First American Financial (FAF) Q3 2026 Earnings Report

The call was broadly positive, supported by record commercial performance, rising adjusted earnings, market-share gains, strong First American Trust and ServiceMac growth, and substantial progress on Endpoint and Sequoia. However, residential activity remains depressed, mortgage rates are elevated, Home Warranty profitability declined, expense and margin pressures remain, and management expects residential revenue to fall in 2027. The highlights significantly outweigh the lowlights, although the outlook remains dependent on continued commercial strength and successful technology execution.

Management’s outlook today is essentially flat for revenue year-over-year when comparing 2027 with full-year 2026, with commercial expected to have “some modest growth” and make 2027 a record year, while residential revenue is expected to be down next year; investment income is expected to continue to be strong, with the year-to-date net increase of 8% viewed as a good number for Q4, while expenses are expected to face normal inflationary pressures around personnel and other operating expenses. Management expects no margin expansion next year, with margins potentially stable or subject to “a little bit of pressure” and able to expand only if commercial exceeds expectations. The current environment is expected to remain “lower for longer” for residential originations into 2027, with the first three weeks of October showing open purchase orders down 8%, refinance down 35%, and commercial down 7%; commercial is expected to have a strong finish to the year. Loss rates are typically 4%-5% over the cycle, with the current policy year at 3.75%, and management expects it is likely that at some point in the near future it will either slow the release or cease the release of prior-year reserves. Endpoint and Sequoia are expected to process a majority of orders by the end of 2027, with a goal of automating approximately 80% of refinance transactions and 70% of purchase transactions in markets where First American maintains title plants.