by Caroline Wright
Reprinted with permission.
I remember trying to talk my father into buying a microwave oven. Though they’d been on the market for years by then - it was already 1985 - he was resistant to the idea of purchasing one for his own bachelor kitchen. Finally, after I’d fussed at him long enough, he broke down and got one.
Dad read the owner’s manual with excitement. “This is marvelous! I can scramble eggs, cook bacon, boil water for my coffee; I can bake potatoes, defrost pork chops and cook vegetables; I can heat up leftovers and even make popcorn!”
Now, almost fifteen years later, Dad probably can’t imagine life without a microwave.
The spirit of this little tale should be apparent to Internet users everywhere, and particularly those who work in the title industry. Many of us who resisted the initial clarion call of cyberspace would now be utterly lost without our electronic tools. In growing numbers, we are handling the myriad functions of our business online.
Jason Nadeau, SISCO’s Director of Electronic Commerce, raves about the Internet revolution. “[E-commerce] has saved us a tremendous amount of money! Agents don’t have to move paper around, re-key orders into production systems, or deal with faxes and phone calls as much. You HAVE to be doing business this way to remain competitive. Take two title companies in the same city. One company says, ‘Here’s my preprinted pad of fax forms. Here’s my phone number; call between 8AM and 5PM.’ And the other company says, ‘Here’s my URL [for] online statusing, 24 hours a day.’ Which company do you want to talk to?”
“People within and outside the industry are searching for ways to automate and increase productivity. They’re looking at title from outside the box,” comments Todd Hartle, president of Fountainhead Information Systems. “That’s part of the migration --- becoming more information-oriented, as opposed to just insurance-oriented. Title is one of the 20 pieces of the mortgage transaction that tends to hold things up. It’s a target to focus on, to move the mortgage industry ahead. Becoming information-oriented will be part of the answer.”
Marty Thomas, President of both Data Services and Title Security Agency of Arizona, is emphatic about the industry’s need for urgency. “If you’re not doing this now, you’re in trouble. If you’re not doing this now, you won’t be here in three years, because you won’t be able to catch up.”
Building The Future With New Tools
On its website, Stewart Title claims to be developing ‘an environment that extends the traditional role of the title and closing office.’ Its SureClose product seems to have been created with that goal in mind. “Companies use SureClose for a number of online functions,” says Jason Nadeau. “Participants can go to the event-driven database to place or track title orders and view or print any document in the repository, which houses documents associated with the transaction.”
Though some of its competitors offer similar online products, Nadeau believes that Stewart has, at least, a temporary lead. “From a technological standpoint, real-time statusing and delivery are [our] biggest advantages. From a business standpoint, nationwide coverage with 100% [accessibility] of our products has brought us a lot of customers.”
About 20 lenders currently use the SureClose Internet system, and most of the 60 offices with the SureClose desktop system use some version of the Internet system as well. Business Systems Manager Brian Davenport comments, “The Net allows us to reach customers that the desktop application wouldn’t, and [provides] a broader selection of customers to choose from.” Customers are eager for the new tools. “We really are starting to see the industry mindshift --- the matriculation of people pursuing technology as a business solution.”
Michelle Maguire, Electronic Commerce Manager, has worked on e-commerce for the last three years. “Obviously,” she says, “our goal is to reduce cycle time and lessen expense, and electronic commerce is the way to do it. And the Internet has made [equipment costs] something of a non-issue.”
Landata Inc. of Illinois provides plant access to agents and underwriters in the Cook County marketplace. Electronic equity mortgage reports are delivered to customers via the company’s QwikTitle product, either through Internet e-mail or across a WAN. “[Our database contains] street addresses, legal descriptions, tax numbers, taxpayers' names and record owners’ names. Users [can] search the property no matter which piece of information they’ve been given,” says company president Bob Martos.
With a focus on automated searches for the equity market, Martos wanted to get the product to customers in a paperless environment. “E-mail was the answer. A lot of our customers [have] dedicated phone lines using routers. We hook up to their e-mail systems and use lines already in place.” Even customers with dial-up services can access these reports. “Users go to Landata, enter their order, and within five minutes they have electronic files sitting on their desktop. [They] drop [the data] into their WP software, and push it right out the door, without ever turning it into paper.” Customers get online to receive orders, communicate with other participants, and work on settlement issues and closing figures.
Martos reports that some of Landata's largest customers are working feverishly to come up-to-speed. “They have legacy systems that they need to update. In the next nine months or so, they'll be able to accept electronic files. We got a little ahead of them, but they're catching up.”
I went “outside the box” and talked with James Hebrin, Director of Internet Services for FPS Net, who shared details of his newest project. “Open Title Order, which will soon be available on the Orange Coast Title website, allows customers to open and track title orders & escrow accounts in real time, right on the Web,” said Hebrin. “It dovetails with existing legacy systems. Users can change and monitor info, start and track title orders from beginning to end. Most companies take orders at their websites through simple e-mail forms, but none really have real-time database connectivity to this degree.”
The Orange Coast Title site is the jewel in the FPS crown, says Hebrin. “Rich Macaluso (president of OC Title) has been a Web visionary for years. He’s willing to be the pioneer.” Hebrin is also impressed because Macaluso has directed the OC Title staff to interact freely with its Web partner. “There must be dialogue, not monologue, when these applications are being developed.”
Hebrin discussed other virtual products created by FPS --- a secure Web interface in which loan applications are turned into FAX transmissions and sent to the appropriate office, a bank-through clearinghouse for merchants needing online commerce but without the funds or technology to build their own cybercash systems. With the development of these tools, FPS, as a “full-service, one-stop computer solutions group for the real estate and related industries,” lives up to its billing.
Virtual Title Plants
As increasing numbers of title professionals conduct their business online, many are thinking about the somewhat controversial concept of the virtual title plant. SISCO’s Jason Nadeau believes that the industry is headed in that direction, but does not foresee the proliferation of the nationwide virtual plant anytime in the near future. “That would involve entities outside our industry, including government entities that traditionally don’t move nearly as fast as the business model,” he comments. “I think we’ll see more regional plants.”
Doug Bello of D. Bello & Associates agrees. “Major underwriters with one huge title plant could search any county, from any office --- whereas now, they need an office in Orange County, an office in LA County. I don’t know what the time frame will be, but it’s merging in that direction more and more.”
Landata’s Bob Martos says his staff is researching the implementation of online plant access. “With the wave of superbanks and major mergers, I see a big marketplace for companies with information that is easily accessible. Those major banks are pushing pricing down because of their volume. The only way we can respond to that is by putting the data where it’s easily accessible.” However, Martos says his offices have some security concerns. “Our plant activity is tracked on a customer-by-customer basis. Maybe we’ll do [this] the same way. [Customers] will use a password, get into our Intranet, and over to the title plant. But we're a ways away from saying, ‘Here's the title plant, put your MasterCard number in and have fun.’”
When the virtual plant becomes reality, Todd Hartle of Fountainhead Information Systems in Atlanta hopes to be at the head of the pack. “Part of our charter is to aggregate as many plants as we can in one spot on the Internet, to promote a national place [for] title information. My goal is the national virtual plant, which will comprise the top 100 counties in the nation..”
Virtual plants are being received slowly and cautiously by the title community. They may not be fully understood, thinks Hartle. “The title community is, for the most part, on the tail-end of technology, more so than other industries.” Hartle also believes that the undelivered promise of EDI has turned many people off, which has made defense of virtual plants a challenge. “Still, people want to deal with less paper, bring costs down, and get quick response. The Internet is the catalyst for that.”
“It may be five years, it may be 25 years,” says Hartle, “but it will happen.”
Laboring Over The Net
Human resource managers may applaud the title industry’s acceptance of technology more than anybody. Doug Bello contends, “The American workforce today is drastically different than it was 20 years ago.” Bello headed a panel at a title convention earlier this year, and remembers a comment from a Midwestern attendee. “He said, ‘Let me tell you about the problem I’ve got. We hire DE operators, we train them, and they leave. Burger King in this town pays more money than I can!’”
Bob Martos of Landata comments, “On the title side, 60% of most expenses are in personnel. If we can put the quality in on the front end on the data, and use automation to create these products [and] cut some of the labor costs, this presents an opportunity for the title industry to deal with the pricing issues that are a problem for all of us.”
As the industry begins to harness technology and e-commerce, perhaps its labor and pricing woes will begin to disappear. Marty Thomas discusses the effects of technology on Title Security of Arizona. “Productivity has increased by 75%. It’s been absolutely staggering. In the six months after [installation of our imaging system], business literally doubled out here. And we hired no new people to take care of it. [Our] people are better trained, and able to do multiple functions.”
Bob Martos says that Landata’s QwikClose product has already paid for itself via customer retention. Customers “are all on 24-hour turnaround, so anything that we can do that's all electronic is just money in their pockets.” The system has really made a difference. “I have not seen any of our customers add new staff, even with the increase in business. The existing staff was able to handle it.”
Title workers quickly become reliant on their electronic tools. Marty Thomas told me about a member of his staff who swears by Data Services’ imaging system. “They told me, ‘I’ll never go back to doing it the old way. There’s just no sense in working that hard ever again!’” Landata’s Martos discovered the new reliance a couple months ago, when his system was down for a day and a half. “Now I know how Steve Case felt when AOL crashed! Operations get dependent on it, and when it goes down... boy, have you got problems!”
The Next Wave
Electronic loans like those offered through E-Loan and mortgage.com are a hot trend, and the Stewart team anticipates new partnering opportunities. “People will be going to the Internet for a loan, and not talking to anybody until closing. There might be a series of entities the customer never sees, providing seamless services and facets of the transaction. Nobody will care that it’s Bob’s survey, Stewart’s title, and Ed’s flood,” says Jason Nadeau.
Michelle Maguire foresees increased consumer involvement. “Service levels will be more important as the consumer becomes able to select providers,” she says. Brian Davenport agrees, “Consumers typically have been in the dark in this whole process, driven by lenders, builders, realtors, etc. You’ll see a renaissance in education for the consumer, [and] involvement in decision-making that has been foreign to the lending industry since its inception.”
“The age group getting ready to hit this market is the tail-end of Generation X, the children of the Baby Boomers, who grew up in the technology era. They’re going to purchase real estate over the next 30 years, expecting the technology to be in place, and they’re only going to want to do business with the companies that can provide it,” adds Davenport.
Todd Hartle of Fountainhead anticipates that title checks will become as fast as credit reports. “Lenders and mortgage brokers are interested because it’ll streamline the whole process. They can do a loan approval in 15 minutes. We’re trying to get to that stage with title - 15 minutes instead of 30 days. Combined with automated valuation models for assets, flood certification and credit scoring, the whole mortgage process can be automated.”
“From a productivity standpoint,” says Marty Thomas about his Data Services, “we’ve married two or three products together very well --- a title plant, an imaging system, and an escrow and title production system. An examiner [can] access the information, take a look at the documents, and generate a report within a few minutes. [In] the next step, some of those examinations will be done by the computer. We’re going to make some assumptions and literally machine-generate preliminary title reports.”
Finally, James Hebrin of FPS Net gives the paradigm shift an insider’s perspective. “When I started building websites in 1991, companies were paying for nothing more than a digital billboard. It was impossible to measure ROI. Gradually the Web is becoming mainstream. Bandwidth is getting wider, processors are getting faster, companies are rushing to build multi-functional websites.” The future, says Hebrin, is the virtual corporation, conducting its business online --- “supporting information exchange between all parties, internal and external, in a company: departments, branches, secure catalogues for shopping, dealers & distributors, shipping & stocking, billing. It’s opening up time and space.”
Consider this scenario as it will eventually relate to the title industry. And remember: it took almost thirty years for microwave ovens to get into 50 million American homes, but it’s taken only four years for the World Wide Web to get into 50 million American homes.
Time to talk to Dad about a computer.