Orange County Business Journal

Title Insurers Ride Refi Wave to 44% Jump in 2012

Local Employment Up 7%; Fidelity Ranks No. 1 Again Mark Mueller Sunday, March 17, 2013

The low-water mark over the past decade was in 2008, as the housing and mortgage downturns took full effect. Only $18.1 billion in work was reported by companies on our list that year.

Companies whose businesses are tied to the strength of the mortgage and housing markets aren’t expecting 2013 volumes to top last year’s levels, but they are hoping for a more profitable mix of business, based on their latest projections.

“Our 2013 guidance reflects a $1.45 trillion to $1.55 trillion originations market,” said Frank Martell, chief financial officer of Irvine-based real estate and mortgage data analytics company CoreLogic Inc., which provided the data used for this year’s list.

The 2013 projections represent a drop of about 20% to 25% from last year’s levels, Martell said last month during the year-end earnings call for CoreLogic.

CoreLogic was spun off in 2010 from Santa Ana-based First American Financial Corp., whose title insurance business retained the No. 2 spot on this week’s list.

“Based on our internal projections and other publicly available forecast, we expect that the level of refinancing activity will trend down progressively over the course of 2013, partially offset by increases in the level of purchase activity,” Martell said.

The Washington, D.C.-based Mortgage Banker Association reported seeing a 5.1% year-over-year increase in refinance applications and a 19.3% increase in purchase applications during January.

The last three months’ pace of purchase applications has been at levels last seen in 2007, and the total number of existing home sales reported for 2012 also was the highest since then, according to the association’s latest monthly economic report.

Any shift in origination volume from refis to sales will have a large bearing on profit levels for title insurers this year, said First American Chief Executive Dennis Gilmore.

It’s “really going to depend on the origination market,” Gilmore told analysts last month.

“If and when we move to a more traditional market, which I am going to define as two-thirds purchase, one-third refinance, we think there is meaningful opportunity for margin expansion in the business,” Gilmore said.

“We are not there yet, but we are encouraged by the trends moving in that direction,” he said.

About 70% or more of last year’s originations nationwide were refinances, according to CoreLogic data.

Seven companies on this week’s list reported that refinance work made up more than 80% of their business last year.

Fourth-quarter results for Fidelity National suggest some movement is already under way on a national basis, with an 11% increase in resale orders over the third quarter.


Download the 2013 OC's LARGEST TITLE INSURERS list (pdf)

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