ALTA and the promoters of affiliated business arrangements seem to be a bit confused about the meaning of the word “independent.”
The confusion is really nothing new. In a 1999 article, the Title Report quoted a past chairman of RESPRO who was ahead of his time in creatively redefining the meaning of the word. “We see the independent agency market expanding,” said David Ginger, then president of regional underwriter Title Insurance Co. of America, which at the time derived 60% of its revenue from affiliated business. “It’s just that you have a new definition of the independent agent – and it’s called the affiliated agent.”
According to the Merriam-Webster dictionary, the word “affiliated” means “closely associated with another, typically in a dependent or subordinate position”– nearly the polar opposite of independent. An affiliated title agency is indeed an agency that is closely associated with another business in a dependent, subordinate position.
When RESPRO and the beneficiaries of affiliated business refer to an affiliated title business as independent, they really mean dependent. Let’s call this what it is– a lie.
The lie is perpetuated today. The same folks who have contributed to the erosion of independence in the title business mouth the word independent as if that is what they value. J. H. on the Source of Title Forums recently brought up a letter to the CFPB in which current ALTA President Anne Anastasi– who has made her living off the creation of dependent, subordinate, affiliated title businesses– touted the value of the independent title agent as if all title business was conducted by independent agents. “By acting as independent third parties to the transaction, the title industry ensures that the underlying contractual obligations are executed as they are written,” Anastasi said.
The truth is that the title industry has not ensured that title agents are independent third parties to the transaction. Despite Anastasi’s claim that the independence of the title agent is “important,” affiliated title businesses– dependent and subordinate by definition– are widespread, thanks in part to Anastasi herself.
Inconvenient facts did not stop Anastasi however. “An important aspect of the title insurance industry that should not be overlooked,” she says, “is that, at the settlement or closing, title agents are the independent third party to the transaction whose only interest is to ensure the integrity of the transaction and the protection of the consumer.” It would be nice if this were always true, but thanks to the affiliated business arrangements, which Anastasi has promoted for decades, it is simply not. In a transaction involving an affiliated title agency, the title agent is not an independent third party but rather is dependent and subordinate to another party that has a stake in the transaction, such as the realtor or the mortgage broker.
It’s an outrage that these so-called “leaders” like Anastasi would try to reclaim the label of “independent” for themselves after they sold out their independence. Their attempt to debase the meaning of the word independent should be seen as a direct attack on those who maintained their integrity and really did try to “ensure the integrity of transactions” by remaining a true and independent third party.
It’s really no surprise that someone with so little regard for the true independent title agent is ALTA’s president. ALTA basically threw in the towel on the independence of the whole title industry a couple decades ago. Since then, a once proud and independent organization has more or less become a stooge for the banking industry. If the banks want it, ALTA will play along.
That’s how we got stuck with MERS. What independent title industry association would have laid down for something that was convenient for the banks but so legally questionable and of little benefit to the title industry? It boggles the mind. But no, rather than objecting to MERS, ALTA became complicit in MERS. That disastrous entanglement continues to this day, reaching a new and distressing low earlier this year when the ALTA CEO Kurt Pfotenhauer- took on the role of MERS Chairman and served in both roles for a time– a fact that ALTA’s members had to find out on their own; ALTA was entirely silent. In fact, ALTA really never has much of anything to say about MERS. About the only time ALTA speaks up regarding MERS is when the banks get sued because of another MERS foreclosure gone bad. Then ALTA obediently springs into action.
Independent? Some of the “leaders” of the title industry need to relearn the meaning of the word.