Mass e-mails sent by two national title companies asking its vendors to reduce their fees have caused a firestorm among the abstractor and title examiner community

TransContinental Title Insurance Co. requested its vendors reduce fees by 10 percent, while LSI Title Insurance Co. asked for fees to be reduced $8 because it no longer needed tax information.

In TransContinental’s e-mail, signed by National Division Vendor Manager Andrea Somers, the company apologized for the “informality” of the e-mail generated letter.

It stated “most of you are aware that TransContinental Title was purchased by First American Lenders Advantage last year; and as such, we have been slowly but surely integrating ourselves into the family of First American and its on-going goal to be the lowest cost provider of title insurance needs. To that end, we are trying to be proactive by reducing our costs for our outsourced title placement and production so that we are able to retain the authority to continue to produce our own title products. Therefore, we are looking to our vendors to reduce their fees to enable us to reach our efficiency goal.”

The letter indicated the company was reducing its vendors’ fees by 10 percent. Those who accepted the reduction were asked not to respond to the e-mail. Only if the reduction was not agreeable, were abstractors or examiners to respond to Somers by e-mail within 48 hours of receipt of the request.

Robert Franco, president of VersaTitle in Mansfield, Ohio, and host of the Web site SourceofTitle.com, called the request completely unethical. He said he would not accept TransContinental’s request to reduce fees.

“The gall is absolutely shocking,” Franco wrote on his Source of Title blog. “I cannot believe that they would be arrogant enough to unilaterally reduce your fees by ten percent if you don't reply to an email. What if the email doesn't get received? What if it gets rejected by a spam filter? Would you find out that you got screwed when you called to ask why your check was 10 percent short?”

Wendi See, president of LowCountry Title Examinations LLC in South Carolina, responded to Somers e-mail by indicating she would not consent to the fee reduction and asked to be removed from TransContinental’s database.

“I understand that by refusing, I will no longer be receiving work from your company,” she wrote on her post on SourceofTitle.com. “I’d much rather stand on the street corner by choice to recoup the missed income.”

According to See, Somers responded by indicating TransContinental would keep LowCountry at its current fee structure.

Jay Duncan, president of Missouri-based Bi-State Title Search, said he also replied with a resounding “no” to the price reduction request.

“They want to keep the same profits they enjoyed the past couple of years with less business and they are trying to do it by cutting costs,” Duncan said. “That is good business sense, but we still have the same type of liability when we did searches last year. We can’t do searches for any cheaper than we did last year.”

Duncan said if vendors don’t agree to the fee reductions it will force the title companies to become more efficient, market for more clients and cut their own salaries and benefits to maintain profits.

He added abstractors who reduce fees will not ensure they will stay in business or continue to receive orders. He pleaded with abstractors and examiners to “stick to your fees because you are a professional, you deliver a professional service so you deserve your professional fees without any reductions.”

“Our job is to provide our service in a professional and timely manner at a reasonable cost, taking into account the costs that we incur as we perform our work,” Duncan said. “If we as abstractors do not take ourselves as professionals then no one else will.

Ron Rooney, general manager for First American CoreLogic wrote in a post to clarify the letter from TransContinental is not reflective of the services his firm contracts abstractors to perform.

He said CoreLogic has vendors forms outlining fees for each service and the fees are honored unless otherwise negotiated.

Somers responded to the angry response on posts made at SourceofTitle.com by apologizing for the emotions the request stirred. She said the market has been tough on everyone and indicated she was willing to resolve any concerns.

“I am aggressively interested in making this right by whatever means I have leverage of,” she indicated on her post.

LSI, meanwhile, in an effort to streamline processes, told its vendors they would begin receiving orders that don’t require any tax information. Because of the change, LSI said search fees must be reduced $8.

“As you know, the market conditions continue to cause grave concerns within our industry,” Linda Silverman, vice president National Lender Relations for LSI, wrote in the e-mail. “Due to these challenges which have resulted in reduction of lender order volume, LSI must review all aspects of our processes and find ways to reduce our expenses as our market dictates.”