Tuesday, March 26, 2024

On Sunday, March 17, October Research’s CEO and Publisher Erica Meyer and I presented to the National Association of Insurance Commissioners (NAIC’) Title Insurance Task Force.  In addition to featuring key elements of our State of the Industry special report and our Voice of the Title Agent annual survey results, we presented a segment on a Day in the Life of a Title Agent.  Below is an excerpt from the presentation.

If you ask title agents and underwriters about the days in their lives currently, they would reply that they feel they are especially and uniquely challenging.

Some challenges are brought about by virtue of cyclical market forces that are largely organic and are of the sort the industry is accustomed to and used to dealing with.

Another set of challenges, they view as brought about because of well-intentioned initiatives … that also have unintended consequences.

Still others are threats perpetrated by fraudsters and thieves.

So even for an industry that is accustomed to being poorly understood and subject to market forces beyond their control, many feel it’s a perfect storm of threats they’re navigating daily.

They report that revenues remain down.  And that their responsibilities have broadened with a corollary increase in associated expenses.

The transactional and consumer data they hold is highly coveted and is under prevailing attempts to exfiltrate it –  by both legal and illegal means.

The transaction volumes remain cool due to a combination of low housing inventory levels and high interest rates.

Layoffs throughout the real estate sector remain prevalent.

Unregulated non-insurance products are being simultaneously studied and promoted as an acceptable equivalency to full insurance products that are regulated by states.  Most in the industry were surprised by the President of the United States in his State of the Union address earlier this month.  Our sources report that not only would this take oversight for these unregulated products out of the hands of state insurance commissioners, it would also overly engage the Federal Insurance Office.

I’m sure you’re already concerned about the prospect of certain transactions being … I don’t know (what’s the word for selected based on favorable criteria?) “Greenlined?”   For today I’ll use “cherry picked,” for lack of a better phrase, for selection to opt into non-regulated products based on “participating lenders, operating in select geographies” for refinances that have a loan to value ratio of less than 80%.  Programs like that are billed as lowering the costs of homeownership and refinancing for struggling consumers, but in practice our readers believe they would not actually assist the traditionally underserved in your communities, or those feeling the worst of the economic pinch.

And because you are insurance professionals who understand risk pools, I’m sure you also have concern about the lower risk transactions being removed from your state’s title insurance pool and leaving behind at the state level only the higher risk transactions.  Your markets risk essentially becoming a sub-prime pool. The majority of our readers share that concern regarding keeping state markets healthy, risk balanced and diverse.

In the fourth quarter of last year, two large underwriter ransomware attacks slowed and stalled markets for weeks.  At this time, the industry’s collective breath is held, waiting to see where and when the next attack will happen.

Many small agents who are the providers in secondary and tertiary markets where larger players can’t or don’t provide services report they will have to shut their doors if a normal spring and summer season doesn’t soon appear.

These are a few of the things that make your jobs even more critical, and more difficult, as you protect consumers and ensure fair, competitive, and healthy insurance markets.

So, I’d like to take a few minutes to drill down into some of the specific issues we provide coverage of each week.  Because as you engage with your insurers, having this context will help you know how to best spot potential threats to the company’s health and the health of the marketplace.

We went on to discuss:

  • Daily operational concerns
  • Persistent ransomware threats
  • Data security
  • Data privacy
  • Data ownership
  • Deed fraud
  • Contract for deed fraud
  • PACE loan fraud
  • Vacant land fraud
  • Impersonation fraud
  • Spoofing
  • Wire fraud
  • Check fraud
  • Industry layoffs
  • Market consolidation and M&A activity
  • Unregulated alternative insurance products
  • Risk of defalcations
  • SCOTUS cases of note
  • CFPB’s focus
  • White House fact sheet on lower housing costs
  • RESPA compliance
  • Foreign ownership of land
  • MLS settlements
  • Excess Equity Watch as states harmonize to the Tyler vs. Hennepin County SCOTUS ruling

Obviously, the number of important issues that face the market currently is stunning.  If you’re feeling punch drunk out there, you’re entitled to.  It’s a lot.

We’ll keep reporting the market intelligence everyone needs to do their best.  Because knowledge is a competitive advantage.

Until next time,

Mary Schuster
Chief Knowledge Officer
October Research, LLC