Title insurers like First American Corp. are experiencing a sharp increase in the number of claims, according to a report in the WSJ. Title insurance, which is bought by both lenders and homebuyers, is considered a broader gauge of the health of the housing market than foreclosures, the paper states. Title insurers provide "policies that essentially guarantee a homebuyer is the rightful owner of a property," but claims can be filed not only by homeowners but also by contractors whose work on a house has not been paid for. First American had 52% more claims in Q2 2007 than in the year-ago quarter and swung to a loss of $66 million after posting $25.5 million in net income in Q2 2006. In addition to the spike in claims, title insurers are bringing in less new business this year than last. "If you want to know what's going on with mortgage activity, you look at title orders," said Stephens Inc. insurance-industry analyst Nik Fisken.
Sources: Wall Street Journal, CNNMoney
Commentary: Is the Normalization of Housing Prices a Realistic Expectation? • A Contrarian Bet On Housing: Long Case for First American Corp.
Stocks/ETFs to watch: FAF, FNF, LFG, STC. ETFs: KIE, PIC, IAK
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