All of what you have said is true. Getting enough participation to make it work financially may be a problem. Many of the abstractors and signing agents on this board are small operations in a tight cash position. This is all part of which needs to be explored.Last year when we looked into this, the response was rather lack luster. That may not have changed.

However, with the current trend of rising expenses and declining fees, something needs to be done before all that remains are the unqualified and uninsured abstractors. In so far as my firm is concerned, we still perform abstracting for those clients that are reasonable in their requirements and prices, but we may need to focus on other areas than abstracting in the future to generate revenue. The prognosis for the current trend is not good.

In so far as operating the new LLC at a profit is concerned, I think everyone here is focusing their attention on abstractors' fees and the issue of how the new LLC is going to pay the higher abstractor fee, but remain competitive in the market place. If the LLC is operating as a title company, it makes its money from the processing fees after payment of expenses. I do not think I have ever seen a HUD 1 form on which the abstractor's fee and signing agent's fee has not included a mark up for the title company as part of its processing fee. The issue of whether this is permisable still seems to be unresolved by RESPA.

There is also a lot of profit built into the porcessing fees charged to the lender after the payment of other expenses. The abstracting and signing agent's fees are only a small portion of their expenses. In most cases if the title company paid the abstractor and signing agent what it is showing on the HUD 1 form, the rest of its processing fees would remain intact with a healthy profit margin. 

How is the proposed buy in going to be made attractive to an existing  small title company?   ...good question. I suppose a lot of it will depend on how fast it wants to grow, and how badly they need the infusion of cash to accomplish this.