Title giant Stewart Information trims jobs

Stewart Information Services Corp. has begun cutting jobs and and reducing spending on business travel, temporary labor and professional services as a result of the COVID-19 pandemic.

“In these unprecedented times and given the uncertain impact of the COVID-19 pandemic on our business, we continue to take targeted actions and manage our operations to best position our company over the long-term,” Stewart CEO Fred Eppinger, said late Friday in a statement, citing a $60 million annual impact on expenses. Expenses last year were $1.8 billion.

The company declined to release details on the number and location of job cuts, which it said would are affect multiple business lines as well as corporate operations. As of early April, it had 787 Houston-area employees and 5,400 companywide.

Stewart also said it renegotiated terms of a $150 million line of credit, increasing it to $200 million and extending the term five years to May 2025.

The actions come as the company, which provides real estate services to the housing and commercial property industry, including title insurance and closing services, is being dinged by a decline in sales of single-family homes.

A recent report estimated that April home sales volume in the Houston market plunged more than 20 percent from year-ago levels as sellers took properties off the market and buyers stayed home through the coronavirus-induced shutdown. U.S. home sales are expected to fall 15 percent this year, according to an April report from Fannie Mae.

“On the demand side, early indications are that the purchasing benefit of lower interest rates are being offset by the downturn in employment. On the supply side, the number of listings is falling, as those with homes to offer may either be hesitant to allow strangers to tour their home or worry that the lack of demand is placing downward pressure on the sales price they might otherwise receive,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said in a report.

While COVID-19 did not have a significant impact on Stewart’s first-quarter operations, the company said it expected the second and third quarters to be more challenging.

In its first-quarter earnings report, the company said new orders opened thus far in the second quarter were lower than orders opened in March 2020.

“This volume decline is consistent with expectations for the industry as unemployment rates rise, lending standards tighten and capital is constrained. Orders we received during the first three weeks of April 2020 are slightly higher compared to the same period in 2019. However, there are wide-ranging projections of real estate transaction volumes over the next several quarters which is creating near-term uncertainty for our business and the real estate market,” the report said.

Stewart Chief Financial Officer David Hisey said during the company’s April 23 first-quarter earnings call that despite the drop-off, the real estate market today is in a better position compared with the Great Recession. Lending standards are higher and demand has generally been stronger than supply, which will support prices. Moreover, he said, there are better government programs to help stabilize the market.

“I think we go in, in a much better place,” Hisey said. “What the losses will ultimately be, anybody can guess on that.”

Housing could be a leader in the economic recovery with low interest rates helping fuel demand, a Texas economist said earlier this month.

“I don’t anticipate foreclosures anything like what we had in 2008 and 2009,” said Jim Gaines, chief economist of the Texas A&M Real Estate Center, whose report estimated the 20 percent decline in Houston home sales.