Financial Title Company Closes Down Suddenly

In a shocking move, even to most of us in the biz, the morning began with the news that Financial Title Company had locked its doors and laid off all its California employees as of 6pm last night. Oh, oh, that’s not good.

Apparently Financial Title’s parent company Mercury Cos of Colorado had defaulted on some of its obligations, causing lenders to shut off its lines of credit. Without any notice that I’m aware of, Mercury closed all of its companies operating outside Colorado.

But what of all those unclosed escrows and client deposits? Hmmm….that is a rather critical question. One of my clients just deposited their substantial down payment into Financial’s account in anticipation of closing today. It’s some relief to know that,

Examiners representing the California Department of Insurance, which regulates and polices title-policy underwriters and agents, were on hand at all 57 Financial Title offices in the state Wednesday to ensure that escrow funds were properly handled and not stolen or lost, said Darrel Ng, press secretary for the agency.

But as of the end of the day, the dust hadn’t settled enough to know when First American–the company stepping into the breach– might be able to pick up the files and get them closed.

This event follows the demise of another Mercury-owned company in December. Then, Alliance Title suddenly shut its doors and transfered its files to Financial Title where possible. By June, Alliance had filed for bankruptcy, reporting $100 mil in liabilities and only$.5 mil in assets.

Efforts to pierce Mercury’s corporate veil and force the parent to assume responsibility for Allliance’s debts has so far been stifled. Mercury, a privately held company founded in 1946, is owned by the Paul Hauptman family who is refusing to take any responsibility for paying its former Alliance employees and vendors what is owed.