With home loan interest rates remaining at all-time lows, professionals here who handle the closing of real estate transactions expect to see slight improvements in the real estate lending market during 2012, although they agree that a long-term improvement probably still will take several years.

Anthony Carollo, president of Stewart Title of Spokane LLC, says he's observed that business for the title and escrow market here has stabilized in the last year, and that mortgage refinancing activity for the company also picked up noticeably during that time.

"I expect that to continue into the first quarter because the rates have remained so low and look like they'll remain low," Carollo says. "The first quarter also should be good for new sales purchases. I anticipate this year to be a bit better, but I'm guardedly optimistic."

A title and escrow company such as Stewart Title serves as a neutral third-party preparer of the legal and financial documents required to transfer the ownership of property from one party to another. Professionals who prepare those documents to close, or complete, the sale of real estate are referred to in the industry as limited practice officers and are licensed by the Washington State Bar Association. In Washington, attorneys also can prepare and finalize real estate sale documents.

Stewart Title, with one office at 606 W. Third downtown, employs four LPOs within its total staff of 18 people, Carollo says.

Spokane-based law firm Hennessey & Edwards PS, located at 1403 S. Grand on Spokane's South Hill, also offers real estate closing services, and the firm's managing partner, Doug Edwards, says business for it in that area mostly has remained steady over the past three or so years, though not as busy as before the housing market crash of 2008. He estimates the firm's closing business has fallen by about 30 percent since the market peaked in 2006 and 2007.

"We do mostly sales (closings) since we have a fairly consistent following of Realtors that refer their closings here and who are more active Realtors," Edwards says. "Business is down a bit since our concentration is on sales."

Edwards says he's noticed that many homeowners seeking to refinance a mortgage are having difficulty securing better loan rates for many reasons, including the lagging job market and the fact that many homebuyers took out loans for more than their home now is worth.

"There are refinances going on but not as many as one would think given the attractive interest rates," he says.

Despite that, Edwards says he's optimistic that activity in the housing market could pick up in 2012, although he—like Carollo—believes an overall improvement is going to be long term and gradual.

"There is a lot of inventory out there that needs to get sold before we'll see prices firm up again, but I think we are kind of hitting the bottom at the moment," Edwards says. "From what I can read, things are coming back to more normal levels but we're not there yet."

Hennessey & Edwards has on staff one full-time LPO who handles most of its real estate sale closings, along with three attorneys who also do some work in that area.

The firm's closing fees are flat fees that are based on the sale price of the home, Edwards says.

Aside from an increase in loan refinancing activity, some title and escrow offices here also are seeing an uptick in the amount of work associated with property foreclosures.

Kevin Ferguson, co-owner and manager of Spokane-based Inland Professional Title LLC, which has two offices here, says the high number of foreclosures he's seeing in the marketplace makes it hard to predict the long-term outlook of the real estate market, which directly affects title and escrow closers.

"I don't think we're going to see growth until the number of foreclosures goes down," he says.

On the other hand, Ferguson says refinance activity is up for Inland Professional and somewhat is helping make up for depressed revenues the company has experienced during the last three years.

"Our closings are way up, so we feel good about that, but it's hard to be optimistic at the moment," he says. "The part that is most discouraging is that the November 2010 average sales price was just over $179,000, and the average median price now is down by 8 percent so values are still going down compared to last year."

Because title and escrow companies' closing fees are based on the sale price on a piece of real estate, those declining prices directly affect revenue, he says.

Carollo says he's also seeing what he considers to be a significant number of foreclosures for this area.

"Even though the market is poor, a lot of title companies are doing well in the foreclosure market because (the banks) have to get title insurance when the property forecloses," Carollo says.

Edwards says there likely is more work coming from bank foreclosures, but that his firm doesn't handle many of those transactions for banks like title and escrow offices do. He says he has seen an increase in his workload associated with foreclosures, though, from private-party lenders as opposed to banks and other financial institutions.

In addition to more refinancing and foreclosure activity, another area of real estate lending that's seeing growth is seller-financed transactions.

David Birge, owner of Spokane-based Adept Escrow Services Inc., located at 107 E. Magnesium on Spokane's North Side, says his company specializes in handling the preparation of documents for those types of sales, and that despite the shrinking number of both commercial and residential real estate sales, the business is seeing more activity.

"For us, it's huge when you consider that real estate closings have shrunk, but our part of the industry is growing, and we are getting a bigger share of the shrunken pie," Birge says.

Adept Escrow essentially serves as an accountant and the holder of documents in real estate transactions in which the seller agrees to take payments directly from the buyer, rather than the buyer obtaining a loan from a bank to pay the seller, Birge says.

"The seller doesn't get cashed out, just payments over time until the loan is paid in full," he says.

Birge says the seller-finance market is coming back strong right now because of the economy and the housing market, mostly due to the fact that a higher number of buyers aren't able to secure a mortgage from a bank or credit union.

In such an arrangement, the seller of the property does take on more risk should the buyer default, but Birge says that seller financing could be beneficial to someone who owns outright, or nearly so, the piece of real estate they're selling.

Birge says Adept Escrow, which has been in business here since the early 1980s, employs seven people but that those employees aren't required to be licensed LPOs. Instead, he says people who handle and prepare seller-financing agreements are required to pass an escrow agent licensing exam administered by the Washington state Department of Financial Institutions' division of consumer services.

In addition to the sale of commercial and residential real estate, Adept Escrow also handles the sale of businesses, Birge says, which often can include real estate and other assets.

He says he anticipates seeing real estate sales and thus real estate closings improve throughout this year, but an overall recovery of the real estate market is "probably going to take a couple more years."

Another change seen in the title-and-escrow sector that's become a trend since the housing market peaked in the middle of the last decade is a general decrease in the number of law firms offering real estate closing services.

Edwards says, "It's down to a handful that do closings and that do just enough volume to justify dedicating time and staff."

Carollo says along with that shift in the market share of real estate closing services, however, is a nationwide trend of title and escrow offices going out of business or merging with other practices.

"It's a trend of the times," he says. "We are seeing consolidation nationally, and some companies will struggle."