|
|
Collecting Abstract Fees Upfront
by Robert Franco  | 2007/12/12
Should abstract fees be collected upfront like appraisal fees? Diane Cipa believes so. In a recent post on the Source of Title forums, Diane announced her crusade to change the way the industry charges consumers.
I refuse to stiff an abstractor if a transaction does not close. I expect the buyer/borrower to foot the bill and so I am on a crusade trying to get the industry to collect a fee up front to cover abstract and lien letters or at the very least collect cancellation fees.
I have found that mortgage lenders and real estate agents understand what an appraiser does and they understand that the appraiser's work must be paid. It's a pass-through fee. They just don't get it that your work is largely the same.
I wholeheartedly agree with her that if an abstractor is engaged to provide a title search and they do so, they should be paid for it. That just seems to be so obvious that it really should be beyond the need for discussion. Unfortunately, it is a real problem in this business... not all of those ordering title searches think they should have to pay their abstractor if their deal falls through - shame on them.
However, I see some major differences between appraisals and title searches.
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
The Express Lane To Bankruptcy
by Robert Franco | 2007/11/28
Express Title closed their doors for good on September 14 and recently filed for bankruptcy. Just two years ago, Express was generating $65 million in revenue, but that dropped to $20 million between 2005 and 2006. What happened? They lost Chase as a client. The company attempted to continue operating with their other clients, but the subprime lending crisis and the declining housing market made that impossible.
We used to do a lot of work for Express Title's Columbus, Ohio office. I always liked working with them. They had a very knowledgeable staff and there was a terrific attorney in the office that was always a pleasure to deal with. They understood title and seemed to care about the quality of their searches. We really hadn't done much for them over the past couple of years. Looking back, that was apparently the time that they lost the Chase account. I guess I am lucky that I am not writing off much debt as a result of their bankruptcy - less than $300.
It is scary to realize that this can happen. At one time Express was one of our largest customers. It just goes to show you that no company is immune to today's real estate market. There was a time when if a really good client got behind with their account, we would have just shrugged it off and said "Ah, they're good for it. They will catch up next month." Now, you have to be more cautious. Today, even our best customers get cut off if we don't receive payment within 45 days.
I hope that the abstractors who were still working for Express aren't hurt too bad by the bankruptcy. Sadly, this won't be the last company to go under and clients filing bankruptcy is unfortunately one of the risks of owning a business. Now that the risk is becoming more serious it makes abstracting a less attractive profession. To avoid the express lane to bankruptcy, it is imperative to keep a close eye on all of your clients' accounts and don't let any one client become such a large percentage of your receivables that their closure would drag you down with them. That is not always easy to do for any small business, and in today's market it may be especially tough for independent abstractors.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
Still In Business?
by Robert Franco | 2007/11/19
I am getting more phone calls and e-mails from people wanting to know if certain companies are still in business. I wish I could be of more help, but I find out just like everyone else - when its posted on the Source of Title forums. The problem is that it is tough to tell when a company has actually closed down. There is that interim period when they just aren't paying (and there are a lot of those companies) and then you have the companies that conveniently re-open under a new name to escape paying their abstractors.
Here are a few of the companies mentioned recently in the forums:
- Express Financial - out of business, rumors of bankruptcy.
- LSD Lender Services Direct - complaints of non-payment.
- Tower City Title - out of business, rumored to have opened under a new name.
- Title Stream - complaints of non-payment.
- TitleSearch USA - complaints of non-payment.
- Home Connects - out of business.
- JPS Title - out of business.
- Ricter Abstract - complaints of non-payment.
- Southeast Equity Title - complaints of non-payment.
- AmeriStar - complaints of non-payment
- Optimais.com - out of business.
With all of the companies that are experiencing difficulty paying their abstractors, how on Earth is an honest, hardworking abstractor supposed to stay in business? The amount of uncollected invoices abstractors have, from what I have heard from some of them, is staggering. But, the risk of non-payment is one of the risks of being self-employed - it comes with the territory. In my opinion what makes this worse is that many of the clients have found ways to manipulate the system to escape their liabilities. Some of these games they play should be criminal!
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
Reporting Non-Payment To The DOI
by Robert Franco | 2007/09/28
I have decided to try something new. I just filed a complaint with the Department of Insurance for non-payment by a client. I'm sure that isn't exactly the type of complaints they normally take, but my theory is that if the DOI wants to get a step ahead of the defalcations, they could benefit by this type of early warning. We will have to see if the DOI follows up with any inquiries.
The client, Vantage Land Title in Miamisburg, Ohio, called me to ask if we still did work in a particular county. I told her that we did and we reviewed our fees and the other counties we covered and she indicated that she would send an order over for the one she needed now. It was a pleasant conversation. Then she asked, "do we owe you any money?"
I checked and sure enough, they owed us $2,208.50 and we had actually cut them off in April for non-payment. After several attempts to resolve the delinquent status of their account, they were turned into collections. Right away she promised to get us a check, claiming that they had lost a large part of their office staff; as if that were the reason for non-payment. That was over a week ago and we never received the order, nor payment.
A few days ago, I had spoken with an out-of-state company that mentioned that they were also owed a considerable amount of money. It appears to me that after they were cut off by local abstractors, Vantage attempted to get their orders done through an out-of-state company and when they got cut-off there, they started making calls again looking for someone else. Perhaps they finally found someone else that they hadn't yet run up unpaid bills with.
This is almost certainly a sign of cash-flow problems and it seems a likely indicator that defalcation is on the horizon. At the very least it should be cause for alarm for the DOI and whoever their underwriter is.
I understand that the DOI is not a collection agency. I do not expect them to help me get paid. However, I do hope that they recognize the warning signs and conduct an audit of the company. If irregularities are found perhaps they can be shut down before they "stiff" too many other abstractors... or cause problems for homeowners.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
Frankenabstractors
by Robert Franco | 2007/09/13
Replacing abstractors with computers seems to be the latest rage in the title industry. Tap a few keys... hit print... take the search to an in-house "examiner" to review and voila! But, there will always be those few items you have to check at the courthouse. For instance, our home county maintains a special assessment book that contains tax assessments that don't get entered into the computer until they are ready to print the tax bills. There is a foreign execution book that is still handwritten in the recorder's office. And, our probate records are not available online at all. It's just not quite possible to cut the "human abstractors" our of the loop all together... not yet, anyway.
When the "higher-ups" try to eliminate the need for abstractors by implementing thin title plants there are some nasty side effects. There is less volume of work for the abstractors. Even though there will still be a need for real, live abstractors to check those items that are not available electronically, and to do the searches that are too complicated to be done online, "good" abstractors cannot make a living doing the left-over work at today's prices. Common sense dictates that even the simplest jobs will be more expensive because there isn't as much work available to spread the cost over.
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
Ethically Challenged First American
by Robert Franco | 2007/09/11
I received an email last night that almost left me speechless. I say almost because after a few minutes, I realized that I had plenty to say. Unfortunately, its difficult to convey in terms that are "suitable for all audiences." I guarantee that anyone with even a little integrity and self-respect will be equally outraged. If you read this and have no reaction - check you pulse, hold a mirror under your nose and check it for fog, or see a licensed physician immediately!
One last thing before I share the contents of the email... TransContinental Title Company and First American Lenders Advantage should be absolutely ashamed! Heck... really, anyone that works for First American should be embarrassed to be associated with the ethically challenged company. The company that is laying off thousands of Americans while sending thousands of jobs to India, promoting "instant title" products while asking abstractors to reduce their fees on the orders their "computers" cannot complete, paying millions of dollars in fines for allegedly paying illegal kickbacks, etc...
Now... here is the email (and, further down you can find it with my translations included):
[read more...]
Categories: Abstractors, Billing Issues, Ethics
Source of Title Blog :: :: |
|
|
My Way Or The Highway
by Robert Franco | 2007/09/11
The mortgage crisis, if that is what we are calling it now (I prefer to think of it as a much need correction), has affected many segments of the economy. Obviously those in the lending business are most directly effected, but it has also cause quite a hit to the title insurance and construction industries as well. I read an article that indicated that claims may be particularly hard on title insurance underwriters because their agents may be slow in remitting premiums. That made me think that agents may be slow to pay abstractors as well. A problem that was plaguing abstractors long before the business "slowed down."
There has been a lot of chatter on the Source of Title forums about having clients sign an agreement at the onset of the relationship to help avoid nasty collections problems. I received a call last week asking my opinion about the use of such agreements. It is something that has crossed my mind more than once. I have even considered asking the owners, or an officer, to sign a personal surety just in case the company ceases to exist. This has been the case on several occasions - the company "reorganizes" under new ownership, with a new name, and they claim no responsibility to pay the old debts. Holding the principal liable, personally, would still provide an avenue for collections.
So why haven't I done this?
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
Abstractors' Liens
by Robert Franco | 2007/07/17
With the payment of abstractors' fees being such a problem in this industry, perhaps it is time to lobby for state legislation to create an abstractors' lien. One state has had such a statute on the books since 1949 - New Mexico.
§ 48-4-1. Lien on real estate
Every bonded abstracter or abstract company, doing business in compliance with the provisions contained in Sections 51-1301 and 51-1302, 1941 Comp. Statutes, who shall hereafter compile and furnish any abstract or continuation of abstract, of title to any real estate at the request of the owner thereof, or his authorized agent, shall have a lien on said real estate for the amount due for compiling and furnishing such abstract of title and for all costs incurred in enforcing such lien, including cost of the preparation of claim of lien.
While I do not think it is necessarily a good idea to place a lien on a homeowner that is most likely not even aware that the abstractor was hired to provide a search, let alone that it wasn't paid for, with a little work an abstractors' lien could prove to be worthwhile. Abstractors' liens should be treated like mechanics liens for purposes of priority. The liens should be effective as of the date the search was completed, as would be required to be shown on the filed lien.
The effect of such a lien would be to encumber the property effective prior to the issuance of any title policy, thereby creating a valid claim for the insured homeowner. In order to protect themselves from abstractors' liens, the underwriters would require their agent to make sure the abstractor who actually completed the search was paid. If their agents were using vendor management companies that were not paying their abstractors, they would incur liability under the policy and it would not take long before underwriting bulletins would begin to circulate prohibiting the use of such companies.
As things stand now, the abstractors only right to collect is a contractual obligation between the abstractor and their client. If the client doesn't pay their invoice, abstractors are left with few options. An abstractors' lien would provide the extra leverage that is needed to collect what is due to them. And, it would of course also allow the abstractors to collect their costs in enforcing the lien. Presently, the cost of collection is born by the abstractor and abstractors don't have the resources to effectively collect from non-paying clients, or the proposition is thought to be not worth the expense.
I imagine that many organizations would oppose such legislation, but if the companies were paying their abstractors there would really be no harm in passing it. And, after all, that is all we are trying to accomplish - to make sure that the abstractors are paid for their work.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
Paper Collar Joe
by Robert Franco | 2007/06/12
Many of you may know the phrase "there is a sucker born every minute," and incorrectly credit it to P.T. Barnum, the founder of what became the Ringling Brothers and Barnum and Bailey Circus. There are many stories about the origination of the phrase. The most likely source was con-man Joseph "Paper Collar Joe" Bessimer and the full quote was "there is a sucker born every minute... and two to take 'em."
What ever the origination, the phrase most definitely applies to the new "title con" that plagues the abstractors. It seems the new path to riches has been paved by a new breed of con-men who operate under the guise of legitimacy: servicing clients on the front end, while not paying those who do the work on the back end. What could be more profitable than selling something you get for free?
How could that possibly work? Well... there is no shortage of "suckers" as Bessimer pointed out in his quote. Though not the typical suckers, abstractors are hardworking people providing a valuable service who consider themselves "businessmen." However, they all too often allow themselves to be scammed by unscrupulous individuals and companies. Since the inception of Source of Title's forums, the dominant topic has been companies who habitually order title work from abstractors and never pay for it. When one abstractor cuts them off, there is another waiting to do the work. Sound familiar?
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
No-find Fees
by Robert Franco | 2007/06/04
There has been a great discussion on charging "no-find" fees on the Source of Title forums the past week or so. It is a rather touchy subject for some people and good arguments can be made on both sides.
We do not charge "no-find" fees. First, it isn't something we deal with very often. We only cover four counties and we know them pretty well. If we spot an address that could be in two different counties, we check the auditors' Web sites and see if one of them has it listed. We are fortunate that all of our counties have Web sites that we can check - I realize that not everyone has that ability.
One of the posts in the forum provided an excellent resource for checking the county on-line, MelissaDATA. MelissaData provides several tools, but the "U.S. Address Lookup & Verify" tool seems to be the most useful for this purpose. It is a street level check, which means that it doesn't simply rely on the zip code. As we all know a zip code can overlap counties; on-line tools that just check the zip code can lead to erroneous county assignments. However, I checked a couple of addresses I know that overlap and MelissaDATA correctly reported the county for them. While I'm not familiar enough with it to guarantee its accuracy, it does seem to be very reliable.
Because we don't have this problem too often, I find that for the few times we do make a wasted trip, its just not worth it to upset a client by charging them a "no-find" fee. We just absorb the costs. I do try to think of my client's position; if they are not able to bill their client, I don't want to bill them.
However, for those who routinely travel a greater distance and make such trips for one search, a no-find can be costly. When you factor in the cost of the gas, and the abstractor's wasted time, it may require the charge. For those abstractors who feel they must charge a "no-find" fee, I would suggest that it be clearly stated on their fee sheet. If the client is aware that a fee will be charged, and they clearly send the order with the incorrect county, there should be no problem charging the fee. However, I still think the abstractor has some responsibility to minimize the chances of a no-find by being familiar with their counties and using resources such as the counties' Web sites, or MelissaDATA.
What is completely unacceptable is the rude treatment by the client that the poster received when she informed them of the no-find fee. After all, when it comes down to it, it was the client's fault for providing the incorrect information. In my opinion, not charging for a no-find is a courtesy... it's not something the clients should expect.
Generally, the clients have successfully kept abstractors' fees very low and there just isn't enough profit for the abstractors to absorb much in the way of additional costs. The abstractors are one of the most important resources the clients have and they should trust their abstractors to treat them fairly on additional charges, such as no-find fees.
Just as an abstractor has a responsibility to keep such additional charges to a minimum, the clients also have a responsibility to their abstractors not to waste their time. The client could have just as easily checked the counties' Web sites, or MelissaDATA. If they chose not to, then they really don't have much to complain about when they provide an incorrect county assignment.
What it finally comes down to is that there should be a much better relationship between the abstractors and their clients. Neither party should take the other for granted. They are both on the same side and should be helping the other get the job done right... and make a profit.
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
[read more...]
Categories: Abstractors, Billing Issues
Source of Title Blog :: :: |
|
|
|