Deals Down Through March, Busy Since
Getting ready for this: Even with Federal Reserve Bank interest rate cuts in the past 12 months, the dollar value of Orange County transactions insured by title companies fell through March because of lower refinancing activity.
That’s according to this week’s Business Journal list, which ranks the 20 largest title insurers based on data from Anaheim-based First American Real Estate Solutions, a unit of Santa Ana-based First American Corp.
For the 12 months ended March 31, total OC title insurance for mortgages, refinancings and construction activity fell 6% to $26.12 billion. In the year-ago period, total value of mortgages insured touched $27.81 billion.
And while title companies say they had a gangbuster first quarter with refinancing activity, the 12-month period ended March saw a drop of almost 20% in refinancing. Total refinancing fell to $11.95 billion from $15.52 billion last year and accounted for the overall decline reflected on the list.
Fourteen of the 20 companies had negative or zero growth in their OC transaction value.
But industry officials said not to make too much from the negative trend in the numbers. The first quarter was particularly strong, they said, as was the just-concluded second, which isn’t reflected in the figures.
“While the data is indicating a downward trend, our business is actually up,” said Larry Buster, vice president and county manager at No. 2 First American Title, the title insurance arm of First American. “We certainly are making more money than we did in 1999.”
Through March, the company had a 12% drop to $5.9 billion in its OC title insurance operations, according to First American Real Estate Solutions.
Buster said the trend in the First American Real Estate Solutions numbers matches those from San Diego-based DataQuick Information Systems, another tracker of title companies. But both sets of numbers could have missed some transactions, he said.
“I don’t think this is a reflection of what is happening with title companies,” Buster said.
Other title insurers also say they are seeing brisk refinancing business.
“It has been a very good year for us,” said Jeff Fox, county manager at No. 10 Southland Title Co.
While Southland was flat at $924 million in title insurance transactions for the 12 months ended March, Fox said his company is up 170% year-to-date.
While the data may not reflect some title insurance activity, the numbers do point to the fact that refinancing activity did not take off until early this year, according to Fox.
“Most of our growth took place in the first two quarters of this year,” he said.
Still, at least one title insurer said he sees a slowdown coming.
“Long-term interest rates seem to have reached a plateau,” said Michael Lowther, chief executive of No. 5 American Title Co. “We are also seeing a slowing in activity in California.”
But, for now, Lowther said American Title is busy.
“Overall, in Orange County and in the U.S., title companies are having a much better year,” he said. “We are expanding and increasing our market share in California and Arizona.”
No. 1 Fidelity National Title, a unit of Irvine-based Fidelity National Financial Inc., had a 6% fall in the value of OC transactions insured. The firm had $6.63 billion in total mortgages insured, down from $7.08 billion in the year-ago period. After acquiring Chicago Title Co. last year, Fidelity counted a 25.8% market share in OC.
In terms of market share, First American Title wasn’t far behind cross-county rival Fidelity at 23.1%.
Santa Ana-based Orange Coast Title Co. came in at No. 3 with a 6.3% market share and $1.6 billion in transactions, which was down 9% from the year-ago period.
Interestingly, the top three title insurance companies are headquartered in OC and count a combined market share of 55%. Out of the top 20 title companies ranked by the Business Journal, six companies were based in OC and had a market share of 64%.
Even with an overall decline posted by the title insurers, at least two companies managed to post big percentage growth. The OC operation of No. 6 Parsippany, N.J.-based Equity Title Inc. increased 49% to $1.25 billion. Its market share for the period was 4.79%, up from 3% last year.
Equity Title is owned by Cendant Inc. and is a part of real estate franchise company NRT Inc.
“As NRT grows, our business grows,” said Rick Van Stralen, executive vice president of Equity Title.
Equity did a better job of penetrating its sister companies in the past year, according to Van Stralen.
Phoenix-based New Century Title Co. is a smaller player that saw big gains. The company’s transactions grew 1,192% to $148.3 million from $1.31 million in the year-ago period. n
