Thursday, November 27, 2008
"Door Buster" is to Black Friday, as Turkey is to Thanksgiving. And so it will go on the day after the turkey day. Sleep deprived and crowd-worn citizens will set out in hopes of buying the things they want (or think they want, anyway) at a discount to what they had previously been selling for.
Business types (at least certain title insurance types) seem to be more interested in maximizing a four day work holiday this year, so they concocted their own door buster deal yesterday; before adjourning for Thanksgiving. According to news reports, Fidelity is buying LandAmerica's title insurance business after all - after LandAmerica files for bankruptcy protection and sheds off some less desirable assets. LandAmerica will then sell its principal title underwriting units to Fidelity National for a combined $298 million. Chicago Title will buy Commonwealth for $158.6 million, and Fidelity National will buy Lawyers and United for $139.4 million.not all of LandAmerica.
You may recall that on November 7th, LandAmerica & Fidelity announced a merger agreement. (more like a $126 million takeover). Two weeks later, Fidelity cancelled out on the deal during the due diligence period. Yesterday, LandAmerica filed for bankruptcy protection.
How bad were LandAmerica's problems? Fitch Ratings downgraded LandAmerica's financial strength and issuer default ratings and placed LandAmerica and its subsidiaries on "rating watch negative". Now understand that I don't actually know what any of that means, but downgrades from rating services are never good. Especially when your company is also reporting third quarter losses of $600 million and nine month losses of $673 million. Not when stockholders' equity plummet by more than half in that same quarter to $485 million. Not when the New York Stock Exchange suspends trading of your shares (which peaked at more than $106 last June, and plunged to about 25 cents in electronic trade).
And that debt that needed to be trimmed off of the deal to lure Fidelity back to the table?
A $290 million investment in auction-rate securities (ARS) from LandAmericas 1031 exchange business that currently cannot be accessed. (1031 exchanges are tax deferral vehicles used by real estate investors. An intermediary holds the proceeds from the sale of an investment property until those funds are deployed to purchase a replacement investment). Those funds were tied up in toxic debt that could not be freed up to meet cash needs. The 1031 company is also in bankruptcy court, and Nebraska State regulators have intervened as well.
Assuming this deal passes muster with the bankruptcy court, and with the various state regulators, and federal anti-trust concerns, Fidelity will control nearly three quarters of the title insurance market nationally.
The deal may well be completed before the year ends.
Wednesday, November 26, 2008
The McHenry County Recorder's office has announced an $8 fee increase for each document recording, effective December 1.
The minimum fee per document is now $50.00. Buyers record a Deed and Mortgage. Sellers record releases of all mortgages and other liens that are paid off in connection with a closing.
Monday, November 24, 2008
Full game highlights, and a nice mention of son number on the Booster Club web site
Next up for Lane, a showdown against Loyola on Friday at Soldier Field, the 75th annual Prep Bowl.
according to wikipedia,
As early as 1927, the Chicago Public Leage football champion met the Chicago Catholic League champion at Soldier Field for the city title. The game would be later dubbed the Prep Bowl in 1934 by Mayor Edward Kelly as a Thanksgiving fundraiser for the city's poor. Until the advent of the Illinois state playoffs in 1974, the Prep Bowl was the main attraction of the fall season, attracting crowds in upwards of 100,000 in its heyday and averaging close to 65,000. Since 1974, crowds have dramatically dwindled with the emphasis switching to earning a state championship. The renovation of Soldier Field in 2003 has seen a steady resurgence in crowds for the game, averaging around 20-25,000.
Go Lane Go!
Friday, November 21, 2008
Fidelity National Financial Inc. has called off its plan to acquire troubled rival LandAmerica Financial Group Inc., the companies said Friday, calling into doubt LandAmerica's long-term prospects.
Fidelity and LandAmerica both issued terse statements at 8 p.m. Eastern Time Friday saying Fidelity had exercised its right to back out of the deal during a due diligence period.
LandAmerica lost $599.6 million during the third quarter and was in danger of defaulting on its debts, the company said in a recent regulatory filing.Fidelity announced an agreement on Nov. 7 to acquire LandAmerica in an all stock deal valued at $128 million
Thursday, November 20, 2008
Inquiries regarding the GTT liquidation and requests for Proofs of Claim forms should be directed to: The Office of the Ohio Insurance Liquidator, Attn: GTT, 50 W. Town Street, Third Floor, Suite 350, Columbus, OH 43215. The telephone for that office is (614) 487-9200.
SHOULD CONSUMERS TAKE ACTION? Well, that is going to depend on where you closed or who insures your title.
If your title insurance comes from Chicago Title, Ticor Title, First American, Stewart or LandAmerica, or Old Republic (which collectively control roughly 93% of the title insurance markets) you probably don't have any worries. Guaranty was not one of the "big five." Same goes for titles written by Attorneys Title Guaranty, Professional National Title, and as near as I can figure, Greater Illinois, Prairie, Mercury title too.
But if your title came from any other company, you might want to pull out that closing file and check to see if the title insurance underwriter was GTT. If so, pick up the phone and call your lawyer to get make sure you retain some insurance protection.
Most Chicago area home closings take place at a title insurance company's office. Just setting foot into those offices these days tells you all you need to know about the current state of the Real Estate business: Still open, ready and willing to do business, but it's just not happening. Most are pretty lonely places right now.
The numbers seem to bear this out. According to the American Land Title Association and Inman News, All five of the nation's five biggest title insurers lost money during the third quarter.
Those grisly numbers:
- First American, the nation's largest, reported an $8.3 million third-quarter loss
- Fidelity, number two in 2007, lost $198 million and closed 115 title and escrow offices
- Stewart reported $30 million in losses, closed 40 branches, and canceled 1,750 independent agencies
- LandAmerica lost $599.6 million! which may explain its recent announcement that it was being acquired by Fidelity, and the urgent need for an immediate $30 million in secured credit to keep them liquid).
- Old Republic was $48 million in the red.
So what does this mean for consumers?
Well, on the down side, expect title insurance premiums and closing costs to go up. Fidelity for one is reportedly planning 10-20% price increases nationwide. Underwriting standards are going to be tightened down even tighter. Its going to get harder to "work-around" unresolved title issues. I would not be surprised to see more title companies close down and consolidate operations in their suburban and neighborhood offices. This process has already begun. Smaller title agencies are also likely to start shutting down operations as well.
On the bright side, its going to be pretty easy to schedule closings, and when you do get the deal to the table, everyone is going to be real happy to see you there .
Friday, November 14, 2008
Chicago's next World Naked Bike Ride will take place Saturday June 13, 2009
Wednesday, November 12, 2008
HUD announced today that it amending its regulations to require mortgage loan brokers to actually give prospective buyers a standardized Good Faith Estimate of their closing cost. OK, the truth is that they already require GFEs, they are changing the format. What was once a fairly incomprehensible one page form is now a three page colorized incomprehensible form, that will come with a fourth page of "explanations"
HUD estimates that the new regulation will save the average consumer $700 at the closing table. Cool right?
Here's the catch:
The reegulation does not go into effect until Janury 1,
Monday, November 10, 2008
This is not really so much of a merger as it is an acquisition: One of Fidelity's subsidiaries, Chicago Title, is going to bail out Land America with a $30 million in stand-by secured credit to provide liquidity and to help Land America's subsidiaries Commonwealth Title and Lawyers Title pay down other debts.
Conventional wisdom, and historical indications suggest that the title insurance industry is usually a hugely profitable one. In 2003, according to ALTA, the industry paid out about $662 million in claims, about 4.3% percent of the $15.7 billion taken in as premiums. By comparison, the boiler insurance industry, which like title insurance requires an emphasis on inspections and risk analysis, pays 25% of its premiums in claims. Auto and homeowner insurers are said to return about 70% of their premiums to customers in claims.
Times, however, have changed. Title companies have been battered along with most every other player in the real estate transaction process. Corporate dividends have been slashed. Share prices have tumbled. Employee rosters have been slashed and branch offices closed. The remaining offices are, by and large, quite. The days of overflowing reception areas and parties signing loan documents in the break room or on top of the photocopier are distant memories. Gone with them it seems are all those title company profits.
I am an agent and write title with Fidelity subsidiaries Chicago Title and Ticor Title, and Land America's Lawyers Title. I like working with all of them. The good news for my clients as there all three provide excellent service, competitive pricing and have really very nice (and knowledgeable) staff here. There will no doubt be some more pain for them all internally as the merger moves towards completion, but I do not foresee any problems or ill effects for my clients. In the near term, anyway.
In the same way that savvy buyers, particularly investors, are returning to the market, the Fidelities seem poised to gain market share and overall proftability by seizing on opportunities to buy assets while prices are low. The real estate market is cyclical and the turning point may come up on us sooner than many realize. This deal will no doubt pay big dividends to Fidelity in the long term.
Anyone else out there ready to make a similar play?
Here's a pretty grim example of the train wreck that we are all witnessing. The owners of this unit are having trouble selling it at a 40% discount to what it sold for four years ago!