Title companies benefitted in the fourth quarter from the August and September decline in mortgage rates and that showed in their financials for the period.
Refinance activity made up 32% (according to Fannie Mae) to 38% (Mortgage Bankers Association estimates) of origination volume for the three months ended Dec. 31, 2024.
The February forecasts for both found that
This broke the traditional pattern of the fourth quarter being weaker than either the second or third, both of which benefit from the Spring home buying season.
In fact, purchase volume was lower in the fourth quarter than the prior periods.
Title insurance demand is highly correlated to mortgage origination activity, with purchase transactions normally earning higher fees than refinances.
Each of the publicly traded title companies earned more year-over-year in the fourth quarter; all but First American
Here are the results for the four national title underwriter parent companies, along with Investors Title, the only remaining publicly traded independent after Doma was acquired by Title Resource Group. Mortgage insurers
Refi orders increase 46% at Fidelity
Fidelity National Financial, which has the largest market share among title insurers, turned around a year ago loss in the fourth quarter.
It made $450 million during the period, versus net earnings of $266 million
Full year 2024 net income of $1.3 billion was more than double the $517 million it made the prior year.
Refinance orders for title searches opened on a daily basis increased by 46% year-over-year in the fourth quarter. However, the overwhelming share of new business still came from purchase activity, at 72%; one-year earlier, this was 78% of FNF's orders opened.
Total opened orders for the period were 299,000, compared with 352,000 in the third quarter and 257,000 for the fourth quarter of 2023.
"This fourth quarter seasonality was modestly better than the typical 20% sequential decline that we have seen in recent years," CEO Mike Nolan said during the earnings call.
While volumes are still a fraction of the levels seen in early 2021, "borrowers have been responsive as 30-year mortgage rates fluctuated during the course of the year," he said.
While daily refi orders averaged 1,300 in the fourth quarter, that slipped to 1,100 in January, "reflecting how refinance volumes can change with modest movement in mortgage rates," Nolan continued.
Still, compared to December, January's opened orders per day was 3% higher.
First American's full-year earnings run lower
First American's fourth quarter net income more than doubled compared with one year prior, but it earned less for the 12 months in 2024 than it did in 2023.
The company, which operates
Despite the "challenging conditions" the title industry dealt with, "at the end of the year, we did, however, benefit from a surge in our commercial business and began realizing the full benefit of our strategic investment portfolio rebalancing project," Ken DeGiorgio, CEO, said during the earnings call.
As for the current year, even with mortgage rates remaining elevated, First American expects "modest improvement" when it comes to both residential purchase and refinance, as well as a good 12 months for its commercial title business.
"Though still early, we are already seeing this in our results," DeGiorgio said. "For the 4 weeks ending February 7, our purchase orders were up 1% and our refinance orders were up 43% compared with the same period in the prior year."
Opened orders of 143,100 for the fourth quarter compares to 166,100 for the third quarter and 124,600 for the prior year period. For all of 2024, First American had opened orders 634,400, a slight gain from 629,100 one year prior.
Stewart remains focused on expansion
Stewart Information Services has been the most active of the title underwriters in recent year in expanding its direct operations, primarily through acquisitions. This activity slowed due to market choppiness in the third quarter, it previously noted.
Much of this growth has come following the failed attempt to sell the business to FNF. It will continue during 2025, management said.
"We remain focused on expansion efforts in targeted MSAs through both organic and inorganic means and keep a pulse on all the markets we are in, as well as those we are not to ensure we are operating to our fullest potential across the country," said Fred Eppinger, CEO, during the earnings call.
For the fourth quarter, the once-troubled Stewart posted net income of $22.7 million, a drop from the third quarter's $30.1 million but up from $8.8 million for the same period a year ago.
It earned $73.3 million for all of 2024, versus $30.4 million during the prior year.
Opened orders totaled 69,339 for the fourth quarter, down from the previous three months, when it did 87,646 but up on a year-over-year comparison, when Stewart had 68,583.
Refis make up one-third of Old Republic's volume
While open orders were up 26% year-over-year in the fourth quarter, nearly one-third of the activity in the most recent period was from refis, noted Carolyn Monroe, president and CEO of Old Republic International's title business and a senior vice president at the parent company.
During the Jan. 23 earnings call, Monroe hinted at some changes to come on the technology side.
"We are refocusing our technology efforts on integrated solutions that enable our agents to seamlessly connect to our customer portal," she said. "This will make it easier to do business with us regardless of which closing software is being used by our title agent. There will be more to come throughout 2025 on these technology solutions."
A week later, Old Republic announced
In the fourth quarter, the title insurance segment had pretax operating income of $55.4 million, up from $40.2 million in the third quarter and $43.9 million for the fourth quarter of 2023.
Full year 2024 segment pretax income was $144.1 million, compared with $133.5 million in 2023.
Opened orders were 46,685 for the period, compared with 56,202 in the third quarter and 37,167 for the 2023 fourth quarter. The company revised its methodology for reporting orders in the second quarter of 2024.
Net income at the parent company, which also operates a specialty insurance segment, was $105.1 million for the fourth quarter, down from $190.6 million for the prior year period.
Expansion initiatives pay off for Investors Title
Investors Title posted fourth quarter net income of $8.4 million, down from $9.3 million three months prior. But this was a gain from the year ago quarter, when it made $5.8 million.
Full year net income was $9.4 million higher, at $31.1 million versus $21.7 million for 2023.
Revenue of $258.3 million during 2024 was the most for Investors in two years, J. Allen Fine, chairman, said in a press release.
"Profitability was aided by ongoing cost control measures which kept overhead costs flat when compared to the prior year," Fine commented.
Net premiums written ended 2024 at $204.3 million, while one year prior, they totaled $171.2 million. In the fourth quarter only, they totaled $57.8 million, compared with $38.4 million for the same period in 2023, which the company attributed to its ongoing expansion initiatives.
Conditions in the real estate market remain challenging, but Fine ended on an upbeat note.
"Any stabilization or decrease in mortgage interest rates along with ongoing improvement in the supply of homes available for sale should be supportive of increased activity," Fine said. "We continue to seek opportunities to expand our distribution network, make prudent investments in capital improvement projects, and maintain a disciplined approach to expense control while real estate activity remains subdued."
