The Title Insurance Crisis
Richardson and his wife, Michele, had just purchased LandAmerica's Ann Arbor branch when lending froze that fall-putting a lid on the home sales that drive the firm's business. "We had a 45 percent drop in orders from September to November," Richardson says. And LandAmerica, the nation's third largest title insurer and the underwriter of many of Liberty's policies, went bankrupt.
People typically purchase title insurance when they buy a property or refinance a mortgage. It insures against any liens, restrictions, or other "defects" that could lead to problems for the buyer down the line; agents earn their living by researching titles beforehand to minimize claims. But since the financial crash "it's harder to get loans approved and closed, or people aren't refinancing," says Scott Broshar, who co-owns Absolute Title with Christy Perros. And that, says Perros, leaves local firms like Absolute Title "competing for a piece of a smaller pie."
Since the crash, a number of title insurance agencies have been absorbed by other companies; underwriters that wrote policies through their own agencies have consolidated them; and some, like LandAmerica, have gone bankrupt. Perros and Michele Richardson, Tom's wife and partner, agree that the number of active operations in the county has dropped significantly; neither would be surprised if the number were half what it was before the crash.