Old Republic Title Insurance Co. has joined the list of other title companies asking examiners and abstractors to decrease their fees.<?XML:NAMESPACE PREFIX = O />

Jodi Clark, vendor management administrator for Old Republic Title Residential Information Services (ORTRIS), sent an e-mail Sept. 26 indicating that “effective immediately vendor fees for all products will be reduced by 10 percent. Vendors who do not, or can not, agree to the 10 percent reduction, may no longer be eligible to receive orders from Old Republic’s Residential Information Services division.”

“We appreciate all of your hard work in the past and hope by instituting this price reduction we will be able to increase the orders we currently send to you,” <?XML:NAMESPACE PREFIX = ST1 />Clark’s e-mail said. “It is our hope that as a valued vendor you understand the necessity for this reduction and will agree to continue with the business relationship we have established over the years.”

In her e-mail, Clark said it has been ORTIS’ policy to allow vendors to amend fees as necessary to maintain a positive working relationship.

“Because of current slowdown in the mortgage and housing market, we are forced to change our policy,” Clark wrote. “The competition for business continues to tighten and many of our customers are demanding better pricing models for their transactions. Our policy is, and always has been, to provide the best service at the most competitive fees to our customers. We can only do this with your cooperation.”

Old Republic Title Insurance declined to comment about the fee reductions. Old Republic formed its ORTIS division in 1997. The National Association of Land Title Examiners and Abstractors had not yet commented when this story was posted online.

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

According to the e-mail, ORTIS’ vendors had until Oct. 30 to indicate acceptance or refusal of the price reduction, otherwise it would be assumed the price reduction was approved. This followed the same approval procedure taken by TransContinental that angered many of its vendors.

Robert Franco, president of VersaTitle in Mansfield, Ohio, and host of the Web site SourceofTitle.com, called TransContinental’s request completely unethical. He said he would not accept TransContinental’s request to reduce fees and asked to be taken out of its database. The e-mail from ORTIS sparked the same reaction from Franco, who has been an Old Republic Title agent for eight years.

“Though there is no doubt in my mind that ORTRIS is a disgrace to the industry and they deserve the label ‘ethically challenged,’” Franco wrote on his blog. “I do not think this is reflective of the corporate culture of Old Republic, in general. I have always considered them to be the best of the Big 5. They have pretty much kept their nose clean. I haven't noticed them being fined by the Departments of Insurance and I don't recall any large settlements for paying illegal kickbacks. Nor have I noticed any large attempts to outsource their title work to foreign entities. For the most part, they treat their agents well and they still care about a job well done.”

Jeff Schurman, executive director for the Title Appraisal Vendor Management Association (TAVMA), said while negotiating fees through an impersonal medium such as mass-e-mail is hardly a public relations winner, fee reductions are a part of life in a capitalist society.

“As long as the party asking doesn’t violate a contract or resort to bribery, coercion, or extortion, asking by e-mail is not necessarily unethical,” he said. “It is typical in any industry that a downturn will cause customers to ask for fee reductions, just as it is in a run-up for suppliers to demand higher fees. All of us in business including title companies are under pressure to cut expenses. I view it as less about maintaining a bottom line then protecting our competitive position with the customer.” 

Whether or to what extent an abstractor can absorb fee cuts over a sustained period of time is uncertain. Most abstractors are sole proprietors or small family businesses that can’t sustain incremental across-the-board fee cuts on what is already a relatively inexpensive service, according to Schurman.

“As in previous downturns, some will decide to leave the industry to pursue a more profitable line of work,” he said. “Many that remain will find themselves working longer hours to make up the fee shortfall. Eventually they’ll be at risk to fall behind, drop the ball, miss deadlines and maybe burn out, all of which is bad for the industry. The down side of fee reductions is that at some point, 5 percent, 10 percent, 20 percent or whatever, quality, service, and passion for the work become the price paid for lower fees.”

ORTIS’ e-mail asking for the fee reductions comes during a management shakeup at the company. Don’t miss a coming edition of The Title Report as we provide exclusive coverage of these changes.