Santa Ana-based First American Corp.’s stock fell 10% in early Friday trading over worries about lower prices and regulatory concerns and what impact they’ll have on profits.
First American said Wednesday it plans to cut the fees it charges by offering one rate for all title and escrow services.
The company said the rate would reduce the cost to borrowers, but did not give a dollar figure.
The worry for Wall Street: Lower fees could result in lower profits.
Investors also could be wondering about a price war among title insurers, as competition heats up amid a slowdown in refinancing and fewer home sales.
Two years ago, First American and its rivals were enjoying fat profits amid the refinancing boom and brisk home sales.
First American counted a market value of about $2.5 billion at midday Friday, down from about $2.8 billion a day or so earlier.
The title company said in a statement it’s responding to California Insurance Commissioner John Garamendi’s charges that fees are inflated. He said he’s investigating the practice by title companies of paying lenders, agents and homebuilders for referrals.
Stock of Jacksonville, Fla.-based Fidelity National Financial Inc., OC’s largest insurer ahead of First American, also took a hit Friday, dropping 6.7%.
