Alliance Title Co. went out of business, laid off all its employees and closed its doors Thursday. At least 30 employees in Stanislaus County, plus hundreds more elsewhere in the state, lost their jobs with less than one day's notice.
Alliance has been among Stanislaus County's busiest escrow and title companies the last four years, and it had about 500 real estate transactions pending.
"We're going to make sure there's a smooth transition. We're moving (the bulk of them) to First American Title," assured Terry Harwell, division president for Alliance in Stanislaus County. "There will not be a delay in any closings (of real estate transactions)."
Harwell said he was shocked to hear his four offices -- three in Modesto and one in Turlock -- were being closed and that he and everyone else was being let go.
"We're the market-share leader in Stanislaus County, so it didn't seem viable that they would close us down," Harwell said. "We were on pace to break even this month."
But rumors started swirling Tuesday evening that something was wrong. Harwell said his employees weren't able to log into the company's computerized payroll system, which triggered suspicion that layoffs were in the works.
Corporate officials at Alliance's headquarters in Campbell didn't explain what was happening until a telephone conference call late Wednesday, Harwell said. His offices scrambled Thursday to move accounts and box up belongings.
"We have a lot of highly qualified escrow officers ... and half of them already have found new jobs," said Harwell, noting that top-producing escrow officers typically have loyal clients who stick with them no matter where they work. That makes them an asset to other title companies.
'A really big deal'
Alliance's other staff members, Harwell included, may not find new employers so easily. That's because most title companies are shrinking, not expanding, their payrolls. Layoffs are widespread throughout the industry.
In 2005, at the peak of the real estate buying and refinancing boom, Alliance had more than 200 offices and about 2,500 employees in California, Harwell said. That included 10 branches and about 165 employees in Stanislaus County.
"Two years ago, we made a ton of money," said Harwell, noting that Alliance raked in $370 million that year.
Then the housing market began crashing, and Alliance started slashing staff. Harwell closed six Stanislaus County offices and eliminated more than 100 jobs this year. He also closed six branches in Merced and Fresno counties. About 14 employees in a Lathrop title service center were let go Thursday.
Alliance also had offices in Manteca, Lodi and Stockton.
"This is a really big deal," said Mike Zagaris, president of Modesto-based PMZ Real Estate. "Alliance had about 30 percent of the (title insurance) market share in Stanislaus County. ... We and other real estate companies have scores and scores of escrows pending with them."
Zagaris said he's confident escrow funds -- such as the deposits buyers put down when purchasing homes -- will be safe. But he fears real estate transactions will be disrupted.
He also said he is troubled by Alliance stopping payment on checks for office rental leases in Stanislaus County, which he said happened to at least three landlords this week.
"It's one thing to close down, it's another thing to not pay your bills and stiff your landlords," Zagaris said.
Harwell said he, too, was surprised the checks bounced, and he doubts Alliance will make good on those debts. "I wouldn't hold my breath if I was a landlord."
No one at Alliance's corporate headquarters would comment. Even the company's Web site was taken offline Thursday. Alliance is a wholly owned subsidiary of Mercury Cos. Inc., which owns assorted firms that service the title, escrow, real estate and mortgage industries.
Alliance had been one of the fastest-growing title companies in California. It opened in 1996 and grew quickly for 10 years.
Harwell opened the first Stanislaus County branch in 2000. He eventually expanded, opening offices on McHenry Avenue, Standiford Avenue, Coffee Road and Scenic Drive in Modesto; Geer Road, Main Street and Fulkerth Road in Turlock; and in Oak-dale, Patterson and Lathrop, as well as in Merced and Fresno counties.
But escrow transactions dropped dramatically the last two years. In August 2006, Alliance processed 715 transactions in Stanislaus County, but that declined to 348 in August 2007.
Other Northern San Joaquin Valley title companies also have seen transactions decline, of- fices close and employees laid off.
"The industry as a whole is just awful right now," said Suzanne Robinson, office manager for First American Title, on Sylvan Avenue in Modesto. "There's just not enough business to sustain all the title companies here."
It's been a very rough year, agreed Rod Santa Elena, man-ager of North American Title in Modesto, which recently merged three branches into one.
There also has been downsizing at Stewart Title, Chicago Title, Old Republic Title and Fidel-ity National Title in Stanislaus County.
Realtor optimistic about market
Nearly all aspects of the housing industry have shrunk because of the market downturn. Stanislaus County home prices have plummeted more than 16 percent since last year, sales volume has declined more than 40 percent and foreclosures have soared to record levels. In November, more than 400 homes were lost to foreclosure in Stanislaus County.
Many mortgage brokerage companies have closed, real estate agents have left the profession and builders have quit.
Pacific Union Homes announced last week it would "cease further home building operations" after selling its remaining 10 homes in Oakdale and two in Atwater. That company previously had built large subdivisions in Modesto and Ceres. It also had announced big development plans for Salida.
Another victim of the housing downturn is Youngdale's home appliance store in Turlock, which will close this month after 85 years in business.
On an optimistic note, Zagaris said thinks the housing market has hit bottom and has begun its rebound.
"The market has turned, but it will take six to nine months before people figure that out," said Zagaris, whose real estate company is Stanislaus County's biggest. "Buyers are coming back because pricing is so good."
Zagaris predicts home sales will increase in 2008 and home prices will flatten.
Bee staff writer J.N. Sbranti can be reached at firstname.lastname@example.org or 578-2196.