Mortgage

Title premium volumes fell by over 13% from Q2 to Q3

Title insurance companies saw third-quarter volumes and profits drop by 13% from the $6.21 billion of volume reported during the prior three months, the American Land Title Association reported. 

Insurers wrote $5.4 billion worth of premiums between July and September, which was a decline of 20.6% from $6.8 billion over the same quarter last year — a record at the time.

“Results of the latest quarter reflect headwinds from higher interest rates that have resulted in a significant drop in home sales and mortgage refinances the past several quarters,” said ALTA CEO Diane Tomb in a press release. 

Net income for the title insurance industry also came out to $342.9 million in the third quarter, a 44% drop from $616.3 million produced over the same three months last year, according to ALTA’s analysis. Industry operating income and expenses were down 19.6% and 18.8%, respectively. But loss and loss-adjustment expenses increased by 30%.  

In 2022, mortgage application volumes have consistently come in at less than half of where they stood last year, the Mortgage Bankers Association has reported in its weekly surveys, as mortgage rates more than doubled from the end of 2021 and led to decreased business traffic for title insurers. Refinances, in particular, are currently running 85% below year-ago levels. 

Through the first nine months of the year, title insurance premium volume has been reduced by  7.7% to $17.6 billion compared to the same time frame of 2021, when $19 billion worth was written. 

Meanwhile, claims paid totaled $438.7 million between January and September, up from $352.5 million in the same period a year ago.

In October, the MBA projected 2023 originations to fall another 9% from this year’s level to just over $2 trillion, while researchers at both Fannie Mae and Freddie Mac predicted volumes to come in even lower than that mark. But despite what could turn out to be a prolonged less-than-favorable environment, title companies are well positioned to get through a down cycle, Fitch Ratings said this summer.  

In addition to shrinking business opportunities resulting from the mortgage slowdown, title insurance companies are  also facing increased pressure from the growing acceptance of attorney-opinion letters in lieu of policies. This past spring, Fannie Mae joined fellow government-sponsored enterprise Freddie Mac in allowing for use of attorney letters in limited circumstances, a move ALTA has openly criticized. United Wholesale Mortgage also introduced a title review and closing product  in October meant to serve as an alternative to insurance policies.

First American Title Insurance grabbed the largest share of the market in the last quarter at 22.6%, followed by Old Republic National Title with 16.3%. Fidelity National Title Insurance and Chicago Title Insurance, both subsidiaries of Fidelity National Financial, landed in third and fourth place at 13.7% and 12.9%. Stewart Title Guaranty rounded out the top five at 8.7%.

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