First American Corporation Shares Bullish.

American Homeland Title Agency Files Fed-eral Lawsuit Alleging Discriminatory Actions By State Of Indiana.

Home Services Acquires First Weber Realtors and Its Subsidiary Priority Title.

Fidelity National Financial (FNF) Ratings are Overwhelmingly Buy.

Investors Title Company Surpasses Revenue Estimates for the Quarter.

T itle Roundup

rating in a research dated August 3rd. Barclays boosted their target price on shares of Fidelity Na-tional Financial from $45.00 to $50.00 in its forecast on July 31. Piper Jaffray issued a $44.00 price target (up from $42.00) on shares of Fidelity National Financial in a research note dated June 29th. One research analyst has rated the stock with a hold rating and five have issued a buy rating to the company

Fidelity National Financial currently has a consensus rating of Buy and an aver-age price target of $44.17. Zacks upgraded shares of Fidelity National Financial from a sell rating to a hold

Investors Title Company (NASDAQ:ITIC) announce-d its quarterly earnings res-ults on 5 August. The com-pany reported $2.05 earn-ings per share (EPS) for the quarter. The firm had reve-

nue of $35.50 million for the quarter, compared to analyst estimates of $33.20 million. Shares of Inves-tors Title Company traded up 3.23% during trading on Wednesday, hitting $72.00. The firm’s 50-day mov-ing average price is $70.87 and its 200-day moving average price is $72.39. The company has a market cap of $144.50 million and a price-to-earnings ratio of 14.05. Investors Title Company has a 52 week low of $64.41 and a 52 week high of $82.08.

65% to 79% as part of a recapitalization of ServiceLink. ServiceLink now has $641 million in combined inter-company and mirror note principal and interest out-standing with Fidelity

Fidelity National Financial (FNF) announced on 31 July that it increased its ownership stake in Ser-viceLink Holdings from

Old Republic Default Management Services opera-tion will now operate under the new name of Old Re-public Servicing Solutions (ORSS). The operation pro-vides national mortgage servicing offerings through direct fulfilment and in partnership with affiliates

First American Financial Corporation is up 13.88% in the last 3 month period. Year-to-Date the stock performance stands at 20.19%. 2 analysts have rated the company as a strong buy. The shares

have been rated as hold from 5 Wall Street Analysts. 2 analysts have suggested buy for the company. On a consensus basis, Wall Street sell-side analysts have a mean target price of $42 for First American Corpo-ration

Home Services , the nation’s second-largest, full-service residential real estate brok-erage firm has acquired First Weber Realtors, Wisconsin’s leading residential real -estate brokerage firm, and its subsidiary, Priority Title Corp., together with owner-ship interests in eight regional title operations in Wis-consin. Headquartered in Madison with additional support staff in Milwaukee, First Weber has nearly 1,200 sales associates in 58 offices throughout Madi-son, Milwaukee, central Wisconsin, the Fox Valley and the Northwoods.

American Homeland Title Agency, Inc. (“AHT”) has filed a civil rights lawsuit against the Commissioner of the Indiana Department of Insurance (“IDOI”). In the lawsuit, AHT alleges that

Fidelity National Financial Ups Ownership Stake in ServiceLink.

Old Republic Default Management Gets a New Name.

the Indiana title insurance laws and regulations have been selectively enforced in violation of the United States Constitution by IDOI Commissioner Stephen Robertson. It appears that the IDOI Commissioner has been targeting out-of-state title insurance com-panies for vigorous enforcement to protect Indiana businesses from competition. A few other major Cin-cinnati area title companies have made a business decision to cease doing business in Indiana for fear of being targeted by IDOI.

M ortgage Roundup CFPB Issues Guidance on Private Mortgage insurance.

Competition Among Lenders Lead to Fall in Mortgage Origination Fee.

M&T in Talks to Settle U.S. Probe of Federally Insured Mortgages

Prospect Mortgage and Wells Fargo dump their Marketing Service Agreements(MSA)

Chase Leads the Way on Making Jumbo Loans Easier.

Demand for Mortgage Picks up in Second Quarter as per Fed Survey

Consumer Financial Pro-tection Bureau (CFPB) is-sued a bulletin providing guidance to mortgage servicers regarding can-cellation and termination of private mortgage in-surance under the provi-sions of the Homeowners

Protection Act. Noting there are confusions in im-plementation of the cancellation and termination provisions., the guideline summarizes existing require-ments under the law and outlines when borrowers may request that PMI be cancelled, when servicers are required to cancel PMI automatically, refunds of excess premiums, annual disclosures and guidelines for investor-owned mortgages.

The average mortgage-origination fee fell 22 percent in the 12 months through June to $1,041 as nontraditional lenders gave borrowers more op-tions, pushing banks to

make concessions to stay competitive, according to an annual survey by Bankrate Inc. Average costs ranged from $874 in Wyoming to $1,208 in Arizona. The average was $1,181 in New Jersey, $1,032 in New York, $937 in California and $905 in Massachusetts. Fi-nancial firms that aren’t traditional banks accounted for 55 percent of mortgage lending as on June 2015. Such companies include online firms, peer-to-peer lenders and closely held originators such as Quicken Loans Inc.

Mac and Fannie Mae. The investigation is to deter-mine whether the firm complied with underwriting guidelines. Remedy could include penalties, restitu-tion or fines.

cials to settle the probe involving mortgages in-sured by the Federal Housing Administration that M&T sold to Freddie

In context of the recent fine on Lighthouse Title by CFPB on count of mis-use of MSA, Prospect and Wells Fargo have decided to shun the MSA route

altogether categorising the arrangement as too risky in absence of any clear cut direction from CFPB.

expensive areas ( the conforming loan limit). A po-tential buyer now only needs a credit score of 680 and a 15% down payment to qualify for a maximum loan amount of $3 million for a primary-residence home. Borrowers used to need a 740 score and put 20% down. Through this move the bank hopes to gain more customers

M&T Bank Corp. said it’s in discussions with U.S. offi-

JPMorgan Chase & Co has eased the lending re-quirements for its jumbo mortgages, which tend to be loans in excess of $417,000 in many markets and $625,500 in more

-aled, suggesting financial strains on households are easing. About 44% of banks reported moderately stronger demand for mortgages, compared with only 5% reporting weaker demand. The survey sam-ple comprised 71 domestic and 23 branches of for-eign banks operating in the U.S. The increase in mort-gage demand was across the spectrum, including both jumbo and non-jumbo mortgages.

The trend for stronger de-mand for mortgage loans continued in the second quarter, a Federal Reserve senior loan officer survey released on 3 August reve

CFPB charges affiliates of Western Union and Fidelity National Financial $ 38 million

It is alleged that Paymap Inc a payment processor that is part of Western Union and LoanCare, a mortgage servicer affili-ated to ServiceLink ( with majority share of FNF) through their “ Equity

Accelerator Program” promised “tens of thousandsof dollars in interest savings” to consumers if they made more frequent mortgage payments. However along with an automatic mortgage debit , the con-sumers were charged a $295 enrolment fee as well as a $2.50 transaction fee for each debited payment. As a result, about 125,000 consumers paid more than $33 million in fees since July 2011 claims CFPB. Pay-map has agreed to return $33.4 million in fees to af-fected consumers and pay a $5 million civil penalty, while LoanCare has agreed to pay a $100,000 pen-alty.

Jonathan Danek joins Prism Title as Vice President and General CounselJonathan Darek will head the Title Examination team at Prism Title. Darek brings in 25 years of experience in the Title industry. Prior to Danek joining Prism, he acted as a Commercial Underwriter for Chicago Title. He has been General Counsel for Stewart Title Illinois, General Counsel for 12 years at Specialty Title and has as-sisted other independent title. Prism Title is a full-service title, settlement and vendor management services company and operates in 43 states to provide a range of title and closing services both direct and through national title partners.

Tracey Webb will lead the compliance team at Frazier & Deter one of the nation’s largest CPA firms. Webb, a Certified Pub-lic Accountant, was most recently a Senior Vice President with Stewart Title. During her 27 years with Stewart, Webb worked in the audit services department and held numerous sales, man-agement and leadership positions within the company.

North American Title Insurance Co. (NATIC) has hired Mark Hungate as state agency manager for its Southeast region, handling North Carolina, South Carolina and Georgia. He has nearly 25 years of experience. Hungate most recently served as vice president of national sales for an appraisal manage-ment company (AMC) offering title insurance products, settlement services and default management services. He previously worked for another AMC, for a default management services company for one of the “big four” title insurance companies, and for 13 years, for the mortgage insurance subsidi-ary of that same company.

Hungate Joins North American Title Insurance Co.as State Agency Manager for Southeast Region

Manoj Purohit joins North American Title Insurance Co. as State Manager

E xecutive Moves

Tracey Webb Joins Frazier & Deeter as a Principal of the Firm’s ALTA Best Practices Compliance Service

Philip Holtsberg Joins North American Title as Senior Counsel

Manoj Purohit has joined North American Title Insurance Co. (NATIC) as state agency manager for its Great Lakes region, handling Minnesota, Wisconsin and Illinois. He has a 28-year background in the mortgage lending, title and title technology industries and has worked for two of the top national title insur-ance underwriters. Purohit’s career has included sales positions at a number of technology and title technology companies, in addition to working as an agency representative for two major underwriters. He also served as president and chief executive of-ficer of a settlement services company in New Jersey, where he managed all aspects of daily operations.

Philip Holtsberg has joined North American Title as manager and senior counsel for its National Title Solutions (NANTS) department, which handles multistate, multisite transactions for national commercial customers. He also serves as senior underwriting counsel to North American Title Insurance Co. (NATIC), North American Title’s affiliated underwriter, where he will assist with underwriting matters for Florida and other commercial customers, as well as educational initiatives for NATIC agents. Holtsberg most recently was a senior attorney with The Ort Law Firm, an Orlando-area, practicing real property law. He previously worked for seven years with Attorneys’ Title Fund Services LLC, Holtsberg served in several capacities, including education manager, forms counsel and senior underwriting counsel.

O pinionC hanging Gears: Alternate Business Models in the Title Insurance IndustryThese are mixed times for the Title Insurance Industry. The good news is that home sales are on the upswing. For the first half of 2015, home sales posted its best performance since 2007. Real estate industry experts believe this trend to continue through the year. The bad news however is that the storm clouds seem to be gathering on the horizon for the Title Industry. The portends include the CFPB action against Lighthouse Title, Senator Skelos episode of fraud involving title insurance, scathing media reports, regulatorsputting compliance pressures, consumer groups clamouring for cheaper title insurance etc.While the industry grapples to cope, we see innova-tive approaches from within the ranks which have potential for stunting the onslaught. These approach-es cluster around - reaching the customer directly, cutting costs, new business affiliate arrangements and making technology work harder. In this article we discuss some interesting innovations

Underwriters Eliminating the MiddlewareTwo underwriters have stood out in cutting the distri-bution chain short by approaching the customer di-rectly sans the title agent facilitation. They are(i) One Title National Title Insurance Company of New York and (ii) Entitle Direct InsuranceWhile One Title is a private equity based licensed title underwriter start-up in New York, Entitle Direct has been in business for over thirty years. The emer-gent model is to sell title insurance directly to attor-neys, investors, loan officers and home owners. The elimination of the Title Agent tier enables channel savings which are passed on to the customers. As a disruptive move, One Title deviated from the prac-tice of the underwriters in New York to file rates as a cartel. One Title went ahead and filed rates below the cartel threshold by about 10%. In a similar move Entitle Direct has also filed rates with authorities much lower than that of competition. Both Entitle and One Direct claim at least 20% savings for their customers over competition. One Title positions its competitive advantage in leveraging technology for a paper-less closing experience. Entitle prides itself in provid-ing customised service through its personal closing agents.

Title Agencies Shunning Affiliate Business Ar-rangements and ReferralsIn a similar vein of underwriters bypassing the title agencies, Title agencies have also started reaching out to the home buyers directly, independent of af-filiate business arrangements, thereby eliminating the commission on each referral. By reducing the num-ber of hands in the pie, the attendant savings are being passed on to the home buyers. The DC based

Federal Title & Escrow Company has a Real CreditTM

program wherein if an online order is placed through its website for the jurisdictions of District of Columbia, Maryland, Virginia or Florida, a significant discount is passed on to the home buyer. If a lender or an agent orders on behalf of the home owner through the Real CreditTM program, an email is sent to the home own-er on the details of the closing documents and Real CreditTM savings made. The company promises a sav-ings of at least $750 on each title insurance ordered online.

Bringing New Institutional Arrangements in the Title Sales ChannelInvestors Title, a Title insurance underwriter headquar-tered in North Carolina, has pioneered the concept of Multi Bank Title Agency in the industry. In Eastern and Southern states where the entry barriers are low for entry of the banks into the title industry business, Investors Title has partnered with Bankers Associa-tions (mostly community banks) to engage in the dis-tribution of title insurance. The banks can leverage their existing banking relationship with customers to provide referral to Investors Title. Industry insiders claim that bank owned title agencies may gener-ate profit margins over 50%. Unlike non lender owned title agency, a bank owned title agency does not have the expense of hiring title reps, traditional mar-keting, advertising and promotional expenses. Bank customers often ask banks for assistance in choosing title and escrow services. The current bank staff with minimal training can provide the requested advisory to their banking customers and the concomitant re-ferral goes to Investors Title. A Community Bankers of New York State (CBANYS) survey indicates that within a few years of providing title agency services, 60% of the bank owned title agency revenues were be-ing generated by bank relationships other than from-direct bank loans. The business model has five main players (i) Owner Financial Institutions- generally the commu-nity banks who own the Title Agency as a consortium,

O pinion(ii) The Bankers Association- which aggregates the community banks for joint ownership, (iii) Investors Title Management Services (subsidiary of Investors Title)-help setup the bank owned agen-cy, provide managerial support, help recruit exper-tise, provide training, benchmarks and oversight, (iv) Investors Title- provide underwriting, training to bank staff and RESPA advisory , (v) Title Agency Staff- provide core title duties. Some bank owned title agencies affiliated to Inves-tors title include Kentucky Title Center, West Virginia Bankers Title, New York Bankers Title Agency West, Vir-ginia Title Center.

Outsourcing Title Insurance ProcessesOff shoring is not new to the Title industry and some of the first forays go back to early nineties. While ti-tle plants were the first to take the outsourcing route, increasingly the title production is being outsourced by major title underwriters and agencies. Indecomm

Global and HEDP are amongst the leading provid-ers of title out sourcing services from their off shore title production facilities Recently HEDP and The Ti-tle Resource Network have set up On Shore Title at Kansas City, an outsourcing production facility for Title Search and Policy Production. Outsourcing has many reasons to recommend for itself. With industry average employee age increasing the wage bill is rising, turnover in the industry is high which follows the housing market fortunes, with compliance issues be-come more complex high quality trained manpower has become a prerequisite, with stress on eClosing many title companies will have to make big capi-tal investments. Outsourcing can take away these headaches.

In these turbulent times the title industry might well re-member Darwin’s observation, “It Is Not the Strongest of the Species that Survives But the Most Adaptable”.

Texas Guaranty Fund a Way to Distribute LiabilityResulting from DefalcationLenders entrust loan money to a Title Agency when the underwriter backs the Title Agency by agreeing to pay the lender if the money is stolen or the Title Agent fail to follow the closing instruc-tions. This backing is through a Closing Protection Letter (CPL) issued by the Underwriter. Unfortu-nate as it is, owners and employees of title agencies have stolen several hundred million dollars of money entrusted to them, and this trend is on the rise from the 1990’s to the present. New Jersey Title Insurance Company, Guaranty Title and Trust Company, Southern Title Insurance Company in recent years have ceased operations after incurring large losses on CPLs. With a number of states having imposed rules or laws requiring title insurers to issue Closing Protection Letters, more closures are a distinct possibility .

Texas has a model wherein the industry takes collective liability in case of defalcation leading to bankruptcy of an Underwriter or Agency. The Texas Title Insurance Guaranty Association (“TTIGA”) is a non profit, unincorporated association of all Texas-licensed title insurance companies. It exists to protect Texas title insurance policyholders and claimants when a title insurance company or agency fails. Title agents pay fees directly to the TTIGA on all policies. Customer or the title insurer do not pay any fee to the guaranty fund. TTIGA collects the policy guaranty fee from title insur-ance transactions to fund the title insurance agent audit function of the Texas Department of Insurance and to fund the payment of covered escrow account shortages resulting from the insol-vency of a title insurance agent. In 2014, the TTIGA paid back insureds when underwriter Southern Title Insurance Company went bankrupt due to thefts by Texas title agents.

C FPB Study Finds Technology Enabled Closings (eClosing) Consumer FriendlyThe home run of the mortgage process is the closing - the last step before a consumer is contractually obligated to their loan. CFPB released a study in August 2015, titled ‘Leveraging Technology to Empower Mortgage Consumers at Closing’. The report indicates that eClosing has much to recommend for itself in context of enhancing customer experience at closing. The control group for the study were homebuyers who went through the paper closing process and the experimental group proceeded with technology assisted closing process.

eClosing borrowers had higher scores than paper borrowers on measured outcome perceived em-powerment, understanding and efficiency

Most pilot borrowers with access to CFPB educational materials stated that they used these materials and reported that they were useful.

Consumers who received and re-viewed documents before the clos-ing meeting reported feeling more empowered in the closing process. In the pilot, early document review was more prevalent in eClosings relative to paper closings, perhaps due to documents being delivered early more consistently in eClosings than in paper closings.

eClosing transactions in the pilot ex-hibited shorter closing meetings and earlier document delivery, which matched higher scores on consumer perceptions of efficiency

% of closings of purchasesPaper

% of closings of RefinancesPaper

Base/Adv eClosing

Advanced eClosing

%age of respondents who felt empowered during the mortgage process

%age of respondents who found the closing process efficient

%age of respondents who understood the closing pro-cess

33%respondents with no early closing docs to review fell empowered

47%referred to ASK CFPB

71%referred to the closing

checklist

69%referred

to the document

56%respondents who had access to early closing docs felt empowered

74%paper

48%paper

54%paper

55%eClosing

79%eClosing

63%eClosing

<15 min 15-29 min 30-59 min 60-90min >90 min

1%

4%

42%

24%

10%

21%

30%

33%

18%

38%

65%

65%

20%

9%

4%

1%

6%

1%

3%

4%

I nfographic

Title Track is published by Zivanta Analytics, a wholly owned subsidiary of Jivanta Wealth Science Institute LLC based out of Charlotte, North Carolina. Title Track is a fortnightly roundup of the real estate closing industry.

“CFPB manual on eClosing does not talk of how to scan a stone tablet”

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