Quote "Our customers as a rule do eventually pay, and we're finding more and more that they won't pay until the people actually go to settlement.  I can see their way of thinking, after all, they can't disburse on anything else until they get funded, so why shouldn't the abstractor be willing to wait.  I have to wonder if appraisers are facing the same situation. Not saying it's right, just that it is what it is. 

I don't think this situation will ever change until abstractors present a united front with a firm 30 day payment policy. "

 Deborah Manion/VA 

This is a great start to a solution. My personal feeling is that an escrow company should be capitalized enough to be able to pay for their expenses whether the file goes to closing or not. In fact, I think the ultimate solution is for the industry to be on a prepaid basis, in the same way that attorneys, appraisers, and other industry professionals are. This would be a diffuclt and maybe impossible transition.

Regarding appraisers, the standard practice I have seen at least in FL and GA is for the appraisal to be POC by the borrower directly to the appraiser on the spot. It still can be reflected on the HUD that way.

Professional abstractors should not be a means of financing or operating capital for a closing agent. The escrow agent is the primary and central entity managing the transaction process. They are justified in earning the majority of the profit on the deal, but should also take the risk of loss.

Abstractors should at least do some due diligence on their clients to check basic financial condition; D&B, bank references, etc. In addition, there should be an iron-clad customer agreement which ideally holds the principal personally liable for invoices. I can't see how any legitimate and honorable business would have an issue with an agreement like that, if they truly intend to pay their invoices anyway.

My company has no problem with agreements like that, and agree to them whenever requested. Out of thousands of abstractors and other vendors we deal with, the number who have ever asked is in the single digits.

The title and escrow companies are not the enemy of abstractors; they are not the bad guys. Searchers simply need to negotiate a more secure arrangement for their business relationships with them. It would be good for everyone. If abstractors don't have to calculate a loss factor into their expenses, and spend time doing searches they will not be paid for, they will have more time do get searches turned around faster for good clients, and mabe aven have more leeway to be more profitable or competitive. Sounds like win-win to me.