June 2008 | Volume 1 - Number 1

Update from the CEO

Your Report from ATG's President

photo of Peter Birnbaum
Peter J. Birnbaum



ATG and the title industry are faced with many important issues, from the continuing challenges in the housing market in our own neighborhoods, to RESPA Reform at the Federal level.

The Housing Market

The housing market continues to be plagued by the ongoing subprime loan debacle.

Not only is the volume of transactions down significantly but the deals out there are far more difficult to close. Hard-to-complete short sales are abundant; there are far fewer mortgage products available, and it is increasingly difficult for borrowers to obtain appraisals to support financing for their purchases. Downward pricing pressure will continue to discourage equity-strapped home sellers, some of whom already have 100% financing.

Many sellers are "upside down," faced with the prospect of having to bring cash to the closing in order to pay off their mortgage and close the transaction. Many of these sellers have found it more desirable to take the property off the market, or simply walk away from the property. We believe that the problems roiling the housing market will continue through the remainder of the year.

Despite the significant downturn, ATG enjoys excellent financial health. The Trust and Judicial Sales businesses have flourished. We don't chase the fast dollar. Unlike many of our competitors, we didn't pursue subprime business, have excellent systems in place designed to minimize our exposure to fraudulent transactions, and follow reasonable underwriting standards.


RESPA Regulations

Despite the widely held view that the new RESPA regulations would have no negative impact on our industry, the new regulations have been released and they are potentially very problematic for our membership.

The new RESPA regulations were said to be geared toward a modification of the Good Faith Estimate and HUD-1. While that is true, a new and ominous provision in the regulations allows the lender to steer the selection of the settlement service provider at the time of the tender of the Good Faith Estimate to the consumer. The theory is that if the lender is recommending the provider, they can guarantee the price of the service. As you can imagine, the national lenders see this as an opportunity to secure monopolistic control of a new revenue source.

It feels like Groundhog Day. These new regulations will require major legislative effort on our behalf to ensure that our members continue to have the ability to provide title services to their clients. The proposed rule was released in March. We have hired lobbyists and are diligently working to make sure your interests are protected. We have already been to Washington, D.C., twice in recent weeks and expect to spend considerable effort in the near future.

As in the past, we will be looking to our members to participate at the grassroots level. We need our members to communicate with their key contacts in Congress as well as submit their comments to HUD.  


Election of Directors

We are pleased to announce the election of two new Directors to the Board of ATG: Aurora N. Abella-Austriaco and Murphy C. Hart. Aurora and Murphy are already well known to many of you.

Aurora N. Abella-Austriaco is a great story of success in the ATG family. She came to the United States at the age of 18. Her first full time job was at ATG in our Accounting Department. She worked at ATG all through college and law school. She worked at ATG as a lawyer before going to work for the great, Harold Levine. She now practices at Peck, Bloom, Austriaco & Mitchell. Aurora is running for State Representative in the 65th Illinois legislative district. I hope you will vote for Aurora if you live in her district or support her candidacy through contributions or other volunteer work. We can count on Aurora to understand the issues facing the real estate bar and the clients they serve.

Murphy C. Hart is, and has for many years, been one of ATG's top issuing members. He practices in the law firm of Hart & Hart, one of the oldest family law firms in continuous practice in Illinois. It was founded in 1887 by William Hart, Murphy's Great Grandfather. Murphy's father, Richard is one of the founders of ATG and was a well respected member of our Board for 43 years. Murphy is also on the Board of Directors of the ISBA Mutual Insurance Company. He also claims the distinction of being Illinois' best golfing lawyer, having secured the top spot in all the local and regional events, except to my dismay, my Member-Guest.

Changes at ATG

ATG Exits Mortgage Business — After months of careful consideration, the boards of ATG and our subsidiary, Capital Funding Corporation (CFC), have made the decision to exit the mortgage origination business. CFC will be closing its doors June 15, 2008. We made every reasonable attempt to avoid this result, however we have determined that it is in the best interest of the company and its members.

We salute our dedicated, capable staff and loan originators who have actively participated in our efforts to maintain and expand the role of real estate lawyers in the residential conveyancing process. The challenge of a prolonged period of declining transactions has forced us to evaluate each segment of our business, which led us to make this and other difficult decisions. Unfortunately, business conditions being what they are, we must focus on ATG's core businesses. It is with that objective in mind that we take this action. We thank you for the support you have given CFC over the years, and for the opportunity to work with you on a business conceived to further ATG's mission to be the premier lawyer service organization for the benefit of the profession and the public.

ATG Closes Homewood Office — The ATG office in Homewood will close at the end of the month. The last date for closings in this facility is June 27, 2008.


The Competition

With so many companies competing for so little business, competition is fierce. We are continually doing battle with competitors who are willing to cut corners in the exam process, exposing both themselves and their agents to regulatory action and significant claims loss. If you work with a company that doesn't require you to follow the guidelines published by the Illinois Department of Financial and Professional Regulation or RESPA, you are putting yourself at risk. We urge you to resist the Faustian bargain of big pay for no work.

Many publicly traded title companies continue to be hammered by Wall Street due to ongoing problems in the housing market, as well as their own misguided decision to aggressively pursue market share by closing subprime loans and failing to follow reasonable underwriting standards.

The combined losses of the title industry in 2007 will exceed $500 million.

National companies have significantly reduced their agent relationships in favor of more profitable, direct operations. It is noteworthy that some of the pain experienced by our major national competitors may be to our benefit. ATG has always been adept at servicing smaller agents and opportunities may exist in this market to do so.


Heger Litigation

We are pleased to report that the Heger Class Action lawsuit was finally settled early this year. I have to say that the entire experience was one of the most distasteful of my entire legal career. There is no doubt that the class action bar is in desperate need of reform. In our case, the attorneys' fees to the plaintiff exceeded the estimated pay out to the consumers by 500%! Tell me there is not something wrong with that picture. Be that as it may, we are pleased to put this matter behind us. It is critical that we strictly comply with the terms of the Heger settlement, particularly the provisions relating to the collection of the exact amount of recording fees and the specific rules for releases and certificates of release as outlined in the February 6 memorandum to ATG members from August R. Butera, which can be found in the Memo Library on the member/agent section of our website.


ATG Legal Education

In addition to our OnSite programs, we are pleased to announce the introduction of ATG Legal Ed OnDemand programs, including two Professional Responsibility Programs providing all four required hours for MCLE.

We offered extensive ATG Legal Education programs during May and June. It is our commitment to deliver a panoply of programs in these months to ensure those still needing MCLE hours by July 1 will have access to top-flight, low-cost programs. As a reminder, new rules provide that attorneys whose last names begin with A through M must complete 20 hours of MCLE, including four hours of Professional Responsibility, by June 30, 2008. ATG Legal Education can provide all the hours you need to complete your MCLE requirements.


ATG Trust Company

ATG Trust Company recently passed the quarter billion dollar mark in assets under management. ATG Trust provides a vehicle to enhance your relationships with your existing clients. ATG Trust gives you the consistency and control you need to deliver impeccable services to your clients. It is a unique product providing an evergreen stream of income for the practicing lawyer. If you have an estate planning practice, we urge you to contact us at 312.338.7878.


The Judicial Sales Corporation

The Judicial Sales Corporation (TJSC) provides cost-saving services to foreclosing plaintiffs and their attorneys when a judicial sale is ordered in the course of a mortgage foreclosure action. TJSC was founded in 1991 as a subsidiary of Attorneys’ Title Guaranty Fund, Inc. (ATG) and has been growing and increasing our bottomline profit every year since. Given the foreclosure scene in recent months. 2008 will prove to be TJSC’s biggest year ever. Over the past several years, the company has achieved recognition by the judiciary and foreclosure attorneys for expeditiously performing the duties of a selling officer as defined within the Illinois Mortgage Foreclosure Law, enabling us to expand our services throughout the State of Illinois.


SB 1167

The provisions of the former HB 4050, which applied only to ten Chicago zip codes, are back under SB 1167 and apply to all of Cook County. This Anti-Predatory Database Program will become operational on July 1, 2008. The significant confusion regarding the training and operation of the database is ongoing. We are working hard to ensure our membership is ready when the program is implemented.


A publication of Attorneys' Title Guaranty Fund, Inc. © ATG 6/08