Despite a 36% year-over-year decline in closed title purchase order volume and a 79% decline in the number of closed refinance orders compared to the fourth quarter of 2021, Fidelity National Financial Still managed to record a strong Q4 in 2022.
Thank you for reading this post, don't forget to subscribe!Fidelity CEO Mike Nolan told investors during the firm’s fourth-quarter earnings call in mid-morning on Thursday, “Our title business performed well despite a decline in mortgage originations due to increases in mortgage rates and adverse housing market conditions.” has continued.” “Volumes in 2022 were significantly lower than record setting 2021 levels, primarily due to the rapid rise in mortgage rates in recent months. We responded with disciplined cost actions as open orders began to decline.
These cost-cutting actions helped Fidelity’s headline segment deliver record revenue of $1.9 billion in the fourth quarter (down from $3.1 billion in the fourth quarter of 2021) and net income of $198 million. While direct title premium ($544 million), agency title premium ($708 million), and commercial revenue ($344 million) were down 47%, 48%, and 37%, respectively, for the quarter, total fees per file were up 21%. $3,649.
However, Nolan said it was the second-best fourth quarter on record for commercial revenue, just behind the record-setting fourth quarter of 2021.
For the full year 2022, Fidelity’s title segment reported revenue of $9.5 billion, down 11% from 2021, and title income of $790 million. Overall, the firm projects revenue of $11.556 billion in 2022, down from $15.643 billion in 2021, and net income of $1.136 billion, up from $2.422 billion a year earlier.
“We have a proven track record of reacting quickly to adjust order volume,” Nolan said. “For the full year 2022 net and acquisitions, we have reduced title headcount by approximately 26%, and will continue to manage the business based on market conditions.”
Nolan said the firm continues to seek opportunities to strengthen its business through acquisitions and recruiting of talent already established in the industry.
With mortgage rate volatility likely to continue through 2023, Fidelity executives expect a challenging year ahead.
“I don’t think we’ve seen rates move this quickly in such a short amount of time. When they’re moving that quickly, it certainly hits buy orders very quickly,” Nolan said. “In more normal environments with more gradual rate increases, buy orders tend to hold better, but in this environment, those buyers choked faster.
“FNF is well-positioned to execute through this higher mortgage rate environment because of our disciplined operating strategy and long history of navigating market cycles,” he added.
Unlike the other Big Four title firms, Fidelity executives asked questions on attorney opinion letters that were approved for use in lieu of title insurance. fannie mae In April 2022. So far, executives say they haven’t seen any impact on title volumes due to AOL.
“There’s some hype around them that they reduce costs for consumers, but I don’t think anyone has really shown that, and I think it could actually increase costs for people, because there are so many unknowns.” And there are a lot of things that they don’t cover,” Nolan said.
