I did a WSA with Stewart Lender Services (Electronic Closing Services, ECS, now discontinued) back in 2007 through late 2008.  It's impossible to generalize about them in the sense that the scope of what work is done by whom determines the manageability of them.  In our case, we did everything except the actual insurance part, that is, we had a CPL covering us so we did the HUD and disbursing.  In addition, 99.9% was refi work, so the location of the disbursing wasn't so much of an issue, and we could get the docs signed remotely at one place.  REOs may not be as complicated with the time pressure of ordinary purchases, but they do have their own well-known problems (for example, closings that don't fund the same day). 

I would say it was a defensive move in that it kept us from losing a customer that all of a sudden changed from originating in one state to originating in about 15-20 states outside of where we had done almost all of our business with it.  So, we saved the relationship until it re-grouped and went back to the state we had worked with them in the first place.  A temporary solution.  I would also stress that you need to file as a foreign corporation, at minimum, in any state you do close in.  You may need a settlement/closing license as well.  Furthemore, many states interpret their insurance licens statutes in a way that would require a title license as well, insofar as you are negotiating the sale or purchase of an insurance policy on behalf of someone else.

Overall, it was/is/will be a headache due to losing control at the very least, to being able to clear title, getting HUDs out when customers expected, etc.  But, it does give a temporary alternative to going into a full-blown multi-state licensing and underwriting agreement.  I would say the licensing issues (particularly for the insurance producer license) are a real risk 

One more suggestion is that you probably should stick to an underwriting-sponsored WSA in that that is by far the fastest way to be able to get CPLs.  Without CPL coverage, WSAs are very difficult to manage. 

Finally, the biggest issue is that a well-thought-out WSA takes a fair amount of time to do and the ability to adjust for huge state difference in laws, customs and practices).  This is a very complicated area, and in nearly all cases, you need this resolved as a business issue sooner than you can get your ducks in a row - that is, before important details are clarified.  I guaranty that you  will get stuck with costly parts of the transaction before you know it.  In my opinion, it's nearly impossible to make money on these, so you have to determine whether your net fees are sufficient to cover the WSA as a "marketing cost," as opposed to a profit center.  At minimum, make sure that no fees are due the partner until the deal is closed.  

You really have to try hard to avoid the appearance of a middle-man, while at the same time placating the decision-makers at your affilliate title insurance producer/sponsor.  A few states in particular make this extremely difficult: Texas, California and Arizona.   In my WSA with Stewart Lender Services/ECS in Texas, for example, we had to use a FATIC affiliate becase even ST did not have all the requisite licensing for Texas (IIRC, it was county-level authorization there).