Online Business Chat with Bob Grubb of Alliant National
March 16, 2009
Source: Boulder Daily Camera
Business Chat with Bob Grubb of Alliant National Title wallacea
Hello Bob, Thanks for joining us. For readers who are visiting this chat and want to ask a question, write in the field below and click on "Submit Query."
Please tell us about Alliant National Title Insurance Co.
Alliant National is a title insurance underwriter. We work through independent agents to protect property owners from claims that would alter, change or impair the ownership rights of their property.... so what does that really mean? Well, we protect the dreams of property owners.
Title agents, which are licensed by both the underwriter and the state Division of Insurance, are the only independent party in a real estate transactions. Their role is to be sure sellers have the right to sell, and that money in the transaction is distributed in the proper amount, to the proper people, at the right time.
The underwriter pays the agent to be certain the seller has the right to sell AND does not transfer "defects" in the title of the property to the buyer. The underwriter insures the buyer (and their lender) that should problems arise after the buyer completes the transaction, the underwriter will protect the buyers ownership right, including the cost of defending their right in court.
What do you think makes Alliant unique from other title companies?
Alliant National works only with Independent Agents. We help the independent business improve their business practices, lower risk and help them grow their business. Most other underwriters actually compete against their agents in the market place, which we believe is a conflict of interest.
We've seem some of the deeper job cuts made in the insurance industry come from title companies. How has Alliant been affected by the recession?
The answer is two fold - first because insurance premium revenue has declined, and second because the industry has experienced large losses from claims. The net effect of these two issues forces title insurers to adjust - and laying off staff is one of the variables they need to look at.
As far as premium revenue, In the last 3 years the title insurance industry has shrunk by 40%. This is a result of 2 factors: first the reduction in the number of real estate closings in the US from an historical high in 2005, and second because of a decline in real estate values. Values effect our industry because part of the premium we charge is based on value. The value we insure is also the potential risk we take of loss on the property.
Claims have been very high for the past few years. It is common for claims to increase during cyclical downturns, this downturn has been particularly bad due to mortgage fraud rampant in the US. You probably have heard a lot about the fraud, but if you know a person who owns property and was a victim of such fraud, chances are their title insurer protected them from any personal loss. This is the largest single element of our company's paid losses.
Alliant National has outperformed the industry to date, and we have taken the opportunity to hire some key people. We have continued to grow, though slowly, as the industry has shrunk.
Why is title insurance necessary?
Title Insurance is a great bargain - you pay a 1 time premium and get protection form a huge number of potential issues - for as long as you own your property!
The US land record and title insurance systems fill several critical functions in society:
1) Having good title to your property unlocks your assets for you to leverage - it does so because the proven and recorded right of your ownership allows you to get credit not only for your house, but for other purposes like a car, college, and other investments. This factor of being able to prove your ownership is also what allows you to get a mortgage - with out title insurance a mortgage company can not take the risk of lending to you and finding out late the seller did not disclose an issue that would affect your rights to own and use your property.
2) the system is very efficient - In the US transfer of property can be complete in less than 30 days. This may seem like a long time, but it is fast. Most democracies do not have an efficient system and in developing countries the problem is that no one knows who owns what! Even in developed counties - like France - it may take up to 10 months and tens of thousands of dollars to complete the work of validating the sellers right to sell a property!
The speed at which we do it, the low cost and the protection from future risk make the US system exceptional and allow people to use their ownership rights to prove and build their family wealth. To attempt this on your own would be impractical, and using an attorney would be much more expensive - and an attorney is not going to insure you from future problems that were not known at the time of the transaction!
What are some of the factors that can affect title?
Some examples of everyday issues that would be impractical for you to find on your own is the discovery of liens placed on the seller by other parties, liens on your HOA for problems they have incurred which can affect your ownership, easements by public or private entities, land use restrictions, presence of underground restrictions including pipes, electric lines, possible issues of the seller violating setbacks, easements or property lines. All of these are referred to as "defects" to the title by our industry.
BTW - Little known is that the title insurance collects from sellers $1.2 billion a year in delinquent Federal taxes, more than $3.0 Billion in delinquent real estate taxes for states and counties, and close to a half a billion in delinquent child support.
The speed of our system actually pays for the cost of the industry..... if, for example the average real estate closing took just 15 days longer than it does, it would cost buyers and lenders an additional $15 billion in interest costs per year - more than the revenue of the entire industry!
Bob, thank you very much for joining us. If people have additional questions, how can they contact you and Alliant National?
I would be happy to do what I can - you can reach me at: firstname.lastname@example.org
There is really helpful information available on the American Land Title Association website, here is a link: http://www.alta.org/consumer
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