Alliance Title
A reader notes that Alliance Title seems to have suddenly closed its doors in San Francisco and wonders what’s going on. And while we can’t confirm a why, we can confirm a what: it appears as though Alliance Title is shuttering their Escrow Services in San Francisco and San Mateo but continuing to operate their Default Services (in both cities).
Perhaps it’s simply a coincidence (considering the state of the market). Or perhaps it’s a canary (considering the state of the market). Regardless, we do have to note the irony (considering the “Closing the California Dream” tag line).

Comments from Plugged-In Readers

  1. Posted by Jimmy (Bitter Renter)

    Maybe the dropoff in volume that’s not happening (except in Districts 4,8 and 10) is affecting their business?

  2. Posted by tipster

    A potential explanation is here:
    “But the Wall Street Journal [subscription required] surprised me by reporting that the title insurance industry — which issues policies that essentially guarantee a homebuyer is the rightful owner of a property — also is taking a dive. The paper reports that claims against leading title insurers — due, in part, to a rise in subcontractors who file a lien for unpaid work on a house — have spiked 52%. Moreover, title insurance revenues are down which indicates a drop in new mortgages that require title searches to get approved.”
    It’s good to know that when you need the title insurance you paid for, they’ll just close their doors in any year in which the claims exceed the revenues for that year. No doubt they’ll just open a new title insurance company 5 years down the road, leaving the old one permanently without funds.

  3. Posted by Trip

    Tipster, I don’t think that’s a concern. Insurance is highly regulated by the state. Closing the doors of an insurance company does not mean it is simply gone if you need to file a claim. They have reserves, etc. that will cover any claims. And if they do become insolvent (very rare), the Department of Insurance will take it over and insurance guaranty associations pick up most (if not all) of the tab on any claim.
    Jimmy, look at the broader trend on volume — SF is at about half of where things were in 2004. That’s a big hit for title companies who exist on volume.

  4. Posted by Craig

    Or perhaps we didn’t need so many title companies to begin with? This doesn’t really mean anything substantial, but thanks for highlighting it Socketsite.

  5. Posted by SFSal

    “Or perhaps we didn’t need so many title companies to begin with?”
    No, we did but we don’t anymore. Important difference. “Default Services” will continue to operate in San Francisco? Nope, nothing to see here.

  6. Posted by homebuyer

    Several Title companies have downsized tremendously or shut their doors. I believe its an effect of the housing market being so unstable.

  7. Posted by JS

    Alliance is what’s called an “underwriten title company.” They don’t actually issue the title insurance. A bigger company, First American Title Company, actually issues the policies for Alliance. So, there will be no problem in getting claims paid or otherwise resolved.

  8. Posted by joe shmoe

    My understanding is that title companies that rely on credit have faced a tightening of standards by banks. Established title companies that have learned to be self sustaining should not be affected. Not surprisingly, many title companies started in the ’90s and ’00s and some of those new comers are going to be weeded out by market conditions.

  9. Posted by baddebt

    They have shut their title/escrow operations and stopped payment on their obligations, but are still running some operations. There are some major issues here that I’m sure will come out. Plus if they still have operations like “Default Services” they are responsible for all those obligations.

  10. Posted by former employee

    I know first hand how San Mateo and San Francisco Counties were run….surprised they stayed open as long as they did! Needless to say….the County Manager did not manage! Should have gotten rid of him long ago!

  11. Posted by Susie Jjohnson

    The former employee was very right about the San Francisco/San Mateo County Manager. When you run a Corporation willing to take the risks by hiring “young and cheap”, this is exactly what you get, “shut down”. Alliance Title did recruit strong Escrow Officers but the Company was not willing to provide a timely service to their customers who were used to a Title Company that provided them with excellent service.

  12. Posted by interesting

    does anyone know of any other title companies big or small closing their doors and shutting down in northern california?

  13. Posted by Fred

    Alliance Tile is/was owned by Mercury Inc, which owns 6 or 7 other title companies. I can tell you that while Alliance/American may pay claims, I do know that Alliance is not paying anything that was due the employees. No vacation (earned) pay, no Notary (earned) fees and giving them only one solution/answer —- file a claim with the state !!

  14. Posted by former employee

    Sounds like there are a lot of disgruntled employees (or should I say EX-employees) out there. Thank God I was out of there before they went under. I feel bad for the ones that are left with a piece of paper that says they should get a paycheck only to be turned away by the bank. I knew those doors were going to be closing soon, I just didn’t figure all of California…..I figured San Francisco and San Mateo would be gone in a moments notice. Good going Mr. County Manager!

  15. Posted by another former employee

    I am also a former employee, left Alliance about 6 months ago. I knew it was a sinking ship, at least in Sam Mateo and San Francisco County due to the County Manager. I have worked at darn near every title company over a long career in the business and NEVER saw a company run quite so shabby. I am really sorry for the people that stayed out of loyalty only to be left in this situation. Best wishes to ALL the former Alliance people

  16. Posted by George Mahoney

    Having also been an employee at Alliance Title in Los Angeles the theme of pooragement or no management is exactly what we saw. The county manager thought he was “GOD” spent money on public relations but never brought in any business, Was busy chasing secretary’s instead of chasing business and held the company’s sports tickets hostage unless you were willing to kiss his ass. When he was being paid only on the profits he cut staff, took away all $$ for PR and only a few of his handpicked people ever benefited. I left because I am a revenue producer and did not need him or the company. A liitle control or oversight could have gone a long way to saving the company but no one from Corporate ever took the time to ask the employees what was happening.

  17. Posted by Mystery Realtor

    I knew they didn’t have much life in them after Joey Cano left the firm.

  18. Posted by handy hauler

    I am also an ex loyal ATC employee for over 5 years. It trickled down from the very top. Upper managment down to branch managers, and especially in between. In the final months prior to chapter 11, The company was so unstable. There was a lack of leadership, direction, communictaion…you name it. The employees that stayed behind watching everything they built come apart, and their freinds lose their jobs were suckers! WE SHOULD HAVE GOTTEN OUT!!!
    The company did pay well though…which is a HUGE component of the fold & why most attemtped to stick it out. ATC’s philosophy was to go out and buy up the competition. If you were a player, it was ridiculous money! and I mean ridiculous! Contract signing bonus’ bigger then most annual salaries. In the end, I wouldn’t trade it…we (the employees) capatalized on corparate America a bit, instead of them on us…
    One funny thing about working in the title insurance business, is there is no education requirement. I pursued and recieved mine after 7 long years, but people didn’t need an education to be in sales or be an escrow officer. Most of the people jumped straight into the business and didn’t look back. These same people moved up the corparate ladder into middle managment…and are a pain in the ASS!
    Hope you enjoyed my rambling! Merry Xmas!!!

  19. Posted by james

    nice insight into the crookedness handy. this is the problem i have with anyone in the real estate industry in general. why can’t we at least ask that they went to college? that would weed out the folks that can’t ever finish anything in life, worst case.

  20. Posted by ex-employee

    What an idiot James sounded like. Those in upper management, those that took the Corporation to Bankruptcy WERE college educated. So much for those degrees. Alliance brought in managers that had no background in the Title Industry and no apptitude for Customer Service. After buying “seasoned” Escrow Officers who had been underpaid for so long, they decided to switch up and bring in employees with very little knowledge about anything, especially Escrow. As for Joey Cano, he came with John Kotleba, the San Francisco/San Mateo County Manager which only helped destroy these Counties. I can’t speak for LA County or management there but NO money was spent on any Customer Servie in SF/SM Counties because they did NOT care about the customers that they needed. Alliance couldn’t even get out important items needed from their Customer Service Dept. Allince Title was a disgrace to this industry. The majority of Escrow Officers at Alliance Title Company in the final years were actually Escrow Assistants given the name of Escrow Officer or Branch Manager. Be glad they are no longer around.

  21. Posted by Did not bite!

    I was one of those top producing escrow officers that John Kotleba tried to recruit, most people would vomit at the amount of money he offered me. Most of us that know the business could see the writing on the wall, you have to be able to turn a profit and offering those salaries to escrow officers without big followings(generally that’s who they were able to convince to move)was a disaster waiting to happen. My advice to anyone in the business, stick with the tried and true companies, whether you are an employee or a consumer. They know how to run the business and provide a good product and service. It’s not about paying big salaries, it’s about having knowledgeable management.

  22. Posted by james

    are you sure they actually graduated from a real school ex-employee? if they were as dishonest and unethical as it sounds, i doubt told the truth on their resumes.

  23. Posted by james

    ok ex-employee. i just went looking high and low on the net and i couldn’t find anything about the management team at alliance title. i am a pro at finding stuff online too. this was a shell of a company from day one. how stupid were you to go to work for them?
    dumb ass!

  24. Posted by Trip

    James, try to keep it civil.
    Look here — it’s easy.
    Then enter “” after the “http//” and click on “take me back”
    You can surf around the old web pages and find out all you want to know. Man, college boys . . .

  25. Posted by james

    that’s a great find trip. thanks! here’s what i found after looking in 2005/06 for their ceo:
    John Harritt
    President and Chief Executive Officer
    John Harritt, President and Chief Executive Officer for Alliance Title, received a Bachelor’s degree in communication studies from CSUS and spent three years in the public relations industry before getting involved in the title business in 1980.
    it looks like he was a graduate of the commuter school in sacramento that you default to when you didn’t show up for class in high school, much like sf state. he doesn’t have any real management experience other than running sales team and being a sales guy. that doesn’t count on either front.
    can you ex-employees tell us more? did he go to any ama night classes on how to manage or run a company? that might count for a little other than the seniority he had to be put in charge of the company.

  26. Posted by former employee

    James….Who are you??? Did you actually work for Alliance??? Do you KNOW FIRST HAND what they did?? You have a lot of stuff to say about the company….but did you ever work for them???? I did, and I am glad I got out before I really got screwed over!

  27. Posted by james

    is that you john? lol!
    no, i know nothing about alliance and no i am not in the industry. i started this rant by saying how much i dislike the fact that nobody entire the ecosystem of real estate seems to have a 4 year college degree.
    the old adage seems to go, those who cannot sell, sell real estate. those who cannot pass the realtor exam become appraisers and those who cannot pass that become mortgage brokers.
    i have no idea where the title and escrow officers come from. straight out of high school i suppose?

  28. Posted by Bachelor of Science Degree

    I have been an escrow officer for over 20 years. I have a college degree that is important to me. A degree is not required to be an escrow officer. A good escrow officer is someone who can work well with the public, has good math, reading and listening skills, multitask and be able to work under pressure.
    I am a Certified Senior Escrow Officer through the California Escrow Association. To stay certified I must complete 45 continuing education hours every 3 years. The California Escrow Association does a great job in educating the escrow professional.
    I would love to see you follow around an escrow professional for a day. You will experience first hand the commitment to provide excellant service to the public.
    You either have never purchased a home or have worked with the wrong realtor. There are many good ones out there.
    What business are you in? You seem to think you are an expert in a field you don’t know anything about.

  29. Posted by former employee

    I have been in the business for 30 years. And unlike Bachelor of Science I have never gone to college and Escrow is basically “on the job training”. And James, like Bachelor said….I wish you could just sit with an Escrow Officer all day long….the amount of stress we put up with while still serving our clients and the public with a smile on our face and a cheery disposition would be enough for anyone to want to go home and cry at times. But, we go back day after day because we know we have a job to do and a commitment to our clients. And yes, it pays great! Looking on the internet these days at jobs….you need all these college degrees to earn what…. $11.00 to $13.00 an hour??? Why go when you can earn 3 to 4 times that amount without college? If you want to spend a lot of time in college to get into a specialized field, then yes I agree…go to college.

  30. Posted by movingback

    James, you are a complete a**, and your comments reflect as such. We have plenty of friends who are in the mortgage business, as well as in real estate, that are very well educated, with various degrees and backgrounds – some are even attorneys. Your broad and general statement just shows that you really don’t know what you are talking about and that obviously you think you know everything. Please enlighten us all – what type of education and schooling did you have? Profession? Degree(s)?

  31. Posted by Bachelor of Science Degree

    James, where are you? You are a real coward.

  32. Posted by former employee

    I don’t think James has ANY schooling at all…at least not past the 2nd grade….look at his posts…he doesn’t even capitalize the word “I”.
    Oh James….we want to know where we can find you – please do tell!

  33. Posted by james

    good for you guys, with an education. if you have one, clearly i wasn’t speaking to you when i said that most in your industry do not. geez. get off your high horse will ya?

  34. Posted by MysteryRealtor

    You didn’t answer the question.

  35. Posted by james

    which one? do i have an education? yes, a ba and a bs from one of our esteemed university of california campus. maybe i’m a little bitter for wasting those 4 years when i could have been playing the biggest ponzi scheme since the tulip market here in northern cal with the rest of you high school dropouts in real estate.

  36. Posted by Bachelor of Science Degree

    What is your profession?
    We have gotten off the topic of Alliance Title and how they treated the employees. What a terrible way to treat people. I wish those who lost jobs well and future success.

  37. Posted by james

    fat chance john. we are headed back to 1997 levels of market required real estate ecosystem people. meaning, all the extra folks and companies that grew since then to service the industry are all going to be out of work. great time to go back to school and start over i’d say.
    i’m in sales too, but not in real estate.

  38. Posted by former employee

    James….why do you think we are all John? Also, to read your posts with the grammer you use I REALLY have a hard time believing that you even graduated from kindergarten let alone a California University. So, what do you sell????

  39. Posted by Rillion

    Can you guys stop badmouthing people that didn’t get college degrees? Many of my friends didn’t get degrees and they are still smart, hard working, ethical people. College isn’t for everyone so stop the blanket insults against those that made a different choice then you.

  40. Posted by Bachelor of Science Degree

    Like I said before lets get back to the topic of this slob title company that messed up its employees.

  41. Posted by Did not Bite

    Back to whats really important, for those of you at Alliance’s sister company Financial Title, I hope you are listening to this as fair warning. You could be next. Cleary upper management of the Mercury Companies only cares about making a quick buck off your unsuspecting backs and will not think twice about screwing you too!. We are still looking for qualified, reasonably paid escrow personel with followings. Call us! We are still here and will be for the long hall.

  42. Posted by Bachelor of Science Degree

    Thank you “Did not Bite”. That is the real point! Hopefully the Financial people will wake up an boldt to the nearest long haul title company. We are and have been in survival mode! I want you to survive this market. Watch out for the parasites that want to suck the life and blood out of you. Take Care a be a Survivor.1

  43. Posted by Bachelor of Science Degree

    Sorry about the typo’s

  44. Posted by james

    better watch the typo’s bachelor before someone accusing you of not having an education.
    really, who cares. i didn’t mean to digress on the college thing, it was merely an observation and a stereotype. i certainly didn’t invent the notion or the glass ceiling that you need a 4 year degree to get ahead in our society. i have disagreed with that on many occasions, but in my short 20 years in the working world, i have seen the difference in those folks with and without a college degree in the workplace. i see college as more of a character builder and work ethic lexicon than anything else. folks that can’t get through it tend to have all sorts of other character flaws that should keep them from ever being put in a position of power, in general.
    now back to the discussion at hand. why do title companies even exist anymore in our modern society?

  45. Posted by james

    look what i found. seems i’m not the only one that thinks all you guys are criminals:
    Closing cost scams
    You always thought those mysterious fees at closing were a total scam. Congrats! You were right. Here’s what you can do to avoid paying through the nose.
    Money Magazine
    By Stephen Gandel, MONEY Magazine staff writer
    October 10 2006: 12:51 PM EDT
    NEW YORK (MONEY Magazine) — Technology has magically lowered the price of buying everything from stocks to airline tickets. But home buyers now pay eight times the closing costs they paid 40 years ago. Here’s how residents of one Minnesota street were overcharged again and again on their home purchases, many by thousands of dollars. And why your street probably isn’t all that different.
    When Lewis Leung was buying his two-bedroom ranch in St. Louis Park, Minn. in 2004, he read up on mortgages. He got rate quotes from lenders on the Web. He even compared their good-faith estimates of the numerous extra fees he’d have to pay to close the deal.
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    But did he sign with the lender who quoted him the best combination of rate and fees? Nope. Instead, under pressure to get a loan quickly, he went with the mortgage broker recommended by his real estate agent. Ditto when tapping a title insurer.
    “The agent and I looked at a lot of houses together over the months,” Leung explains. “You build up a bit of trust.”
    Maybe that trust was misplaced. Going with his agent’s advice cost Leung hundreds of extra dollars in fees and up to $9,320 in higher interest payments over 30 years.
    A bum steer? Not to Century 21 Luger, Leung’s agent. The realtor’s referrals netted the agency and its affiliates an extra $3,635 on the transaction, though Leung didn’t know it. This is on top of the $6,150 the realtor collected from its portion of the seller’s commission, plus $189 that Century 21 Luger said it had to charge Leung to cover its costs.
    “I knew I should do it myself,” Leung says of his decision to go with his agent’s referrals. “But after months of looking for a house, I was tired, and I just didn’t think it would affect my bottom line all that much.”
    Mystery charges and buyer exhaustion
    Ever bought a house? Then you know what it’s like to be confronted, while making the biggest financial transaction of your life, with a bundle of fees you don’t quite understand. They’re enumerated on what’s called your HUD-1 document, the mortgage settlement statement you get the day you close, as required by the Department of Housing and Urban Development.
    The charges listed include mysterious things like title insurance, settlement fees, appraisal fees, processing fees, document-preparation fees and others, as well as charges paid by the seller, like your broker’s commission. You probably didn’t spend a lot of time on your HUD-1, at least not until it was too late, because all those fees can seem like warts on the side of an elephant, a few hundred or maybe a few thousand dollars out of a transaction that runs into the hundreds of thousands.
    Together, though, these fees add up. Americans spend $110 billion a year buying and selling houses, not including the cost of the homes themselves. And while technology has magically lowered the cost of buying everything from airline tickets to stocks to wedding gifts, real estate purchases remain stubbornly expensive. Home buyers now pay eight times as much in closing costs as they did 40 years ago.
    Regulators have begun to ask why. The Department of Justice sued the National Association of Realtors last fall, claiming that its rigid rules for home listings artificially inflate commissions. And state insurance commissioners in California, Colorado, Florida, Maryland and Ohio have recently uncovered what they say are networks of sham title insurance companies set up to hide illegal rebates to banks, builders and realtors in exchange for steering business their way.
    Colorado insurance regulator Erin Toll tells MONEY there are probably more than 100 “shams” — her word — in her state alone.
    “The current system doesn’t work at all,” says mortgage expert Jack Guttentag, a professor emeritus at the Wharton School and head of “Real estate fees are much higher than they’d be if the market worked properly. The whole thing is something of a tragedy.”
    One street’s story
    Many problems with “sham” title insurance companies — companies set up to hide illegal rebates to banks, builders and realtors in exchange for steering business their way — might have been fixed by now, except for this: No one knows the scope of the fees that home buyers pay — or who profits most from them.
    A tiny agency called the Federal Housing Finance Board is the only entity that tracks closing costs. But it doesn’t collect data to break down numbers between realtors, lenders and title companies.
    And lenders aren’t required to file HUD-1 forms at all — not even with HUD itself. The only place HUD-1s get filed away, if at all, is in basements, attics and home offices across the country.
    So that’s where MONEY went — specifically, to the basements, attics and home offices on a single street, Aquila Lane, in a popular suburb just west of Minneapolis called St. Louis Park.
    Why there? Because residents of the entire Minneapolis/St. Paul region pay more when buying a house than residents of any other metro area in the country, a MONEY analysis of Federal Housing Finance Board data shows. Brokerage commissions there are as high as 7 percent, while typical pretax closing fees, at about 1.1 percent of loan amounts, are more than double the national average. And folks in St. Louis Park are hammered harder than those in just about any other zip code in the Twin Cities region.
    As part of a four-month investigation, MONEY went door to door on Aquila Lane, asking people about their home-buying experiences. Forty-two houses there have changed hands since 2000; 20 of the new owners talked to MONEY, and of those, 12 shared their financial documents. Most residents never knew that their closing costs were exorbitant or negotiable or even avoidable.
    Based on our reviews of their HUD-1s with industry experts, the 12 Aquila homeowners would have saved an average of 23 percent on their closing costs if they’d shopped around, which in many cases would have amounted to thousands of dollars.
    What brokers don’t do
    Freight trains ran alongside Aquila lane, shuttling goods into downtown Minneapolis, until 1984, when the rail line was abandoned. Now bike paths wend where tracks once lay. The adjacent park boasts softball fields, tennis courts and a popular sledding hill. Even in this up-and-coming bedroom burb, Aquila Lane stands out as highly desirable.
    So when a two bedroom house on the south end of the street went on sale for $165,000 in 2003, Nikole and Josh Didier stretched for it. On the advice of their real estate agent, Edina Realty’s Chuck Skolnick, they sought a loan through Edina’s affiliated mortgage brokerage.
    “Chuck was phenomenal in working with us,” says Nikole. “We used Edina for everything.”
    That proved to be expensive. The couple’s pretax closing costs came to $4,565, including at least $2,125 in up-front fees that went directly to their mortgage broker. At 2.7 percent of the loan, that pretax total is nearly seven times the national average.
    Worse, the Didiers ended up with a two-year ARM at a high 8 percent. The Didiers figured at the time that it was the best their broker could get them, given some credit problems they’d had.
    Turns out they almost certainly could have done better. Mortgage brokers have no obligation to get their customers the best deal.
    On the contrary, they have an incentive to push them toward a mortgage with an unnecessarily high rate. That’s because the bank’s payment to the mortgage broker, called a yield spread premium, compensates the broker for the spread between the lowest rate at which the lender will make the loan and the rate the borrower ends up with.
    In other words, the higher the rate, the more money the broker makes.
    Based on the large referral payment of $3,398 by lender First Franklin to the Didiers’ mortgage broker with Edina, they probably signed up for an interest rate between one and two percentage points higher than the best rate the bank was offering at the time, calculates Wharton’s Guttentag.
    A shocked Josh Didier says today that he didn’t even know the bank was rewarding his broker. “We thought we had paid our mortgage broker up front.”
    An Edina spokesman calls its payment from the lender on the Didier loan “customary compensation,” adding, “We’d be losing money on this mortgage” without it. “This loan was compliant within our company guidelines on responsible lending. It was competitive in the marketplace.”
    The bunk behind junk fees
    These days nearly everyone knows someone — a brother-in-law, a college pal, a former hairdresser — who’s become a mortgage broker.
    There aren’t many barriers to entry. Only about half of all state governments have any licensing requirements, which, when they do exist, usually amount to a day or less of training. In the other states, all you have to do is register and you’re in.
    The National Association of Mortgage Brokers (NAMB) does have a code of ethics, but it doesn’t do any testing or screening or even require professional ethics classes.
    Beth and Robert Grommesh bought their place at 3049 Aquila in 2005 with a $522,500 loan. The various pretax fees came to $8,856, or 1.7 percent of their loan. Among those costs, according to their HUD-1, were $1,265 in charges for “processing” and “administration.”
    NAMB board member Jim Pair calls these “junk fees” because, he says, they’re generally not related to any actual service performed by a broker and, if so, are violations of NAMB’s code of ethics.
    “As a mortgage broker, I don’t perform those services, so I can’t charge for them,” Pair says.
    Yet such fees can be routine: We found them in 10 of the 12 Aquila purchases. The long list of names that fees go by (in addition to processing and administration charges, Aquila residents were hit with application, commitment, courier, document prep, origination and underwriting fees) suggests that specific things were done to earn them.
    Actually, says University of Minnesota law professor Prentiss Cox, a former head of the Minnesota attorney general’s consumer division, most all of these fees end up in lender or broker coffers regardless of what a HUD-1 says: “They should just call them ‘Pluto research fees.’ They’re just making this stuff up.”
    Toothless regulations
    The federal Real Estate Settlement Procedures Act, or RESPA, was passed back in 1974 to prevent just such a state of affairs. Among other provisions, it requires lenders to send, within three days of a loan application, a good-faith estimate to the borrower detailing the interest rate and fees.
    In theory, all this information allows consumers to compare offers and select the best deal. In reality, the law is so toothless that it enables lenders to ignore their estimates in your HUD-1 come closing day.
    “I call them bad-faith guesstimates,” says Brian Montgomery, an assistant secretary at HUD.
    When Kevin Slama and Brooke Perry applied for a $213,000 loan to buy their home on Aquila Lane in 2004, for example, their good-faith estimate for fees was $4,524. The actual fees turned out to be $7,320 — or 61 percent higher.
    Yet fees aren’t the costliest result of the loopholes. RESPA was also meant to stop realtors from taking kickbacks for steering customers to favored lenders, title companies, appraisers or home inspectors. But it doesn’t prohibit agents from making referrals within their own firm, as long as the agent isn’t directly compensated.
    And the law says nothing about indirect compensation — or about how much the agent’s employer can benefit from referrals. So the two-decade-long housing boom has seen firms morph into huge organizations that offer their own mortgage and title services. Even small shops can have a lending officer these days.
    The result: Almost no one in this arrangement has an incentive to offer consumers the most competitive price.
    Title inflation
    On its face, title insurance seems like a fair deal. For around $1,000, a policy protects you for the life of your mortgage against the possibility that the person who sold you your home was not the full and rightful owner.
    So if, for example, a letter comes in the mail saying the previous owner never paid off the mortgage and the bank plans to foreclose, no problem: The title insurer will make the bank whole.
    In fact, virtually nobody ever gets one of those letters. Most potential claims are cleared up with a title search before the policy goes into effect. Since 1995, title insurers have on average spent less than 5 percent of their revenue on claims, according to a recent industry report. By contrast, property and casualty insurers typically pay out 80 percent of their premiums to cover policyholders’ losses.
    Given those juicy numbers, why hasn’t competition lowered title insurance premiums? Because home buyers almost never shop prices for title insurance. They rely instead on recommendations from advisers like real estate agents, whose firms frequently get a cut of the premiums.
    Again, this is made possible by the Real Estate Settlement Procedures Act, or RESPA, loophole that allows referral payments to in-house or affiliated service providers. It’s fully within the law for realty outfits to set up their own in-house title agency — essentially the sales office for a title insurer — in return for a substantial chunk of the insurance premium.
    Such agents have long argued that they’re being paid for substantive title work, not for a referral. But regulators are increasingly accusing in-house and third-party agents of being shell companies created solely to skirt RESPA’s prohibition against outside referral payments.
    Colorado shut down 11 such entities in November and is investigating some 450 other title agents. And among HUD’s 14 major case settlements last year, 13 involved alleged kickbacks in the title insurance business.
    Keeping the consumer in the dark
    “This is an industry that is not based on price competition,” says California Insurance Commissioner John Garamendi, whose office is also investigating the title business. “It’s based on keeping the consumer in the dark.”
    Not surprisingly, most home buyers we spoke to on Aquila paid substantial sums to in-house or affiliated title agents. When Lewis Leung bought his house, for example, his Century 21 Luger agent suggested he buy a policy from Old Republic National Title, one of the country’s largest title insurers.
    “She said I could find my own title insurer or use the one that she trusted,” says Leung.
    About $895 went to something called Reliance Title. Reliance — you guessed it — is owned by realtor Jim Luger, who founded Century 21 Luger 30 years ago.
    Assuming industry norms, experts estimate Luger’s title agency pocketed 80 percent of the total, passing on just 20 percent to Old Republic, which carries the risk on Leung’s policy.
    Jim Luger wouldn’t confirm the breakdown, saying it was a private matter between his firm and Old Republic.
    “It’s legal and standard industry practice,” says Luger of using affiliated title agents. “The people who come to us get good service and good rates.”
    Rande Yeager, CEO of Old Republic (and president of his industry’s trade group), echoes Luger’s claim that agency relationships serve home buyers well. As for the industry, “Customers get a good service at a fair price,” Yeager says.
    It’s doubtful Leung would see it the same way. He would have paid $250 less, for instance, had he bought a policy from independent Minneapolis-based insurer Title-1.
    The stubborn 6 percent commission
    Galling as junk fees and inflated title costs may be, they are small potatoes compared with the big money commanded by real estate brokers in the form of sales commissions — $65 billion last year. And it’s over the size of sales commissions that the struggle to unleash competitive forces in the real estate business has been most fiercely waged
    The crux of the battle is this: Scores of discount brokerages have opened around the country offering to help sell your home for much less than the 6 percent commission that traditional agents typically charge. Traditional brokers who bring would-be buyers into homes represented by discounters stand to earn a much smaller commission.
    Most brokers say they do so anyway: Boycotting certain homes to protect commission structures would violate their profession’s obligation to show customers every appropriate home on the market.
    No-shows with a discounter
    Jeff Miller, for one, doesn’t believe them. In June he listed his house with St. Louis Park discounter Home Avenue. Waiting for buyers at yet another empty open house last September, Miller got the sense that he was very much alone. His wife Jo had wanted him to go with a traditional brokerage, but he resisted, figuring, who needs an agent in this crazy market?
    But not one bid came in during the time the Millers had their house on the market with a discounter. Though buyers stopped in to see the place, the people who really move a house — agents, who bring in the most potential buyers — were largely absent.
    Few ever brought buyers, yet each one brought a version of the same story: Dump your discount broker or your house won’t get sold.
    “One of the brokers told me that my house was the last one on their list to show a prospective buyer,” says Miller.
    Under pressure from his wife, Miller caved two weeks before Thanksgiving and hired a traditional agent charging a full commission. On a snowy day in November, 28 agents showed up. No sale as of early February, Miller reports, but seven potential buyers have been brought in for a look.
    Pressure to use full-price brokers
    Stewart and Amy Krummen planned to use a discount broker to sell their three-bedroom Cape Cod on Florida Avenue, but, they say, the owners of the five-bedroom split-level they wanted on Aquila insisted that the Krummens use their full commission broker.
    Why? The Krummens say they were told the owners were nervous they’d fail to sell quickly — and delay the Aquila closing.
    In the end, the Krummens acquiesced and paid $17,710 in full commission on their sale. The Aquila house seller declined to comment; the broker says the Krummens’ purchase was not contingent on their hiring her.
    The Krummens remember it differently. Either way, their house sold within 24 hours. Says Stewart, “We paid a lot of money for something we could have done with a day’s work.”
    Simple solutions to fee bloat
    The real problem in real estate transaction costs is greater than what’s happening on Aquila Lane. Home buyers are at a huge disadvantage when they deal with the realtors, mortgage brokers and title companies they hire. Most folks buy or sell a house only a few times in their life, so they build up little knowledge of how the process is supposed to work or how much it should cost.
    Meanwhile, real estate pros have relatively little incentive to treat customers fairly. Sellers often move, and buyers may not seek another house for a decade, which is longer than the career life of the average real estate agent. So unlike, say, a grocer or a hairdresser, agents get little repeat business.
    As the real estate boom enters what looks like a new phase of less frenzied growth, there’s more need than ever for laws that better align the interests of real estate professionals and their firms with the interests of their customers.
    Bundle services
    According to John Weicher, director of the Center for Housing and Financial Markets at the nonprofit Hudson Institute and a former HUD official in charge of RESPA regulation, one simple solution would be to allow real estate services to be bundled.
    Realtors or mortgage brokers could charge a single fee for everything a client needs to buy a house — loan, title, the works. Consumers could easily compare fees and rates, pushing lenders to compete on price. Lenders would also pressure title insurers, appraisers and other service providers in the same way that Wal-Mart pressures its suppliers.
    “If lenders had to buy their own title insurance, premiums would drop like a rock,” says Wharton’s Guttentag.
    Put teeth in RESPA
    Another way to correct the system would be to make lenders stick to their good-faith estimates. HUD officials, who are working on changing the rules of the closing game, argue that this could bring down costs because lenders would have an incentive to offer lower prices, not just lower estimates.
    Reform proposals have been floated before, only to be shot down by industry lobbyists. Maybe it’s different this time. The Justice Department has brought antitrust allegations against realtors. And perhaps HUD’s nascent efforts at reform will make a difference.
    A skeptical Allen Fishbein, director of housing and credit policy at the Consumer Federation of America, chooses to reserve judgment.
    “We have a long way to go,” he says. “Right now the only competition in the real estate business is to see who can get the consumer to pay the most.”

  46. Posted by movingback

    Wow! James can cut and paste! What a waste of space.
    James, obviously you have never owned a home, and clearly still don’t know what you are talking about.

  47. Posted by james

    was it too hard for your little brain to read all that moving nowhere?
    the original url and site that came from was unformatted so i was trying to do you a favor
    i take it you are an unemployed mortgage broker or title insurer by your reaction?
    how much did you steal from the public over the years?

  48. Posted by Professor Shays

    I’ve created a single blog site where you can monitor what is going on at the Mercury Companies through the postings of former and existing employees and customers of the Mercury Companies. You can reach the site at:

  49. Posted by james

    cool site daniel. you could just start an entirely new mortgage implode o’ meter for title companies.
    as an ex alliance title employee, i’m curious to hear how you guys justified your fees to run a title search, especially on a refi with your existing lender and home.
    don’t take this too harshly but i think you guys were robbing people blind with these fees for years and the re-examination of all fees in the real estate ecosystem is the one welcome thing we’ll see as a result of this crisis.

  50. Posted by former employee

    James….Will you PLEASE stop posting to this site. This all started out for the former employees to find out the “what and why” of the Alliance shut down. We as employees did not set the fees, we just worked for the company. So, if you want to know how the fees were justified, why don’t you talk to the Insurance Commissioner as all title companies are REQUIRED to post their fees with the Insurance Commissioner. So, please, let the ex-employees of Alliance have this site back and go find some other site to bother. Thank you.

  51. Posted by professorshays

    James, I don’t want to get in the middle of a discussion on whether or not title insurance premiums are justified. That is largely left to the market and the posting requirements of the Insurance Commissioner here in California. But I want to clarify something that you appear to indicate. That is that I am currently involved in the title insurance industry. That simply is not the case. I left that industry in 1995. Clearly a better industry at the time of my departure in terms of business ethics. I’d encourage you, and those interested in the business to read the Report to the California Insurance Commissioner issued in 2005 and titled”AN ANALYSIS OF COMPETITION IN THE CALIFORNIA TITLE INSURANCE AND ESCROW INDUSTRY.” The URL is provided below and it will likely help you in your analysis of industry pricing.
    I agree with the previous poster that your issue is not with the mid-level or lower-level employees as far as insurance rate schedules are concerned. The problem here (and yes there is one) was with the decisions of upper management to support activities that amount to illegal rebates to those able to control the flow of business.
    Report Site:

  52. Posted by movingback

    No James, I am not involved, nor have I ever been involved, in the mortgage business, title business, or insurance business. Your ignorance continues to shine through. You obviously have some frustration and bitterness that you need to get out of your system. Best of luck!

  53. Posted by Brian

    Alliance was a rip off. I won’t mention the name of the person in the office, but Alliance totally ruined my life along with Funding Foreclosures, a company that wrecked my credit and can’t be found either.

  54. Posted by james

    thanks for that link dan. very interesting stuff. confirms what i think most people know, title companies are criminal:
    Title Insurance
    In the markets for title search, examination and commitment and for policy
    issuance and service, we found the following:
    Reverse Competition
    Title insurance and escrow markets are characterized by reverse competition
    where the marketing of the products is directed at the real estate agents,
    mortgage brokers and lenders who steer and direct the home purchaser or
    borrower – the consumer who actually pays for title and escrow services – to
    particular title insurers, underwritten title companies and escrow companies.
    Residential consumers have little, if any, market power because title insurance
    and escrow services are required for the closing of a real estate transaction,
    resulting in inelastic demand. In a reverse competitive market, expenses are
    inflated as title insurers compete for the producers of title business – the real
    estate agents, mortgage brokers and lenders and others involved in real estate
    High Market Concentration
    We found title insurance markets highly concentrated – a few title insurers
    account for the vast majority of title insurance sales – at both the statewide
    level and at the county level in California. For example, three title insurer
    groups account for 77.4% of the market at a statewide level. At the county
    level, each individual market was highly concentrated.
    Excess Profits
    In a competitive market, sellers earn a reasonable profit. In the California title
    insurance and escrow services markets, both the title insurers and the
    underwritten title companies realized excessive profits over an extended period
    of time. In 2003 and 2004, underwritten title companies in California earned
    after-tax profits of 49.0% and 32.3%, respectively – excessive by any
    reasonable measure.

  55. Posted by former employee

    I had asked you a question earlier in this site, which you have failed to answer. You state that you are in sales….WHAT is it that you sell? Perhaps we would like to critize your product as well. You sure do have a lot to say about our chosen profession….why aren’t we allowed to say anything about yours?
    I also indicated that this site started out for the ex-employees of Alliance Title….and you seemed to think not. Well, if you look at the site name and the logo at the top….well “Tag Line Irony from ALLIANCE TITLE”.

  56. Posted by Professor Shays

    Having experienced people like James on forums like this in the past, all I can say is there is little you can do other than ignore them. They will continue to respond to any postings and in particular to postings that include them as the subject matter. Best to ignore and hope they go away. And yes, James, my title is accurate and represents the level of education I have. Additionally I left the title business in 1995, starting in it in 1972 as an assistant escrow officer fresh out of college, and spend my first 6 months n an intensive training program, learning about title operations with a focus on escrow.
    I wanted to clear up what appears to be an error in a couple of the postings. You will not see Alliance Title file bankruptcy because under California law (and the laws of other States) they are under the control of the State insurance commissioner. What you will likely see if the Mercury empire falls is Mercury Companies and the non-insurance related entities it owns and operates will file some sort of Chapter 11 bankruptcy proceeding if that becomes necessary.
    I remain somewhat amazed that there isn’t more information being reported by the main stream media. If I were a lender and one of the Mercury owned underwritten companies were handling my transactions, I’d certainly want a “closing protection letter” from someone like FATCO. Any idea if lenders are getting a bit concerned?

  57. Posted by Former ATC Employee

    It is true that no accrued vacation, commissions, etc, were paid to Alliance Title employees who were laid off on December 13.
    So if you are owed final wages, file a wage claim:
    Also, an up to 30 day penalty can be applied:
    My office was kept out of the loop, and let’s just say that we had to take a lot of the heat because Mercury wouldn’t, even though we had zero answers for fellow employees.

  58. Posted by Mark

    I am an attorney, and represent several former employees who were not paid what they were owed – – – long before ATC closed its doors. It is my opinion that ATC/Mercury promised large salaries (bonuses, etc.) in order to induce the top producers to accept employment, but never intended to pay what was promised. If you have any information on this, please e-mail me at

  59. Posted by Former employee

    On another note regarding former Alliance Title employee’s. Many of us had used the Payflex system to help with medical bills, prescription co pays etc. We specified how much money we wanted to go into this account from our paychecks. We were given a payflex card that could be used when needed to pay for such things from this account which was our own money. For those that were laid off, we were unable to use the balance of our own money we had in this account. Payflex states that any unused funds were returned to Alliance Title and then should have been returned to the employees. Where did all this money go.

  60. Posted by Professor Shays

    This whole deal is really lousy. I just started a flexible health savings plan this year but it never crossed my mind that this was an issue. My initial thought is “conversion” of your money might constitute a crime (if the people controlling the funds actually did use it). The problem of course is “who do you talk to”? What troubles me is why Mercury continues to operate other title companies if they treat their terminated employees in this manner. They of course sit as a fiduciary, holding customer funds. If they can’t handle employee owned funds properly, their continued operations need to be monitored closely to be sure they are not doing the same thing with customer funds. I’ll tell you that I’d personally be concerned if they were holding a large amount of funds for me as a buyer or 1031 exchanger.
    Take care,

  61. Posted by Frank

    I just found out today about Alliance closing their doors. I am the landlord for one of their offices, when I called about their rent being late I was told that they had closed their doors. Did they file bankruptcy? I’m not surprised that they went under. Everyone I ever dealt with from their office was an idiot.

  62. Posted by Larry

    Financial Title is the sister company to Alliance Title which just closed shop. Both are held by Mercury Companies Inc. How secure is Financial Title at this point? Any insights?

  63. Posted by Professor Shays

    I guess the concern I would have is given the fact that its continued viability is somewhat predicated upon the viability of its parent Mercury Companies, I’d be concerned at having Financial Title handle one of my deals. You just don’t, in the exercise of sound business judgment, close down an operating company and stiff your employees. Mercury made that decision, not Alliance (or so it seems).

  64. Posted by Frank again

    BIG companies are run by small minded people with no ethics it seems.

  65. Posted by Professor Shays

    From Inman:
    Last month, California’s Alliance Title threw clients (not to mention its own employees) for a loop by closing the doors of its offices without warning. Today, I’ve been checking out rumors that Mercury Companies Inc. — the parent of Alliance and sister companies Financial Title and Investors Title — may be preparing to pull out of the state altogether.
    Here’s what I’ve found: although the phones weren’t working at Financial Title’s corporate headquarters this morning, I eventually got a callback from a company executive who said Financial Title began winding down its operations in Southern California in October, and had wrapped the process up by Dec. 31.
    Financial Title executive vice president Sandi Sigg told me the company’s core market is Northern California, where “all of our offices remain open, and we are doing really well.” Some Financial Title employees in southern California were hired by Alliance Title and Investors Title, Sigg said, and others went to work for Nations Title, taking accounts and clients with them. Nations Title took over some of Financial Title’s offices, even keeping their phone numbers in some instances, she said.
    At Investors Title, an employee at the company’s San Bernardino office said the company is consolidating operations in Glendale. Division president and Los Angeles County manager Chris White’s voicemail said he was in the office today, but he didn’t return my call. The company’s Web site says it’s licensed to do business in six counties, but contact info for offices in San Diego and Ventura counties has been removed from the site.
    My call to a spokeswoman for Mercury Companies was not returned (they didn’t have anything to say in December, either, when Alliance Title shut down). Interestingly, the compay’s Web site was also down today.
    Meanwhile, Old Republic Title Company also appears to be closing or consolidating its SoCal offices in Glendale. When I called Old Republic offices today in Carlsbad, Chula Vista, Indian Wells, Lancaster, Ontario, Redlands, San Diego and Westlake Village, I either got a voice mail message saying the offices were closed and open files had been forwarded to the Glendale office, or, in a couple of instances, my calls were just forwarded directly to that office.
    Multiple requests for comment to officials at Old Republic Title’s regional headquarters in California and the company HQ in Minneapolis yielded no results.
    If you were employed by any of these companies — or employed their services — I’d be interested in hearing about your experiences. Call me or shoot me an e-mail.
    A title industry veteran who told me he’d managed county offices for both Alliance Title and Old Republic said Mercury and Old Repulic are employing the same strategy in Southern California: “Bring your wagons back into LA, and see if you can survive — and if you can’t, you turn out the lights.”
    The former manager said that while the downturn in the housing market has meant less business for all title insurers, both Alliance and Old Republic had profitability issues predating the current downturn.
    UPDATE: An Inman News reader says Old Republic Title has disclosed to clients plans to close its office in Burlingame (that’s south of San Francisco) in the next two weeks and consolidate in San Carlos. This reader expects other title companies in San Mateo County to make similar moves.
    Also, Financial Title has closed its office in downtown Livermore (east of San Francisco). Call the old number there and you’re forwarded to an office in Pleasanton, where a staffer told me, “all the Livermore girls” are now working.

  66. Posted by Ex ATC-Sacramento

    It is clear ATC had the same set up in Sacramento that they did in the neighboring areas just different idiots running the ship. When ATC first came to Sacramento they were infamous for hiring all of the “HOT” female reps, and then offering HUGE signig bonuses to the Escrow Officers from the other title companies prior to the BIG refinance boom. Buying business was the way of the land for ATC. The problem was everything that all of you have pointed out…It was a scam, and even though we were all paid well for what we did the managers like Rob Awalt, Chad Barth, Ami Kellogg, and Patrick O’Donnell were taken over to Financial or LFC to continue making the big money. And why should that bother any of us? Well, we didn’t even get our final commission, vacation, or anyother of the monies owed us…But, rest assure I am a big believer in karma. Everything happens for a reason and when this ship hits land again the companies that try and do what ATC did this last time around won’t even get that secret coffee shop meeting to try and steal good Escrow Officers away from solid companies that made it through the tough times.

  67. Posted by Lisa

    I just found out that Alliance is no more. They were one of my clients ( dealt with dozens of their offices in CA). I am a notary in CA and was owed money by the Castro Valley office. I last communicated with them last month. I am amazed at all that I am reading today. I know I am not an ex-employee, so I hope its ok that I post this. I know how hard and dedicated Alliance employees were. I did alot of calling this morning to FTC and was told by some that they were no part of ATC. So I am sorry to hear about this. Best of luck to all of you out there.

  68. Posted by Professor Shays

    The article found at the link provided below gives additional information on this whole story:^1574361

  69. Posted by EX ATC SAC EMPLOYEE

    I used to work for ATC in Sacramento…I feel really sorry for any one that has every worked there and you have to deal with this junk. I was let go by them because of someone I was working with was using my password and cutting some fee checks. They sure did screw me around when I told them I was not there to do that. They are a bunch of chickens there and can’t stand up to an EO that has done them wrong. Of course shortly after they let me go she left….I wish you all the best of luck and keep us posted on any lawsuits out there, I am sure some of us could get them for something…….like no lunches…working late and having to clock out becuase they were not paying overtime….just a few…..GOOD LUCK TO ALL

  70. Posted by BRIAN

    The county manager for SF/SM not only had a problem with his professionalism, but messed up his personal life.

  71. Posted by former employee

    Has any of the former Alliance Title employees in California received their W-2 yet? I have not yet received one….gee….do you think were gon’na get one????

  72. Posted by ATC Shasta Employee

    I haven’t heard of anyone getting their W-2. They were always right down to the wire. I don’t think that is going to change. I do know that Mercury Companies took over Alliance HR department. Maybe they will come through, I wouldn’t hold my breath.

  73. Posted by Pissed Off

    I haven’t received my W-2 yet either. Thought legally they had to send by the 31st. I guess when it comes to Alliance they are above the law and don’t care. I really can’t see how some of their employees went over to Financial Title knowing how their fellow employees were royally screwed. They just keep feeding the beast with no sense of morals. The Almight Dollar is more important the comraderie. Some of them brag about being President of the escrow association, and yet continue to work at Financial Title even though they know when sleeze balls the Hauptmans are. Oh yeah… and good luck Ray (former County President of Alliance). You really screwed a lot of escrow officers without a blink of an eye. Hope you stay unemployed you creep.

  74. Posted by Screwed by Alliance

    Here’s the real reason Alliance shut down….
    They are involved in a huge FBI investigation for fraudulant transactions. Over 400 properties involved.
    Any other questions, just post a comment!!!

  75. Posted by waldo

    Doesn Anyone know the answer???
    alliance title in ATWATER, CA did my title insurance work in 2005 when i last refinanced, there was a lien from a bail bondsman that shouldnt have been there, anyways i was able to refinance without paying it off because it wasnt owed. their escrow officer back then said dont worry i will get a release and record it within 30 days. i just started to refinance again and i’m told that this lien still shows up. what can i do now if ALLIANCE TITLE is out of business?. who can i go and complain to? wouldnt they be held liable for this shady title work?

  76. Posted by ex vp-nv division

    Yes, over a year ago, I personally saw the books being manipulated to cheat the employees, then they released me without the non-compete clause, and paying me…………. now I see, how karma came back to them… yes they bought business and did everything NOT by the book in Nevada.
    anyone know where I can put my claim for my money owed? Nevada shut down the same way, everyone owed money, at least that is what I am told.
    as for John Harritt, What a salesman!
    what else can I say>>>>

  77. Posted by Georgene

    We used Alliance Title when we purchased our current property. We are in the process of selling it and I just found out that liens(from the previous owner) were not cleared. I’m to close escrow on the 1st and don’t know what to do now to prevent a delay. Can anyone help me?

  78. Posted by Trip

    Georgene, you need to talk to a real estate attorney right away. Your title insurance should cover the costs of clearing all the liens even though Alliance Title is defunct. I suspect you will have problems closing with the title not cleared, but an attorney may be able to get you quick results depending on the nature of the liens. I suppose you could see if your current title company can help so you don’t need to incur the costs of an attorney, but I suspect the reason you are posting here is your title company punted it back to you.

  79. Posted by Mary

    Who can tell me who has the files of Alliance. The sent some checks for a refi that seem to have disappeared and my client is in danger of losing their home. All she has in a closing statement from Alliance. We need copies of those checks immediately. Can you help me locate their files.

  80. Posted by Susan Miller

    I can tell you where all the file are… at the city dump. They didn’t pay Cor-o-Van (storage) and all files were destroyed. I worked in the “Escheat Department”, I had at least 5 million in funds that belonged to borrowers and creditors sitting on my desk. When they shut the doors that money became lost forever. My boss had a file that held 375K waiting for the seller to open a checking account. I’m sure he freaked when he called and the number was disconnected. If borrowers only knew how many files Alliance Title management allowed to be closed with funds held. They just sent them to storage. Why would they care? The escrow officer already got their bonus, Alliance already collected their fees, why would they care if your taxes or credit cards didn’t get paid. The percentage of files closed incorrectly was staggering. I’m ashamed to have ever been associated with the escrow business.

  81. Posted by RB

    Interesting reading this after two years. Still surprising to see that some blamed Alliance HR for the handling of W-2s. While Alliance HR/Payroll handled checks for the most part, it was all Mercury when it came to W-2s.

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