Joseph L. Petrelli, ACAS, MAAA, FCA
President, Demotech, Inc.
$18,000,000,000
$450,000,000
$16,000,000,000
$400,000,000
$14,000,000,000
$350,000,000
$12,000,000,000
$300,000,000
$10,000,000,000
$250,000,000
$8,000,000,000
$200,000,000
$6,000,000,000
$150,000,000
$4,000,000,000
$100,000,000
$2,000,000,000
$50,000,000
$-
$1998
1999
2000
2001
2002
2003
Countrywide
2004
2005
2006
2007
2008
Colorado
Source: Performance of Title Insurance Companies
$1,200,000,000
$30,000,000
$1,000,000,000
$25,000,000
$800,000,000
$20,000,000
$600,000,000
$15,000,000
$400,000,000
$10,000,000
$200,000,000
$5,000,000
$-
$1998
1999
2000
2001
2002
2003
Countrywide
2004
2005
2006
2007
2008
Colorado
Source: Performance of Title Insurance Companies
In Consideration of the Provisions and Stipulations herein,
the Property and Casualty Insurance Company, for the
term of this date at 12:01 a.m. to one year later at 12:01
a.m. at the location of the property involved, does insure…
Subject to the exclusions from coverage, the exceptions
from coverage contained in Schedule B and the conditions
and stipulations, the Title insurance company, insurer, as of
the Date of Policy shown in Schedule A, against loss or
damage…
While Title insurance coverage looks backward from a
certain date, P&C insurance coverage looks forward,
utilizing a finite future period, to evaluate liability. The
timeframe of coverage and cost containment activities are
a fundamental difference between Title and P&C
coverages.
This distinction for Title underwriters has not been
properly reflected in financial reporting requirements.

Order Entry
◦ Verify property address
◦ Verify owner(s)
◦ Legal Description

Run the Chain
◦ Run names and nicknames
◦ Determining encumbrances or possible encumbrances
◦ Back ground – determining and indication of legal
incompetence – conservator, bankruptcy, etc.
◦ Impairments in chain of Title
◦ Determine adverse claims
◦ Interest which affects tenancy
◦ Property tax

Examination
◦
◦
◦
◦
◦
Legal Description
Conveyances
Execution
Notarization
Evidence of fraud, forgery, competence, etc.

Matters Affecting
◦
◦
◦
◦
◦
◦
◦
◦
Covenants and restrictions
Easements
Rights of first refusal
Judgment of lien
Market requirement to cure
Indemnities
Review prior transaction
Application of statute of limitations

Matters Affecting (cont.)
◦
◦
◦
◦
◦
◦
◦
◦
◦
Update for last minute items
Fallout
Review tax certificate
Reconcile difference with tax discrepancies
Check for outstanding tax sales
Review survey for adverse matters
Verify legal access
Mineral reservations
Geographic posting

Processing
◦
◦
◦
◦
Review commitment for requirements
Verify tax certificate matches legal description
Order demands for all requirements (payoffs, H.O.A., etc.)
Call county to check tax payment status and if any
prior/special taxes
◦ Verify water/sewer/storm drainage information
◦ Prepare P.O.A. if needed confirm acceptance with lender

File Work Up
◦ Verify sellers names on contract match vesting
◦ In a refinance, verify borrowers names match vesting
◦ Ensure all Title requirements are addressed on the
settlement statement
◦ Comply with terms of real estate contract
◦ Comply with requirements in lender’s closing instructions
◦ Verify borrowers names on loan document match contract

Closing
◦
◦
◦
◦

Ensure all documents are executed properly
Correctly notarize all appropriate documents
Comply with lender’s funding requirements
Ensure no disbursements are made without all funds being
received
Post-closing
◦ Disburse all funds per HUD-1
◦ Return lender’s package
◦ Record documents in correct order

An expense directly allocated to a particular claim.

Addressing specific defects and matters in Schedule B?
Consisted of 83 policies from Colorado, issued
between October 30, 2001 and March 5, 2009 with a
majority of the policies from 2008 and 2009.
There were 4,233 possible incidents in the sample of
83 policies.
A sample of 83 policies revealed 888 items that
needed to be addressed, about 11 per policy.
Terms and Conditions
266
Easements
167
Taxes Due
66
Liens
56
Rights or Claims
56
Defects, Liens, Encumbrances, etc.
49
Boundary Discrepancy
48
Effect of Inclusion
32
Existing Leases or Tenancies
22
Deed of Trust
19
Mineral Rights
19
All Other
88
-
50
100
150
200
250
300
TOTAL AGENCY
CHARGES
LOSS MITIGATION
CHARGES
$ 168,144.04
$ 94, 357.74
$ 2,025.83
$ 1,136.84
DISCOVERED INCIDENT
$ 189.35
$ 106.26
PER POSSIBLE INCIDENT
$ 39.72
$ 22.29
TOTAL COST
AVERAGE COST PER HUD-1