The title insurance industry has been ripe for mergers and acquisitions since the national underwriters began gobbling up smaller underwriters and agents across the country decades ago.
After the Great Recession decimated the real estate industry, picking up the pieces in the title insurance industry led to a lot of shifting of assets and territories through many mergers and acquisitions.
It also led to a lot of displaced title professionals banding together to form new title agencies out of the ashes, sometimes led by young, tech-oriented agents wanting to rethink how a small or regional agency could improve process and service by tapping into the burgeoning landscape of title technology.
All of these factors led to brisk M&A activity in the title industry over the past decade, but will that pace continue in light of an anticipated softening in the real estate industry?
What happens to M&A activity in a downturn?
Traditional wisdom would say that M&A activity tanks in a recession, but if we’ve learned anything the past few years, we’ve learned how often traditional economic wisdom simply unravels in this day and age.
According to PricewaterhouseCoopers Company research, companies that continued to make deals during a downturn actually outperformed their peers.
While PwC acknowledged that deal volume is likely to decline in a downturn, they also noted that there could be extraneous factors “driving a decoupling of deals from the broader economy;” meaning, a softening economy could actually include elements that enhance the prospect for M&A activity.
This could be especially true in the title insurance industry.
For instance, title agencies that sprang up in response to the high volume of refinances could now be ripe for acquisition, especially if the agency offers an array of technology that an under-teched company could view as a value add.
The PwC report also offered three major elements that could contribute to a continued healthy activity, all of which could readily apply to the title industry:
This third point is most applicable to the title insurance industry.
Marginal players always enter a hot real estate market and experience short term success due to the sheer glut of available business. But if they are not properly capitalized for the long haul, they will be the first to exit by seeking a quick sale to a more established company.
In addition, with the graying of the title insurance profession, long-term owners who are contemplating retirement could make the leap a little earlier than planned, rather than to try to ride out yet another real estate cycle.
The bottom line is M&A activity is likely to continue in the title insurance industry. But anyone contemplating jumping in should not try to do it without the help of professionals qualified and experienced in M&A. Our experienced team at AMD Enterprises can help with planning, evaluation and due diligence. Contact us the next time you have a potential merger or acquisition in your sites.
At this year's ALTA ONE conference, Amy Gregory, Chief Administrative Officer/President of Florida Agency Network, was awarded the Our Values We Protect Award.
The award was given during ALTA ONE, the largest annual event for the land title insurance industry, held on Oct. 22-25 in Austin. The award is one of three awards given to industry members who exemplify core ideals adopted within the association:
Amy is always trying to look for ways to help protect our clients from cyber fraud. She has direct contacts at the U.S. Secret Service to help lend a hand when a case arises and has hosted events where a U.S. Secret Service Agent came in to discuss ways to prevent fraud. Going one step further, Gregory earned her Certified AntiMoney Laundering Specialist (CAMS) designation to help become a strong resource for other customers, and she is one of the few that have this designation in the nation.
“With decades of experience, I have seen a vast amount of change and new threats that did not exist years ago,” Amy Gregory said. “We have made it our mission to protect our clients and company, and to create an environment of continuous improvement and awareness. I am truly honored to receive this award.”
“The ‘We Protect Award’ is a significant award, given the current landscape of threats in our industry,” said Andrea Somers, Compliance Officer for the Florida Agency Network. "Amy is committed to providing a safe environment for customers by constantly challenging our teams to be vigilant and search for ways to improve our processes. She truly goes above and beyond in everything that she does."
“We Lead, We Deliver and We Protect reflect the universal values of ALTA members,” said Robert J. Grubb, Cofounder of Alliant National Title Insurance Co. and Vice Chairman of Presidio ATC Holdco LLC. “These values are at the core of who we are and how we operate every day. The Our Values Awards recognize the most extraordinary efforts in a profession full of extraordinary professionals who work hard to protect the long-term interests of their customers. The awards allow us to recognize those in our industry who raise the bar, inspiring the rest of us to do the same.”
While iBuyer programs may offer convenience, it doesn’t equate to more money in your pocket. Consumers must be AWARE.
On Monday, October 21, Zillow launched "Zillow Offers" as a new way for consumers to sell their homes. The technology allows a consumer to go onto the APP, answer some questions about their home, and receive an instant cash offer.
But is it really the best way to sell a house?
10Investigates' Courtney Robinson spoke to Joe Locicero, owner of 54 Realty and the Zillow agent for the Tampa Bay area. Robinson also had our very own Aaron Davis weigh in on what's to come of future iBuyer technology.
"While it takes away stress and offers sellers convenience, there is a cost. On average, sellers pay a 7 percent fee. Traditional real estate agents charge between 5-6 percent," Robinson advises.
To read the full story and learn the pros and cons, click HERE.
We hear about it all the time, wire fraud, cyber security, secure networks and portals. We don’t think it can happen to us, until it does.
The way wire fraud cases are handled is changing. No one is exempt from wire fraud, and going forward, everyone in a transaction could be held responsible for the wire fraud.
As Thomas W. Cronkright II, Esq. and Lawrence Duthler, Esq. of CertifID LLC show in their recent report, all participants in a transaction are responsible for wire fraud loss. A recent Kansas Federal District Court decision ruling found a bank, title company, real estate agent, and real estate broker liable in a transaction hit with wire fraud. The cybercriminal hacked into the seller’s agent’s email and was able to reroute the buyer’s wire to a fraudulent bank account. The buyer lost $196,622.76 that day, none of which was recovered.
“The buyer argued that all defendants had a duty to protect them from the losses they incurred and that the failure of these defendants to live up to that duty led to the fraudulent loss of their funds. In response, the defendants responded by arguing that they owed no duty to the buyer because they did not serve in a formal representative or fiduciary capacity.”
While the bank and title company settled in mediation, it was the seller’s real estate agent and broker who were found liable for 85% of the losses during the transaction, since the fraudulent email came from the seller’s agent.
We don’t think it can happen to us, until it does. And if it does, all parties in the transaction may be held liable. Are you ready for it?
“All defendants had a duty to protect them from the losses.” We all have the duty to protect our clients. That’s why it’s so important to do business with a title company who can secure you and your clients. Agencies in the Florida Agency Network are among the Nation’s top 1% in security, compliance and innovative technology. We work hard behind the scenes to make sure everything runs smoothly, and your clients are protected.
For more information on how we can secure your closing, contact us at info@flagency.net or visit any of our offices.
In case you’ve been living under a rock somewhere, in a cave, underneath the ocean, or Mars, there has been this hysteria around Cryptocurrency. Cryptocurrency comes in several forms, or several coins, we should say, the most popular being Bitcoin. Several others dominating the landscape include Ethereum, Litecoin, Ripple, and approximately 1,600 others at the time of writing this post.
The history of Bitcoin is an intriguing story itself, created by Satoshi Nakamoto in 2008 and released weeks following the global market crash leading to the Great Recession. Perhaps more interesting is that Satoshi Nakamoto is still unknown to this day. He wrote the first white paper on Bitcoin, and created the Blockchain database on which Bitcoin resides. However, no one really knows who this person is. Although mysterious and interesting enough, this doesn’t pertain for our purposes here. What DOES pertain is the technology behind Bitcoin, which is the blockchain.
Blockchain is being built up to be the next version of the internet; Immutable ledger system, unhackable, transparent, and definitely disruptive. However, in a good way. There are several industries that will no doubt be affected by blockchain once it gains acceptance and popularity. You can google hundreds if not thousands of companies who already work on adding blockchain to their existing technology and infrastructure. For example, IBM, Chase, Walmart, FedEx, British Airways are just a few. The brilliance of blockchain is its open ledger format. Once a transaction, whether financial or informational, is executed, the nodes on the network all confirm the data and update the ledger, which allows the latest “block” on the “chain” to be added and confirmed.
Industries in third-party payment processing (banks, money transfer companies, credit card companies, payment processors, payroll companies) will all be affected. Medical Industry with the significant amount data and payments will be affected. Even Crowdfunding platforms and gambling sites will be impacted.
But perhaps none more than Real Estate, title insurance, closing and settlement service providers. As blockchain is adopted into these industries, and paper records and PDFs are replaced by blockchain, we can soon envision a day where “click button, buy house” becomes more of a reality.
One company who is certainly progressive in its technology and use of Blockchain is Propy. Propy is a global real estate marketplace with a decentralized title registry. Propy aims to solve the problems facing international real estate transactions by creating a novel, unified property store and asset transfer platform for the global real estate industry. It allows buyers, sellers, brokers, and escrow/title agents/notaries to come together through the utilization of a suite of smart contracts on blockchain to facilitate transactions.
Propy completed the first Blockchain transaction late last year in the Ukraine. Then, in March 2018, they completed the first US transaction in Vermont.
The key to making these transactions happen is to first understand the technology, and second, understand how the flow of currency, whether US Dollars (also known as fiat, or paper money, in the crypto world) or cryptocurrency, work in these transactions. Currently, title agencies and law firms in the US are bound by several laws, regulations and underwriting restrictions which only allow them to accept “good funds” as payment. Right now, good funds are defined as cashier's check or wire transfers cleared via the Federal Reserve banking platform. One reason for this is for tax reporting purposes. Other reasons are for Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.
There are several companies now working on the exchange integration to convert fiat currency to cryptocurrency, which then would allow for the acceptance of cryptocurrency for closing.
There have been a number of reported transactions who have in fact utilized cryptocurrency to buy a home. However, what likely occurred is the crypto was sold via an exchange, transferred to a traditional banking platform in order to wire US dollars to a title company or law firm's escrow account. One of the issues still unresolved is the 1099 form and taxation of capital gains related to cryptocurrency. The IRS is quickly adapting to the virtual currency world as seen here.
Although there is still much ground to cover, it is truly exciting to see the technological advancements taking place in the real estate and settlement arena.
Recently, we made an announcement about partnering with Cottrell Title & Escrow. This news is starting to trickle out to the masses, and we're excited about it! Our official announcement was featured in a recent The Title Report.
We are thrilled to see others taking interest in what we feel is a great move for the State of Florida.
To read the official announcement, click HERE.
Global real estate company, Propy, completed the United States first recorded blockchain real estate deal in Vermont.
While Propy's first transaction, in the Ukraine, utilized the Transaction Platform and the Propy Blockchain Registry, the Vermont pilot program utilized the Propy Blockchain Registry. The registry is "a set of smart contracts designed to store land records on the blockchain (blockchain LRMS — Land Records Management System)."
To read more on Propy's Transaction Platform, Propy Blockchain Registry and the Vermont pilot program, click HERE.
The Florida Department of Financial Services has adopted a new rule (Rule: 69B-186.010) regarding “unfair methods of competition and unfair or deceptive acts or practices in the transaction of title insurance.” The rule goes into effect on February 9, 2016 and will ensure the playing field within the title industry continues to have balance.
The ruling details practices and activities that are deemed unfair and unlawful. Some of the activities listed include:
While some of the mentioned activities are vague, the FDFS makes the seriousness of each offense known.
To read the full list of illegal activities and the ruling, click HERE.
Source: Timeline > Consumer Financial Protection Bureau
Here’s a full timeline of how we created the Loan Estimate and Closing Disclosure forms, part of our Know Before You Owe: Mortgages project. It’s a look back at our effort to make mortgage disclosures simpler and more effective, with the input of the people who will actually use them.
You can also return to the main page to view an interactive timeline.
The new law required the CFPB to combine the Truth in Lending and Real Estate Settlement Procedures Act disclosures.
The event brought together consumer advocates, industry, marketers, and more to discuss CFPB implementation of the combined disclosures.
Starting with the legal requirements and the consumer in mind, we began sketching prototype forms for testing.
During this process, the team discussed preliminary issues and ideas about mortgage disclosures. This session set the context for the disclosures and was a starting point for their development. The team continued to develop these issues and ideas over more than a year during the development process.
We posted the first two prototype loan estimates. We asked consumers and industry to examine them and tell us what worked and what didn’t. We repeated this process for several future rounds. Over the course of the next ten months, people submitted more than 27,000 comments.
We sat down with consumers, lenders, and brokers to examine the first set of loan estimate prototypes to test two different graphic design approaches.
Consumers and industry participants worked with prototypes with lump sum closing costs and prototypes with itemized closing costs.
Again, we asked testing participants to work with prototypes with lump sum closing costs and itemized closing costs.
Another round of closing cost tests, as we presented participants with one disclosure that had the two-column design from previous rounds and another that used new graphic presentations of the costs.
In this round, we presented closing costs in the itemized format and worked on a table that shows how payments change over time.
We began testing closing disclosures. Both designs included HUD-1-style numbering for closing details, but two different ways of presenting other costs and Truth in Lending information.
One form continued to use the HUD-1 style numbered closing cost details; the other was formatted more like the Loan Estimate, carrying over the Cash to Close table and no line numbers.
In this round, we settled on prototypes formatted like the Loan Estimate, but one included line numbers and the other didn’t. We also began testing the Loan Estimate with the Closing Disclosure.
Prototype A
Prototype B
Prototype C
Participants reviewed one Loan Estimate and one Closing Disclosure (with line numbers) to see how well they worked together.
A panel of representatives from the CFPB, the Small Business Administration (SBA), and the Office of Management and Budget (OMB) considered the potential impact of the proposals under consideration on small businesses that will provide the mortgage disclosures.
The panel met with small businesses and asked for their feedback on the impacts of various proposals the CFPB is considering. This feedback is summarized in the panel’s report.
(Note: Link to large PDF file.)
We conducted one final round of testing to confirm that some modifications from the last round work for consumers.
Prototype A
Prototype B
Prototype C
The CFPB released a Notice of Proposed Rulemaking. The notice proposed a new rule to implement the combined mortgage disclosures and requested your comments on the proposal.
Between the public comment period and other information for the record, the CFPB reviewed nearly 3,000 comments. These comments helped us improve the disclosures and the final rule.
We conducted qualitative consumer testing on Spanish language versions of the proposed disclosures. We tested in three cities: Arlington, Va. (October 11-12); Phoenix, Az. (November 14-15); and Miami, Fla. (December 12-13).
With the help of Kleimann Communication Group, the contractor who helped us throughout the testing process, we conducted a quantitative study of the new forms with 858 consumers in 20 locations across the country. By nearly every measure, the study showed that the new forms offer a statistically significant improvement over the existing forms.
In response to comments, we developed and tested different versions of the disclosures for refinance loans, which we tested for three rounds. (In our last round, we tested a modification for both purchases and refinances.) We also did one more round of Spanish language testing for the refinance versions. The modified disclosures tested well and are the ones included in the final rule.
The CFPB issues a Final Rule. The final rule creates new integrated mortgage disclosures and details the requirements for using them. The rule is effective for mortgage applications received starting August 1, 2015.
The CFPB issues a final rule moving the effective date to October 3, 2015.
Please fill out form below