Tom Richardson says Liberty Title’s “big white-knuckle moment” came in the fall of 2008.
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.
Absolute Title survived by downsizing its staff and budget. It went from twenty-nine employees and a 12,000-square-foot building on South Maple to fourteen employees in a 7,500-square-foot building on West Liberty. Broshar credits the company’s survival in part to strong relationships with the underwriters who pay out its claims. “If an underwriter starts to see too many claims coming in from an agent, they will drop them,” he explains. “If they find out one of their agents isn’t following their instructions, they will close them down.”
“Detroit was one of the mortgage fraud capitals of the country, and a lot of claims have come in,” Tom Richardson says. The Richardsons agree with Broshar and Perros that maintaining a strong relationship with underwriters is vital—Michele Richardson is proud that Liberty still writes insurance “for all of our major underwriters. We haven’t been cut by any of them.”
At Liberty Title, the staff took voluntary hour reductions, and the Richardsons went without pay during the worst of the crisis. But as other firms shrank, they also moved to expand. They purchased Chicago Title’s Jackson operation in 2007. Last year, they bought a former National City bank branch on Packard as a satellite office, and this year, they picked up four offices in metro Detroit and Flint through their purchase of Sky Title.