The Bubble Hits the Title Companies – Stewart Reports a loss

Stewart Title reported their third quarter results today, and posted a loss.  Here’s a footnote to the results:

    (a) The third quarter of 2007 includes pretax charges of $17.1 million ($11.1 million after taxes, or $0.61 per share) related to two large title claims totaling $6.0 million, a reserve adjustment of $7.5 million related to prior policy years and a $3.6 million reserve adjustment for the current policy year.  This quarter also includes a pretax gain on the sale of property of $5.6 million ($2.0 million after minority interests and taxes, or $0.11 per share).

Would have been really ugly without the gain…..

A Deafening Silence

Doug Miller has a great series about Controlled Business Arrangements (let’s all start calling them what they are). As Doug points out the sole defense of the arrangement is the consumer’s need for “one stop shopping.” I have yet to hear another rational explaination for their existence. And while rational, the one stop shopping argument isn’t very persuasive. We need to look no further than the actions of the supposed beneficiaries.

Blogs of Note

Though some readers have found it on their own, I just wanted to point out that I’ve moved our Blogroll to its own page, Blogs of Note.   They are blogs that I read regularly and think that others would appreciate.   I’ll post whenever I make a change.

INCOME IS NOT PROFIT!!!!

I’ve seen it again, and I can’t stand it anymore. The fourth estate has again declared that normal accounting rules don’t apply to title insurance agents. At least once a month I’ll see something similar to this in the press:

“Resnick also charges that, unlike property and casualty insurance companies that pay out an average of 70 percent of what they collect in claims, title insurance companies pay only a maximum of $125 for the title check and an average of $74 in claims, leaving them a profit of more than 90 percent, the lawsuit says.” (emphasis added)

Did I Just See a RESPA Violation?

Recently, while photo copying HUD1 Settlement Statements at a real estate office, and for all eyes to see (my eyes were not wandering!), there on the wall was taped an advertisement, a glossy pitch from a mortgage lender soliciting the real estate agents. I have summarized below:

Individual Goal

Refer 4 loan applicants from August 1 through November 1 and get a $200 gift certificate for personal marketing

Office Goal

Just one referral gets you invited to a group dinner:

Refer 9 loan applicants – dinner at the “not so exciting” restaurant

Refer 18 loan applicants – dinner at the “okay this is getting better” restaurant

Refer 27 applicants – dinner at the “yes, I have arrived, fancy “schmancy” steak house

Does this advertisement violate Section 8 or any other section of RESPA? I would appreciate your opinion, maybe I am missing something.

Every day the independent title insurance agent struggles to compete with others who are not playing fairly and with the controlled businesses.

At this time, I have to direct you to Ethical Practices in Real Estate. Douglas R. Miller’s superb writing and on-the-mark insight into CBA’s, kickbacks, and ethics in the real estate industry is phenomenal. An absolute must read!

Looking the other way

The real estate transaction is made up a conglomeration of professionals, each one with a real or a preceived duty to the parties at the settlement table.

Through our inattention to ethics and principle, we, the real estate industry, find ourselves surrounded by a vast quagmire of self-dealing, failed duty, and ethical breaches.