A Debate on Suggestions that the Surety Bond be increased

  • 10/02/2012 10:20 PM
    Message # 1091916
    Anonymous
    The following thread was copied from a series of open emails and in my opinion shows exactly how FLTA is supposed to work.   We should be an open forum for discussing differing ideas about improving our profession.   We won't always agree -- but together we hope to come up with an even better answer than any one of us alone.   

    I want to thank each of those who contributed to this discussion and invite all of our members to join the discussion -- its continuation during the monthly agent section calls, and hopefully leading to final decisions and a legislative strategy at our annual convention. 

    Alan


    From David Lanaux 
    RE: FLTA Agent Section Monthly Call 
    10-2-12

    Just in case we are having a vote and/or discussion, via the agents conference call tomorrow in regards to increasing the surety bond in Florida, I wish to share some comments. Not many people and/or agents know much about this surety bond increase that is being lobbied and/or proposed. I can’t imagine a vote over the phone being legal or binding but I suggest that either you vote no on this or not vote at all on this important matter. There has been no proposals sent out for our review as to what this “Bill”  would look like or what it states. If we don’t step back from this and take a hard look at the consequences of this legislation you will wake up one day like we did when the “butler rebate” was approved and ask yourself what happened?

    I am not trying to create a problem but I have had a tough time getting any information on this proposed bill other than being requested to contribute to a lobby fund in support of a bill that has not been circulated yet. Personally I am not contributing to the lobby fund as I have every year, until I know what the agenda is! Has anyone seen this proposed bill? Does anyone recognize the down side to this proposed legislation? There are consequences to this kind of bill being passed. To many to be discussed here and now. If someone has a copy of the proposed legislation please forward it to me. If we do not have it yet, then why would anyone vote on whether or not to move forward on this. I believe to little information has been disseminated in this regard and I learned a long time ago, if it is hard to get answers to something, then chances are someone is hiding something.

    I say all this respectfully, but from what I hear this “proposed” legislation may have some upsides to it, but it has also been discussed that the downsides may be life threatening for some smaller “quality agencies” already in existence. So think carefully before jumping into this please. We need to have a clear understanding as to what it is that we are trying to accomplish here.

     I’m not sure a message from Florida to the rest of the world that we need more self regulation is the kind of message we need to be sending out, especially when lenders are trying to have us use third party venders to do background checks on us. (Vetting the agents). Hope this stimulates some thought on this. Thank you.

    David D. Lanaux
    President
    TITLE PROFESSIONALS OF FLORIDA
    13241 University Dr. # 103
    Fort Myers, Florida 33907
    Phone: 239-433-2900
    Fax: 239-433-0233
    www.titleprosflorida.com

    From Skipper Henderson
    10-2-12

    David,

        Thanks for the email. I agree. I am not the least bit interested in increasing the proposed surety bong requirement. If for no other reason, its going to cost more. I don't know about the rest of the title industry, but I'm finding it difficult to make ends meet. I am not supportive of anything that is going to increase my cost of doing business, surety, vetting, taxes, price of milk, bottled water, etc., etc. you get my drift.

        I just want everyone to stop trying to "help" me. The current government is do a good enough job putting me out of business, thank you very much.

        ROMNEY/RYAN 2012,

    Skipper Henderson 


    From Vince Cassidy
    10-2-12

    Reply coming very shortly.  I am glad people are getting engaged.

    Regards,

     

    Vincent J. Cassidy
    President
    Majesty Title Services, LLC
        
    “Where Service Reigns”

    (813) 831-3885 X 110 Office
    (813) 777-9748 Cell
    (813) 868-3751 Fax 

    NOTE OUR NEW ADDRESS:
    4006 S. MacDill Avenue
    Tampa, FL 33611
    www.majestytitle.com


    From Bob Booth
    10-2-12

    Experience & Credentials vs. Financial Investment & Net Worth

    The more I ponder the concept of how to ‘raise the bar’ of title agents and supporting an effort to accomplish the goal by way of raising statutory requirements with regard to surety limits, the less convinced I am this is the wisest path to travel.

    As agents we’re all business owners (many being small business owners) it seems counter-productive to be looking at ways to increase our cost to conduct business as we try to generate a profit; or to ways that’ll add additional costs to our customers without adding value to justify it.

    Higher surety limits essentially only serve to protect underwriters from regretful decisions later realized; it won’t raise the bar, nor will it increase the professionalism of our industry.  These things can only be accomplished by way of education and higher standards of ethics; which if so breached result in severe penalty – financially and criminally.

    At the end of the day if an underwriter is tempted to sign an agent/agency, but they’re leery for one reason or another, they already have the ability to demand additional assurances.  They can simply require additional bond or capital in escrow.  The limits set by statute are minimums, not maximums.

    In order to achieve the goal of ‘raising the bar’ with respect to Florida Title Agents the 1st thing we must do is to change the focus of our conversation from title agent to title industry.

    The hard facts are, there are no (or darn few) collegiate classes, and no title academy one can attend to learn the title profession, it’s OJT at its finest.  If we do truly wish to raise the bar we (as an industry) have to get back to considering years of experience, education & character, and those determinations need to be applied by, and should be made by the underwriters, not by state regulators.

    It’s a slippery slope when the 1st motivation to sign an agency is based upon quick profit returns promised by someone who’s a good marketer, or who may know people, as oppose to someone who’s actually qualified.  We insure real estate, it’s more than location, it’s education, education, education.

     

    PS: They're a lot of sharp minds out there, I'm sure others have ideas as to how we can raise the bar & improve our profession; give it some thought, let's work together to achieve that!

     

    R.F. "Bob" Booth, Jr., C.L.S.
    ~ COMMUNITY LAND TITLE ~
    A Full Service [Veteran Owned]
    Florida Title Insurance Agency
    2400 SE Veterans Memorial Pkwy
    Suite 214 - [2nd Floor]
    Port St. Lucie, Florida 34952
    Office Phone: (772) 337-3335
    www.CommunityLandTitle.net

    From Beverly McReynolds
    10-2-12

    Bob,

    Many good ideas here. Thank you!

    We do have some of the best minds in our industry participating in this discussion and I am confident that we can find an acceptable direction if we all work together. I hope you will all be on the call tomorrow and I sincerely hope to see each of you at the convention where we can continue to face our challenges and craft solutions!

    Beverly

     

    Beverly McReynolds
    President
    North American Title Company
    700 NW 107 Ave., Suite 100
    Miami, FL 33172
    305-229-6517
    305-229-6559 Fax


    From Vince Cassidy
    10-2-12

    David:   First, thank you for taking the time to express your thoughts.  We need more agents active in our industry association and certainly your email should get some folks thinking.  I would like to clarify a few things you wrote about.  There will be no vote taken on tomorrow’s agent call.  I do not know who told you that there would be.  There will only be a continuation of the discussion we have been having the last six months.

    As far as legislation goes, since there is no definitive direction as to how we raise the bar, there is no legislation to pass around for comments.  I would recommend we come to an agreement first, and then pass along proposed legislation.  Nothing will be crammed down.

    The movement to raise the bar was an action step based on national trends that where threatening the agent model.  With the onset of third party entities vetting agencies on behalf of lenders, we are seeing the first changes to affect the agent model.  The FLTA Agent section has tried to get ahead of these issues by trying to make the agents stronger so lenders wouldn’t have concerns with our viability (third party vetting tells me they have concerns about the current model).  “That classic  line comes to mind, “Either be at the table figuring this out, or be on the table.”

    During our annual convention this Nov, we will have more discussion on “Raising the Bar.”  That will be a great time for more agents to come together to figure this out.  I look forwarding to seeing many of you there.

    Finally, no decision has been made that I am aware of; just discussion has taken place to insure our model survives changes that are much bigger than FL.

    Regards,

     

    Vincent J. Cassidy
    President
    Majesty Title Services, LLC
        
    “Where Service Reigns”

    (813) 831-3885 X 110 Office
    (813) 777-9748 Cell
    (813) 868-3751 Fax 

    NOTE OUR NEW ADDRESS:
    4006 S. MacDill Avenue
    Tampa, FL 33611
    www.majestytitle.com


    From Peter Christiano

    I agree with the below, whole heartedly.  [referring to Skipper Henderson and David Lanaux's emails]

    From the discussion I have heard, the drive behind increasing the bond amount is a simple one, to erect a barrier to entry into our business.  

    As anyone who has taken even an entry level business course knows, once you are in a business, one of the basic things to strive for is to erect barriers to entry into that business; whether it be through product engineering, better distribution, or cost of Surety and Fidelity Bonds.  Most people, when starting a business, look for one that has lower barriers to entry.  

    We have all seen the effects of easy entry into the title insurance business.  Over the past decade, we have been frustrated by being underbid and out-schmoozed (really a word?) by Bagel Bimbos and fly-by night agents trying to make a quick buck because they saw success and assumed they could duplicate it.  

    However, over the past 3 years have witnessed a culling of that herd and are finally beginning to experience a balance in our industry.  The small agents that have survived have done so because they have had the capital to fund their business through that time, or because they are so good at what they do that they have maintained a following, albeit modest, of professionals.  

    We are now entering a time in which the small agent stands a chance of making a living if he/she manages his/her business prudently.

    We have survived the tough times and now are faced with another threat to our very existence.  

    For those who do not know me, let me fill you in on what I consider to be a fundamental truth of our business.  The competition and, therefore the threat, to the small to medium size independent title agent is not the small agent across the street, or across town.  We have lived for to long believing the myth that the small agents who have survived this shakeup are threats to us.  

    On the contrary, the network of now solid, independent agents, who have survived the past few years, collectively represent a viable alternative to the national title insurance agencies.  We are what many small realtors and loan officers seek; independent, local business owners, like themselves, who understand that our survival depends on how we handle every single detail of every single transaction for them.

    The result of raising the bond requirements impacts the national companies negligibly, yet it can drive us out of business.  Do you think they will support that?  You bet they will.  Keep in mind that we are not just talking about a moderate increase in cost.  The elephant in the middle of the living room, and what no one is talking about, is the fact that those that provide the bonds might not make the larger amounts available to the small agent.

    As this issue demonstrates, the small agent is at a crossroads.  It is time that we wake up and recognize who really is and who is not a threat to us.  It is time that we join together as one voice and send the message that we are doing quite well without more regulation. 

    Higher bond requirements will do nothing to make us more competitive.

    Higher bond requirements will do nothing to make us more prudent in our daily activity.

    Higher bond requirements will do nothing to make us more responsive to our clients.

    Higher bond requirements will do nothing to make us better insurance or escrow agents.

    Higher bond requirements will only serve to hurt us, drive some of us out of business and make the national agencies even stronger.

    Respectfully,

    Peter Christiano  

     

     

    Peter Christiano
    Marlin Title
    727-791-7000
    pchristiano@marlintitle.com
    www.marlintitle.com



  • 10/02/2012 10:29 PM
    Reply # 1091921 on 1091916
    Anonymous
    From Marti Kendall
    10-2-12

    I absolutely whole heartedly agree 110%; you have all made it perfectly clear why we should not have a higher bond.  Peter Christiano I could not have said it better, I don’t know you but look forward to meeting you and all the other agents at the convention in November. Thank You all !!

    Martha J. "Marti"

    Kendall 
    Licensed Agent/Owner
    KENDALL TITLE SERVICES, INC.
    12058 San Jose Blvd.# 204
    Jacksonville, Florida 32223

    904-230-1063 ext 202
    Fax 904-230-3463
    Check out our web site www.kendall-title.com


    From Joanne Quarles
    10-2-12

    I AGREE, PETER DID A GREAT JOB!

    Now let’s all work on getting the “bar” set and work together for a better Title Agency world for each and every one of us!

    I look forward to meeting you all at the FLTA convention.  It is important that we be there, know each other and make our stand!

    May this be the best year ever for you!

    JoAnne

    JoAnne Quarles, C.L.C.
    Treasure Title Insurance Agency, Inc.
    12184 W. Colonial Drive, Suite 102
    Winter Garden, FL   34787
    Office:   407/654-8811
    Fax 407/654-4885
    Cell 407/758-4479
    mailto:joanne@treasuretitle.com
    http://www.treasuretitle.com
    http://www.linkedin.com/in/joannequarles


    From Alan Fields
    10-2-12


    I can’t tell you how pleased I am to see this type of principled discussion going on within your association.  To me, it shows that we ALL want to create a stronger, better title industry – and right now we are just discussing how best to achieve that common goal and debating what a “better, stronger” industry might look like.   To some, it’s having financially strong agencies  (we do, after all, hold a lot of other people’s money) and a surety bond is just , to others it’s agents with a strong depth of knowledge and experience; to some it’s increased educational requirements.    I suspect each of us will have slightly different views of what a “perfect title world” would look like, and we are all looking for the best way to achieve that.

    But the important point here is that we are seeing an honest debate among dedicated professionals about how to improve our industry and our profession.   For the benefit of those not on these email chains, I’m reposting these to our Title Forum.

    So Please – Keep this discussion going in these emails, on tomorrow’s call, and at the convention!

    Thank you all for continuing to help make our industry better!

    Alan

    Alan B. Fields
    Executive Director
    Florida Land Title Association
    249 E. Virginia St.
    Tallahassee, FL 32302
    727-773-6664
    F) 727-608-4669
    alan@flta.org
    website:   www.flta.org


    From Rosa Peck
    10-2-12


    Thank you Bob!

    True experience expressed is always the best! 

    I understand that many states are looking at our model in Florida and are leaning toward the way we conduct our business. Raise the bar?  Florida title agents have set the bar!  Our lenders and consumers are protected.  If we spend our time finding ways to get our message out to the national lenders, we would be better served by our association and ourselves.  This should be the direction of our leadership.

    Unlike some, I’m proud to be a Florida Title Agent and I’m also proud of our industry.  Especially my competition and friends in my own market.  We made it through the tough times and we deserve to be in business and not to be regulated out of business.  Newby’s need to earn it just like we have.

    Rosa Marie Peck
    Proud member of the Florida Land Title Association since 1990
    President
    Title Connection, LLC
    1415 Panther Lane, Suite 160
    Naples, FL  34109
    Phone:  239.593.0016
    Fax:  866.728.2993
    E-mail:  RosaPeck@FLTitleConnection.com

    Make sure to only close with a member of the Florida Land Title Association


    From Aaron Davis
    10-2-12

    Very good discussion agents

    I am in favor of raising the bar for our industry and the overall perceived professionalism of our agents and businesses. The way I look at it is simple:

    To open a title agency currently- one needs:

    • ·         2 mortgage broker buddies
    • ·         1 cousin who is a realtor
    • ·         $350 for a surety bond
    • ·         Fidelity Bond last I checked was under $1000
    • ·         E&O for startup is about $2000 (with monthly financing options available)
    • ·         Borrowed laptop
    • ·         Fog a mirror

    I am joking, however this is how the business and our industry is viewed upon by the outside world. Florida has the lowest levels in the nation of bonding requirements (other states require $200-300k, even CASH on hand, and not bonds in some areas), and Florida ranks amongst the HIGHEST in the country for Fraud and Defalcations. South Florida JUST experienced yet another defalcation, this one making headlines with the owner taking off with $3M from escrow.

    My fears, and fears of many of those in the industry, is that this “vetting” process is step ONE, of many to come- to drive the agents OUT. The Lenders are not going to want to do business with those who, on a whim, can take off with millions of dollars and other peoples money. One of the solutions in the lenders eyes is the ELIMINATION of the agent, and eliminating their ability to hold escrow. Only dealing with the Directs directly.

    I agree with Bob’s statement below, I would like to see the UNDERWRITERS control much of this with higher limits, more policing (NOT additional regulation, just enforcement of what we currently have), however, if the state limits are the MINIMUM requirements, all it takes is ONE UW to NOT require the higher limits (which I am sure they all would love to have), then that UW would have a competitive advantage over the rest. THAT is why the UWs will not or can not require it.

    Other issues discussed on recent calls were ideas such as additional title licensing for marketing reps, increases in the CE requirements, the aforementioned higher bonds, etc.

    We as an industry or as an association will not make everyone happy, but I think we MUST do something to show the outside world that we as agents and an association DO want to fight fraud, raise our standards and professionalism, even if its at some costs to us, before someone in Washington or Wall St. makes those decisions for us. I don’t consider any of the discussions thusfar to be creating barriers to entry (if an extra $1,000 per year for bonding is a high hurdle, I think there are larger issues at hand), I see it as a costs TODAY to protect our business, investments, and livelihood TOMORROW.

    I look forward to a great discussion tomorrow on the call, and hope to see you all at the convention in November.

    (BTW in case anyone was wondering, the costs for a $100,000 Surety Bond is about $1,000.00.$35,000 = $350.00, $150,000 = $1500.00. you get the picture.)

    Please keep the emails coming, the feedback is fantastic! Thank you all.

    Aaron M. Davis | President/CEO

    www.hillsboroughtitle.com

    P: 813.754.4440  |  F: 813.754.0915

     We Do Good Deeds



    From Rosa Peck
    10-2-12


    Vincent,

    I understand David’s comments.  You commented on the last conference call that  something had been written and being reviewed by a couple of people and then would be sent to our lobbyist. I heard it, too.  Everyone on the call heard it. So, if not proposed legislation, what is it and why would it go to our lobbyist? 

    I too will not continue to contribute to our lobby fund until there is transparency again in our association.

     

    Rosa Marie Peck

    Proud member of the Florida Land Title Association since 1990
    President
    Title Connection, LLC
    1415 Panther Lane, Suite 160
    Naples, FL  34109
    Phone:  239.593.0016
    Fax:  866.728.2993
    E-mail:  RosaPeck@FLTitleConnection.com

    Make sure to only close with a member of the Florida Land Title Association



    From Rosa Peck
    10-2-12

    Hi Aaron,

    Sure, it is embarrassing to us in the industry when we find a bad apple.

    But Aaron, surety bonds protect the insurer only.

    In the latest defalcation that you mention, did the consumer or lender lose any money?  How were they affected?

    If the insurers want bigger bonds to cover their own losses from any bad apples that they let into  the business, I would think that they would buy additional insurance to cover  themselves and not place the burden on good agents with unnecessary expenses to compensate for the few bad apples.  If we choose on our own as business owners without regulation requirement to increase our professional liability insurance and fidelity bonds, that is good business on the agents part.

    Rosa Marie Peck

    Proud member of the Florida Land Title Association since 1990
    President
    Title Connection, LLC
    1415 Panther Lane, Suite 160
    Naples, FL  34109
    Phone:  239.593.0016
    Fax:  866.728.2993
    E-mail:  RosaPeck@FLTitleConnection.com

    Make sure to only close with a member of the Florida Land Title Association

  • 10/02/2012 10:32 PM
    Reply # 1091924 on 1091916
    Anonymous
    Aaron Davis -- response to Rosa Peck (Aaron's comments highlighted in Yellow)
    10-2-12

    Hi Rosa- answering below:

     

    Hi Aaron,

    Sure, it is embarrassing to us in the industry when we find a bad apple.

    But Aaron, surety bonds protect the insurer only.

    In the latest defalcation that you mention, did the consumer or lender lose any money?  How were they affected? ---They were not affected…this time. My point to this is how many more times can it occur until a lender the size of Bank of America makes a blanket decision to NOT do business with independent title agents in the state of Florida at all, and only directs- or for the agents on the “approved list” to have higher bonding requirements, limits, cash on hand, etc.

    If the insurers want bigger bonds to cover their own losses from any bad apples that they let into  the business, I would think that they would buy additional insurance to cover  themselves and not place the burden on good agents with unnecessary expenses to compensate for the few bad apples. ---I fully agree with this statement, and wish my health insurance carriers would do the same, and not increase my rates if I am healthy, just because someone else on my plan or lives in my zip code has cancer or another health issue. Unfortunately as with ALL forms of insurance, the bad apples DO increase the rest of our costs. I wish also that other people will pay for the expenses, and costs of doing business. I’m sure over the years most of us were forced to raise our fees in some way because our COSTS increased (banks wiring fees, Fedex bills, etc.), and closing costs in general through statewide increases in doc stamps, recording fees and more. Those costs all ultimately affected the consumer. In this scenario- WE are the consumer, we are insurance sales professionals looking to continue to offer a product. (At least in DFS and OIR’s eyes. I know we are MUCH more than that, but unfortunately our legislators and the majority of the public have NO IDEA what we do, but that’s another discussion.)

    If we choose on our own as business owners without regulation requirement to increase our professional liability insurance and fidelity bonds, that is good business on the agents part.--- I agree as well, it is good business. However I would rather make that decision myself NOW, by a token increase if nothing else, than not have a decision at all when a national lender makes that decision for us. And if/when they do, it wont be something subtle as a bond increase.

    We as an association are not going to do anything that is not in OUR collective best interest, and in the best interest of our industry. So I ask you agents here on this email- if not higher bonding requirements, then what SPECIFICALLY would you suggest we do to send a message to our clients, our legislators, and our government that we WANT to raise the bar and set a higher precedent for our industry, because WE TOO are sick of seeing the bad seeds destroy our reputations as title professionals?

  • 10/03/2012 2:44 PM
    Reply # 1092607 on 1091916
    Anonymous
    From Skipper Henderson
    10-3-12

    Alan,

        I agree, this is a great discussion and points out the many differing points of view of others in the industry. It also reinforces the fact that what is good for one is not necessarily good for all. Furthermore, what may seem minor to some is major to others.

        We need to learn from past mistakes by inviting "legislation" into our industry. Once a "bill" is introduced, it vary rarely comes out the way it was intended. Further regulation of our businesses is not the answer and increasing the cost of staying in this business is not the answer.

        We have lost the ability to charge "examination fees", have not had an increase in the "risk rate" in so long, I can't even remember when the last one was, no one wants to charge "legitimate" search fees, etc., etc. My hard cost have gone up ex potentially and sales have decreased. The perfect storm has arrived.

         Our industry is having a "knee jerk" reaction to what some see as a potential threat. I would like to suggest that we not over react and pause to see what this new era of lending and closing real estate transactions landscape looks like. 

        One thing to remember, is that independent title agents do not represent lenders. This whole conversation is based upon the false assumption that agents "represent" lenders. We do not. We are nothing more than a "closing agency" and our obligations lie with our Underwriter. At the end of the day, all the bonds and e & o insurance in the world isn't going to prevent stealing. 

        What should be happening is our associations (FLTA/ALTA) and Underwriters should be combating this, understand I'm not suggesting they are not. What an independent title agent thinks, as evidenced by past comments by OIR, is irrelevant. 
     
    Skipper Henderson 
     

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