Metropolitan Title Co. shuttered its Ann Arbor office in late March, evidence that the sluggish housing market is taking its toll on title insurance underwriters.
Metropolitan Title, which maintains offices in Howell, Brighton and many other Michigan communities, isn't the only title insurance office that's hurting. Others report budget cuts, including staff reductions, but say they plan to weather the downturn.Officials from Metropolitan Title did not return repeats requests for information about their office, formerly on Research Park Drive.
But industry sources said the already-competitive market for the title insurance dollar has been hammered by the weakening housing market.
Large national title underwriters with direct operations such as Metropolitan Title are looking to cut corporate costs pronto, said Tom Richardson, co-president of Liberty Title. "The direct operations have to report their quarterly numbers to Wall Street and the fastest way to match revenues to expenses in a downturn is to cut expenses. That means layoffs," he said. "We're privately held. We're not responsible to Wall Street every quarter."
Instead, he said, he can look at the long term. "We'll be here when times turn around," Richardson said. Liberty Title was founded in 1974 by Richardson's farther. It's easier for independent agencies to wait out the bad times out, Richardson said.
Still, times are lean, Richardson said. "This is the first bad time in title insurance since the 1990s."
There are 11 title companies operating in Washtenaw County, with all but two of them operating as agencies, he said.
It's tough for almost all title companies, Richardson said. "The quarterly financial results for all title companies (nationwide) just came out. Only Fidelity made money in 2007. We're being murdered by the mortgage fraud thing and the huge down turn. At least we're not Florida, Arizona or California. They're even worse."
Locally, title insurance revenue is off nearly 35 percent from 2005, which was a solid year, Richardson said. Title insurance revenues hit their peak in 2003 during the re-financing frenzy, he said. "There's no builder business at all and the Board of Realtors said dollar volume is down 15 percent from a year ago," he said. "And there hasn't been any re-finance activity. People can't get their houses to appraise."
Year-to-date residential real estate sales volume is about $81 million compared to about $96 million a year ago, according to the Ann Arbor Area Board of Realtors.
Absolute Title Inc., in Ann Arbor for 14 years, has reduced its staff from 29 five years ago to 11, said co-owner Christy Perros.
Perros and partner Scott Broshar have resisted aligning themselves with a real estate broker or lender. "That's the trend now, but we're trying to survive on our own by offering good service," Perros said.
Title insurance companies are waiting, Perros said. "The nature of the business is cyclical. It's seasonal and it follows the national economy. But I've never seen it drag out this long, with no end in sight."