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44 INDUSTRY PROS SHIFTING FOCUS TOWARD REO RESTORATION According to a survey by Altisource Portfolio Solutions S.A., restoration and improvement of REO properties is becoming an increasing priority for many industry professionals. Altisource released additional results from its inaugural Default Servicing Survey, which revealed that 93 percent of the over 200 mortgage default servicing professionals surveyed said that their organization is making an investment to improve the REO properties under their management. at investment was described as "significant" by 62 percent of those surveyed. Min Alexander, SVP, Real Estate Services, Altisource, said in a press release, "For many home buyers, access to conventional financing and move-in ready condition are requirements to purchase their next home. Distressed properties, including REO, have historically been marketed in as-is condition, at times limiting the potential buyer pool. Servicers are changing this by increasing investments to maintain or improve the condition of these properties, attracting more owner-occupant home buyers." With shortages among both housing inventory and recent dips in the housing labor force, moving REO inventory is an obvious opportunity for servicers. According to the Default Servicing Survey, 82 percent of surveyed servicing professionals ranked investing in improving the condition of their REO assets as "among their top three most effective ways for attracting traditionally minded consumers to the REO market." Other important tactics listed include offering financing options (76 percent) and letting buyers work with a real estate agent (43 percent). Unsurprisingly, a focus on technological solutions also stood out in the Survey results. Ninety-five percent of those surveyed said access to easy-to-use resources such as online auctions, positively affected consumer participation in the default market. Making sure that those auction pages include things like local school stats and virtual tours is also key—61 percent of those surveyed listed those sorts of customer-friendly inclusions as "among their top three methods to attract consumers to the REO market." Marcello Mastioni, President, Real Estate Marketplace, Altisource, said: "e REO market offers both servicers and consumers a compelling opportunity to meet each other's needs and solve for today's supply-demand disconnect. Technological innovation, such as online real estate marketing platforms like Hubzu, can help savvy buyers discover a new pool of properties. Servicers' investments in consumer-friendly features, along with improvements in property conditions, are broadening home buyers' horizons and encouraging them to consider the REO market." TITLE INSURERS LOOK FORWARD TO STRONG 2018 In a 2018 Outlook entitled "Fitch 2018 Outlook: U.S. Title Insurance Industry (Market Fundamentals Point to Continued Strong Performance)," Fitch Ratings predicts a stable outlook for 2018, predicting that "ratings for the industry, on balance, will remain at current levels over the next 12-24 months." Title profit margins have been strong for the third consecutive year, with title segment pretax operating margins increasing to 11 percent in the first nine months of 2017, as compared to 10.5 percent in the prior year. Fitch predicts margins will be flat to slightly down in 2018. Increased housing prices helped drive title revenues up 3 percent during the first nine months of 2017. Home prices, including distressed sales, jumped 7.0 percent in September 2017, maintaining their steady annual growth between 5 percent and 7 percent for the past three years. Closed and open orders decreased 17 percent and 20 percent, respectively, during Q 3 2017 over the prior year. A predicted slow in mortgage originations for 2018 may hamper revenue growth, however. Fitch Director Gerry Glombicki said, "Profit margins remain favorable while title insurers' expense structures are at levels that can withstand near-term revenue volatility. e large adverse reserve movements seen during the troublesome policy years of 2005- 2008 are also an increasingly distant memory." Other takeaways from Fitch's report include: » "Fitch's title universe loss ratio was below 4.3 percent for 2016, below longer term historical averages, and 4.2 percent in the first nine months of 2017. While this figure may fluctuate, signs of a sharp uptick in loss ratios are not evident." » "From a RAC perspective, the capital position of the largest four publicly traded title insurance companies improved to 189 percent in 2016, up 9 percentage points (pp) from the prior year." » Operating leverage for the four largest publicly traded title insurers increased modestly to 3.4x in 2016, versus 3.2x in 2015.