The title insurance industry posted a cumulative $710 million operating loss in 2008 — about eight times bigger than 2007 — but this year’s refinancing boom is expected to provide some welcome relief, an industry association reports.
Because title insurers are also paying significantly less in taxes, net losses for 2008 are expected to be a less severe $434.2 million, the American Land Title Association (ALTA) said. But that’s still a big turnaround from the $315.1 million in profits the industry registered in 2007, in spite of a cumulative $87.8 million operating loss.
In releasing its statistical analysis of the title industry’s 2008 results, ALTA said the last three months of the year marked the 11th quarter in a row with declines in title insurance premiums. Not only that, but each quarter’s year-over-year decline was greater than the last.
In the third quarter of 2007, title revenue was down 15 percent from a year ago. By the fourth quarter of 2008, the year-over-year decline was more than 34 percent, indicating that poor markets not only continued through 2008, but were still worsening by year end, ALTA said.
The four largest states in terms of written premiums — California, Texas, Florida and New York — were down 23 percent, 34 percent, 46 percent and 47 percent, respectively, during the final quarter of the year, ALTA said.
The title insurance business is expected to bounce back this year, with the Mortgage Bankers Association forecasting that mortgage originations will hit $2.78 trillion, which would be a 39 percent increase from last year and the fourth-highest year on record.
The MBA expects that refinancings will account for 69 percent of mortgage originations, compared with about 50 percent in recent years, as borrowers rush to take advantage of lower interest rates (see story).
That’s good news for title insurers, because mortgage lenders require new title insurance policies regardless of whether borrowers are purchasing a new home or simply refinancing their existing one. …CONTINUED