Fidelity Posts a 4th Quarter Loss of $44.9 Million

Press release here.  The reserves for claims is the most interesting:

These reported results include the impact of a $135.7 million charge to strengthen the reserve for claim losses.

That’s putting away a lot of “acorns” for the coming winter, considering that’s double the reserve taken in the prior two quarters.   It looks like the tide is still rising:

On the Internet, nobody knows you’re a dog

I started poking around the Internet in the early 1990’s. And one of my favorite cartoons from that time was from the New Yorker. It satirized the fundamental anonymity of the internet, but it raised a serious question: Who are you dealing with?

The other day I was surfing title insurance web sites, when I happened on a consumer-focused site. Sophisticated web design, great copy writing, nice logo, a BBB logo, and even a chat widget. Now, I believe that this particular site is legitimate, but when you spend some time on the site, you begin to wonder.  Here’s what I noticed:

Old Republic Reports a 41% Decline in Net Income from 2006

Full release here.

The forth quarter was predictably worse than the previous three, and performance in the title business was problematic:

Near break even title results for the first nine months of 2007 turned into a loss for the fourth quarter and full year. Premium and fee revenues trended down throughout the year amid an intractable downturn in the housing and related mortgage lending industries. Direct title production facilities in the Western United States sustained the greatest adverse effects of this downturn. In the year’s final quarter more aggressive steps were taken to redress further the imbalance between revenues and operating costs in that region. Severance, lease termination, and other expenses incurred in these regards penalized fourth quarter 2007 pretax operating results by $6.2 million. Together, these factors led to the highest annual title expense ratio sustained in the past 25 years, and though still reasonably contained, to higher claim costs as these tend to increase during periods of serious economic dislocations. (emphasis added)

Suit alleges Fidelity Information Systems Charged Improper Fees

Full article here.  Expect more like this as the tangled web that is our real estate system is picked apart by the legal system.

The lawsuit, filed Jan. 16 in the U.S. Bankruptcy Court in Houston, contends that Fidelity has conspired with mortgage-servicing companies and law firms to “add to the indebtedness” of homeowners by tacking on secret fees that remain undisclosed for years.

Update to my Blogroll

A recent addtion to my Blogs of Note

I’ve added TitleSuccess, which is an excellent resource for Title Agency Marketing ideas and information.  Keep up the great work Shane.

Former Florida Title Agent Arrested charged with $7.7M Fraud

The St. Petersburg Times has an outstanding article on the arrest of the former owner of Eagle Title and Abstract in Clearwater, FL. 

This case shows exactly how asleep at the wheel the Title Insurance Industry was during the boom. 

First, the company was showing red flags:

 With so much money passing through the company, it was easy for a little of it to get diverted, authorities said. Funds that title companies typically hold inviolate in escrow accounts were shuffled around in a bewildering web of transactions. Britts’ own bookkeepers testified in a civil deposition that they didn’t understand what was going on until the whole scheme was exposed.

Anyone in the Title Insurance business knows that escrow accounting is a very straightforward process.  Money comes in, checks and wires go out to payees on the settlement sheet.  “Bewildering” should never, ever appear in a description of Title Agency transactions, ever.  

Guilty Plea in Twin Cities Fraud Case

From the Minneapolis Star-Tribune (full article here):

The government says they defrauded Chicago Title, and possibly some lenders, by depositing more than $370 million in loan proceeds in a secret bank account from June 2002 through December 2003. 

My favorite part:

Hein told U.S. District Judge John Tunheim that the company had accounting problems in 2002. Chicago Title audited the books and required Profile to use an escrow account at Eagle Valley Bank, which could be monitored. She said Profile Title secretly opened an account at Eastbank, through which it routed millions of dollars.

It blows my mind that Chicago Title could miss the first transaction into a secret account, let alone $370 Million.   Title Agent transactions are just too easy to trace and verify. 

Fitch Places First American’s Title Business on Ratings Watch Negative

From Business Wire Press Release:

“Fitch believes the spin-off transaction represents management’s attempts to improve stock valuation and provide a vehicle for acquisitions in the information services’ space. By segregating the companies, the title business would not be negatively affected by higher leverage from future information services acquisitions. While this represents a significant transaction and strategic shift for First American, Fitch’s rating action is largely focused on performance below expectations at the title operations.

Aurora Loan Services Closing Wholesale and Correspondent Lending

From their web site:

Valued clients:

Aurora Loan Services’ parent company, Lehman Brothers, announced today that it will substantially reduce its resources and capacity in the U.S. residential mortgage origination space in light of the dislocation in the mortgage markets. As a result, Lehman Brothers is suspending all Wholesale and Correspondent mortgage originations at Aurora.

Aurora will continue to originate loans through its direct lending channel, and will maintain its servicing business.

We truly appreciate your business and support over the years. We hope you will consider how Aurora may be able to help you meet your needs in the future.

With sincerest thanks.

LandAmerica Settles with California for $3.5M

California Department of Insurance Press Release.  Of note:

“Insurance companies that overcharge consumers will not get away with it under my watch,” said Commissioner Poizner.  “My department aggressively investigates companies that practice business unfairly, and we will not stop until consumers are receiving the best service possible — including rates and discounts that they are entitled to.  This settlement is a $2 million victory for consumers, and a warning to insurers who refuse to play by the rules.”