There might be some good news out there for the real-estate market as mortgage rates continue to fall, according to a recent report.
The average 30-year fixed rate now stands at 5.5%, this id down almost 1% from five weeks ago. There are also signs that interest is on the rise as well as in the last week of November, there was a 112% increase in mortgage applications over the past week, said the Mortgage Bankers Association. Refinancing activity rose at an even greater clip.
This trend bodes well for shares of companies that sell the title insurance required with any mortgage.

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The landscape of title insurance firms is changing just as the financial services landscape is. This week Fidelity National Financial has put in a bid to purchase its rival LandAmerica Financial Group, based in Richmond, Va. The deal is reportedly worth about $126 million. If approved the merger would bring together the second- and third-largest U.S. title insurance groups and become a major player in the space.

In 2007, both firms encompassed about 46% of the insurance market and have posted combined revenue of more than $5 billion in the first 9 months of the year. The merged company would have a $5.5 billion investment portfolio and $2.6 billion in reserves, according to published reports.

Under terms of the deal, Fidelity’s title insurance subsidiaries will provide liquidity equal to some of LandAmerica’s subsidiaries. LandAmerica could then use the proceeds to pay down its revolving credit facility and private placement senior notes. The merger could reduce the firm’s combined debt by $250 million.

The main issues is the type of impact this move will have on other firms as they attempt to bring is business in what has been a struggling economy this quarter.

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Recently, an expert on the title insurance market told the audience at the Casualty Loss Reserve Seminar that the economic downturn the markets have seen recently will product a number of new hurdles for the title insurance industry.

Joseph Petrelli, president of Demotech, an actuarial consulting and financial analysis firm, told the audience that the peak year for the title insurance market was 2005, with $16.8 billion in direct written premiums countrywide that year, but through the first and second quarters of 2008 there had been up to a 20% decline in premiums.

Paul Struzzieri, a principal and consulting actuary at Milliman, noted that there are a series of problems exclusive to title insurance that present challenges for both insurers and actuaries.

Unlike property/casualty insurance policies, in title insurance the loss is typically incurred prior to the effective date. This is a problem because it means that there is no stated expiration date to title policies. So it’s possible that someone could get a claim 60 years out as long as it related to a condition that existed prior to the effective date.

One item that actuaries need that makes it difficult for them is the fact that title insurers don’t know if policies are still in force because the owner or the lender is under no obligation to notify the title insurer when they sell the home or the mortgage is refinanced.

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The state is going after almost 40 mortgage loan providers for allegedly taking advantage of several homeowners who were facing foreclosure and desperate.

The scam expanded through 14 different counties in New Jersey and the state is suing 37 mortgage loan providers, employees and lawyers from North Jersey with racketeering and civil fraud. In a statement, the state said the homeowners were victims of “foreclosure rescue” schemes.

The firms presented themselves to the victims as being able to provide some sort of foreclosure rescue. They would convince the homeowner to sell the house to a third party, they would get the equity remaining in the house and be permitted to stay in the house and pay rent while they cleaned up their credit. Then they could buy the house back.

Instead many found that the rent would be at a higher level than what the mortgage payments were, they never received the cash they were promised and some were evicted anyway.

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A new Pennsylvania Continuing Education course for Title Insurance Producers is now available at the Stewart Title Continuing Education website. Click Here to get 3 hours of credit by taking the Decedents, Estates, Fiduciaries, and Family Transactions course authored by Fran Hack, underwriting counsel at Stewart Title of Pensylvania - Wayne Office. Take the course from the convenience of your office or home anytime of the day.

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While there has not been a lot to cheer about in the title insurance game, there is a slight glimmer of hope that should give officials in the space some hope that brighter days are ahead. The first positive sign are some government rescue measures that are on the way. But there are still other small, but positive signs to look to.

For instance, according to a recent published report, a number of title insurance companies also pay steady dividends. Those dividends have seen their yields go up as the share prices have dropped. First American and Fidelity National are two dividend payers who have branched out into other businesses. As a result of that, both firms have seen their first-half earnings rise ahead of their competitions.

First American closed Oct. 10 at $23.90, which is well off its 52-week high of $42; its 88-cent dividend gives it a yield of 3.6%. Fidelity National closed at $10.35, down from its year-high of $20.38; a $1.20 annual dividend makes for a yield of 11.3%. Once again, not the time to make that large purchase, but a sign that there is brighter days ahead.

Stewart Title of New Jersey has started a new blog. It’s located at www.stgnjtalk.com/titletalk

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MyClosingSpace is gone - now we have Entitle Direct Insurance These guys are an underwriter that sells directly to the consumer without going through an agent. How is this gonna work?

I saw this headline on an article from the “Affordable Housing” Website and the first thing I thought was “Yeah of course there is a decline. You gave em all mortgages they couldn’t afford and now we are all paying the price.”