in 2006, home prices have remained fairly flat throughout 2010.  The median price of home is actually up a bit, but the average price is a little lower.

    I predict that in 2011, home prices will decline further - by between 5% and 10%.
  4. PRIVATE TRANSFER FEE COVENANTS:  By the end of 2010, 19 states had adopted legislation banning or restricting the use of private transfer fee covenants.

    I predict that in 2011, 10 to 12 more states will pass bans.  But, the important thing to watch for will be federal legislation on this issue.  The federal government could put an end to them... or, worse, undue all the state bans.  Two bills were introduced in 2010, one going each way, but neither passed.  I predict that the federal government will not pass anything with regard to transfer fee covenants in 2011. 
  5. AFFILIATED BUSINESS ARRANGEMENTS:  Nothing has divided the title industry like AfBAs.  The biggest news concerning AfBAs was the 6th Circuit decision in Carter v. Welles-Bowen Realty, in which the judge ruled that HUD's ten-part test for sham AfBAs was unconstitutional.  It is currently pending appeal.

    I predict that in 2011 the Carter decision will be reversed allowing HUD to continue to apply the ten-part test.
  6. MORTGAGE INTEREST RATES:  Mortgage interest rates dropped to lows around 4.5%.

    I predict that in 2011, we will see modest a modest increase in mortgage rates to between 5.5% to 5.75%.

  7. REPRESENTATION OF INDEPENDENT TITLE AGENTS:  The American Land Title Association (ALTA) has traditionally been the voice of the title insurance industry.  This year, they reported that "despite a sluggish economy, ALTA reached record membership in 2010 with over 3,800 member companies and 1,350 new members." But there is another industry association to watch in 2011, The National Association of Independent Title Agents (NAILTA). 

    I predict that in 2011, ALTA will still lead the way in number of members.  However, I believe that NAILTA will be the preferred organization by independent title agents when it comes to speaking out for their interests.
  8. TITLE INSURANCE CLAIMS:  Historically, the title insurance industry has had a claims ratio of between 5% and 6%.  I expect that rate will be between 7% and 8% for 2010 when the numbers come out.

    In 2011, I predict the claims ratio will be slightly higher - somewhere between 8% and 10%.

  9. TITLE SEARCH STANDARDS:  We have seen a steady decline in search standards over the past several years.  2010 was no exception.  Insurance is being written on current owner searches, and sometimes even something less.  

    It will come as no surprise that I predict a further decline in 2011.  
  10. INDEPENDENT TITLE SEARCHERS:  2010 was a rough year for independent title searchers.  There has been less work to go around and those still getting work are having a difficult time getting paid on time.  

    I predict in 2011 we will see more of the same kinds of problems, but this will be the year many throw in the towel and get out of the business.  That may mean things might seem to stabilize for those who manage to hang in there.

Feel free to comment on my predictions, and add your own.  What do you think will be the hot issues in 2011?  I have some other thoughts, such as the affect the new Financial Consumer Protection Bureau will have on the title industry, what kinds of foreclosure prevention programs we might see develop, and new federal legislation we might expect.  But... I'm not ready to make a prediction on those just yet.

Whatever 2011 has in store for us... I wish all of you the best in the coming year and I hope it provides new opportunities and positive change.

Robert A. Franco


Categories: General Interest, Title Industry

1159 words | 5365 views | 6 comments | log in or register to post a comment

Forgotten Item!


You forgot the weather report as the last item! How many hurricanes in 2011??

And the best movie will be.....???

Happy New Year!!


by Wyatt Bell | 2011/01/03 | log in or register to post a reply

CalculatedRisk has put up several predictions in the past week

His track record is *very* good on housing... I would never bet against him!

House prices:  LIke you, he thinks house prices will fall 5-10% and will bottom in 2011.  He is predicting a slow recovery for house prices after that-- he predicts that house prices gains will be slower than the inflation rate for a year or two after the bottom.  So, don't expect a booming housing market until at least 2013 or 2014, if then.

Mortgage delinquncy levels and distressed house sales: he predicts that distressed sales, which have peaked in 2008, fell into 2009, and have generally risen again in 2010 before the foreclosure moratoria, will rise and peak in 2011 at about the same levels as the peak in 2008.  That would mean that distressed sales peak at about 700,000 per month, and they are currenly somewhere around 600k per month.  He thinks that delinquency levels, which peaked in Q2 2010 at over 14% of mortgages but has fallen since, will remain elevated for some time and, depending on how much housing prices fall, may rise a bit in 2011.


Some predictions of my own: 

I expect that total title premiums as posted by ALTA will fall below $8 billion in 2011.  The number of purchase transactions may pick up slightly by the end of the year, but refinances will be far fewer in 2010 than 2009, house prices will be lower, meaning a lesser premium per transaction, and insurers have already gotten significant rate increases in many states.  Some increases will kick in 2011, but not enough to keep total premiums from falling again. 

I think premium volume will almost certainly hit bottom in 2011, however.

Title claims will continue to fall in 2011, but slowly.  I think that title insurers will end up paying out  between 11 and 12% of their total title premiums in claims and legal defense fees on claims in 2010 when the final figures come out, and I expect that they will pay out at about the same rate in 2011.  These are still very high levels historically.

I expect that we will see fewer agency defalcations in 2011, as I think most of the folks who foolishly dipped into their escrow accounts have already been exposed by now, but there will still be many more former title business owners headed off to jail in 2011, as cases work slowly through the criminal justice system.



by Slade Smith | 2011/01/03 | log in or register to post a reply


Your expectations are accurate in my view. 

Bad economic times will take decades to work through;  this foreclosure crisis is not a quick or easy fix and will get worse before better. 

by William Pattison | 2011/01/03 | log in or register to post a reply

waiting for the big one
The one I'm waiting for is actually a convergence of several that you mentioned, Robert. I expect (hope?) the increased scrutiny applied to foreclosures will expose the cheap and sloppy title work that has become the norm. That would naturally go along with a sharp rise in claims, but hopefully it would also lead to a tightening of standards and more work for (dare I say it?) real title searchers.  
by Bill Garrett | 2011/01/03 | log in or register to post a reply

I'll say it if you won't - the Real Title Examiners will have to clean up this mess! It's already started in Florida! 
by PAULA DEEM REYNOLDS | 2011/01/03 | log in or register to post a reply

Weather report

2011 - more Hurricanes and strange weather. Portland will be unusually sunny on July 16th (my wedding day).


Best movies, Inception and Tangled. Haven't seen King's Speach but when I do, I may add that.


Thank you so much for you view Robert. That's about what I was thinking and seems to be very logical.

by Kristine Bjorge | 2011/01/05 | 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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