Mercury Cos. caught in real estate slump
By John Rebchook, Rocky Mountain News (Contact)
Monday, August 4, 2008
A Denver-based title insurance company that did an estimated $100 million in business in the state last year appears to be the latest victim of the slumping housing market.
Mercury Cos., which abruptly closed its out-of-state title companies last week, said it was negotiating to sell its four Colorado companies to California-based First American Corp.
First American underwrites the title insurance policies sold by the Mercury companies - Security Title, First American Heritage, Title America and United Title Co.
First American and Mercury are locked in a legal battle in California over First American's stake in Mercury and millions of dollars in loans going back to 2001.
First American, in a Securities and Exchange Commission document released last Thursday, said that "at the end of last week, the company became aware of circumstances surrounding an investment held by First American Title Insurance Co. in a title agent that may cause the investment to be impaired. The company is currently evaluating whether to impare its $37.3 million carrying value" in the title agent.
The title agent is Mercury, according to Inman News, a real estate Internet news service.
A spokeswoman at American Title declined to comment and said she has no details of the pending purchase of the title companies in Colorado. She also said she did not know whether a possible purchase of the companies would settle the lawsuits.
While rising economic pressures and a declining real estate market forced Mercury to close its operations in Arizona, Texas and California, its 60-year-old Colorado title companies continue to remain profitable, Mercury said in a statement. A Colorado Division of Real Estate official put Mercury's market share in Colorado at about 35 percent, slightly higher than the 30 percent estimated by Mercury.
Mercury said it remains committed to its Colorado companies and sees the potential purchase as a way to gain strength in challenging economic times. It did not release a purchase price.
During the negotiations, Colorado title companies will continue to process transactions.
The company has not responded to several phone calls or an e-mail from the Rocky Mountain News. A spokeswoman for Mercury said officials at the company are busy with negotiations with First American.
rebchookj@RockyMountainNews.com or 303-954-5207
Post your comment
Registration is required. Click here to create your free user account, or login below.
Comments are the sole responsibility of the person posting them. You agree not to post comments that are off topic, defamatory, obscene, abusive, threatening or an invasion of privacy. Violators may be banned. Click here for our full user agreement.
August 5, 2008
9:27 a.m.
Suggest removal
skipmanii writes:
Mercury obviously expanded aggressively and unwisely during the market boom and seems certain to implode here in the short term leaving the peices to be scooped up be the vultures.
Can we say Indy Mac, Countrywide, et al. I am sure they will not be the last. I applaude the audacious attempts of Mercury management.
August 5, 2008
10:11 a.m.
Suggest removal
Time4Change writes:
How can this be called a purchase? FATCO is taking over Mercury so they don't have to pick up the shattered pieces like they are having to do in CA, AZ, TX and elsewhere.
The underwriter is responsible for the actions of its agent and in this case the agent was in such dire economic straits that they just walked away from other operations that also were profitable on a day to day basis but unable to continue given the weight of past employee and competitor lawsuits.
This is all just window dressing so there isn't any really bad economic news coming out of Denver (like the implosion of a 60 yr. old, $1billion, 7000 employee company) caused by financial mismanagement and corrupt practices just before the Democrats come to town. Mercury is no Enron, but the causes and effects aren't much different.