02.29.08
Title Insurance Abstractors and Examiners - Who is in the Drivers seat?
I struggle, I believe the world is flat. With computerization, the world has become one. I know that we can and are significantly cutting the cost of posting title plants outside of the US. I know that with a solid education system for title plant personnel, outsourcing of title plants to other countries can produce an excellent product at an excellent value.
I also know that with 50 states, 3143 Counties, Parishes or Independent Cities and tens of thousands of taxing authorities in the USA, a “thorough” title search can only be compiled at the local level. There are just too many nuances. Did you know that a parking ticket is a lien on the land in some jurisdictions? Ever heard of an airport lien? How about sidewalk liens, ditch liens, impact fees? Every jurisdiction – federal, state, county, township, city, village jurisdiction has its own rules and regulations. Every jurisdiction – federal, state, county, township, city, village has its own politics that will not allow complete sharing of information. The shear quantity of information (at this point in time) together with local politics (possibly forever) does not allow the possibility of a complete, thorough and accurate title search without local intervention.
We still need a competent local title abstractor and a competent local title examiner to do the traditional solid title work that used to be the norm. The key here is used to be. What I think does not matter. Abstractors and title examiners are just passengers in the car. The title insurance underwriters are driving. We are just going along for the ride.
The title insurance underwriters decide HOW they want to insure real estate. The title insurance underwriters decide if they can best make a profit by becoming risk underwriters. The underwriters decide if outsourcing of title plants will occur because it is cheaper and their duty is ultimately to their shareholders. The underwriters decide if outsourcing of title examinations, commitments and title policies will occur because it is cheaper and their duty is ultimately to their shareholders.
A serious discussion needs to take place as to the future of the industry. But what about today? What do we do?
Robert Franco said,
February 21, 2008 at 2:55 pm
Excellent post…. I do feel like I have been taken for a ride!
Pat Scott said,
February 28, 2008 at 12:41 am
I don’t think an excellent title product will emerge from any foreign country any time soon. I could arrive at that conclusion just based upon your observations in your post, Jeanne. You know, the nuance thing.
Even if those nuances can be learned from abroad, which would be an admirable accomplishment, the complete information will not be readily available to them - the political aspect. As they build, their ability to build further will diminish. The local people who supply them with the information needed to fill in the blanks will leave the field for greener pastures.
It is already difficult to find an abstractor able to complete commercial searches in many areas. The foreign abstractor with 40 hours of training, try as he may, will have a difficult time accommodating. I hope the underwriters’ CEOs are thinking that far ahead, but I doubt it.
Duty to shareholders above the longevity of the industry is contemporary business sense. I am not so sure it will work in the title industry. In fact, it has proven to be short-sighted policy in other industries. Maybe one size does not fit all in the business world. Businesses have a duty to serve the public in exchange for profit. When the value of that service disappears, so too will the profit.
Jeanne said,
February 28, 2008 at 12:03 pm
Pat - I appreciate your comments. I must clarify - the quality I have seen of some title indices posted overseas has been excellent, that is, when the outsourcing posts verbatim document information - Grantor/ Grantee names, document type, dated and recorded dates, document number, etc. When available with an imaged copy of the document, the results are virtually the same as an index posted within the U.S. in the county or in a private title plant.
I do agree with you that a thorough title commitment cannot be done outside the U.S. with the same quality that the title industry historically has had for the past many years for 2 reasons: 1) because of the “political aspect” of not allowing local jobs and privacy of data to go overseas and 2) because at this time, the task of obtaining liens from the thousands of entities that have the right to create liens on the land is not available (or even known to others), except at the local level.
But the unfortunate point is that the Title Underwriters do not seem to care. They are clearly on a path of exchanging cheaper labor for higher claims. They are becoming risk underwriters. They do not seem to care that they no longer identify all potential liens. If you do not find the liens, you do not have to take time to clear the liens. And, if they miss a child support lien, tax lien, a judgment, etc. what are the chances that the creditors will find out and a claim will be filed against the title company? The IRS has clearly stated that they receive virtually all of the IRS tax lien payments from title closings, because they have no enforcement entity.
It’s sad, and it has so far proven to be short sighted, with so many claims. Will the underwriters make the tough decisions to go back to the old way of doing things? I think not. But there has to be some middle ground for the title agents and the good of the public.