COMPANY
CITY
STATE
WEBSITE
Abstract Trust Company, LLC Alexander McCabe Appraisal Management Company Alliance Appraisal Management, LLC AppraiserLoft Bankers Choice Appraisals, LLC Clarity Appraisal Management Company ClearCapital.com, Inc. Coester Appraisal Group Digital Docs.net E-Appraisal, LLC Elliott & Company Appraisers, Inc. eTEC Appraisal Management Solutions First National Title Residential, LLC FNC, Inc. Integrity Title Records, Ltd., LLP IRR-Residential, LLC Kirchmeyer & Associates, Inc./Real-Info, Inc. KPD Appraisals, Inc. Lenders Choice, Inc. M&I Bank MDA Collateral Valuation Solutions Metro National Settlement Services National Title, LLC Nationwide Property & Appraisal Services Niemi Appraisal Placement Company, Inc PCV | Murcor Peak AMC, LC Property Sciences Pro-Teck Services, LTD Quality Valuation Services, LLC Quantrix Valuation Real Estate Valuation Partners, LLC RELS Valuation SAMCO Appraisal Management Company Solidifi Springhouse Appraisal Management The Benchmark Group, Inc. US Deeds/Turbo Deed USA Real Estate Information Services, LLC WHR Group
Russellville San Francisco Saratoga Springs San Diego Delmar Nashville Truckee Gaithersburg Orlando Henderson Greensboro Phoenix Denver Oxford Houston Westwood Buffalo Tucson Carlsbad Milwaukee Pflugerville Salt Lake City Denver Gibbsboro Kimberly Pomona Lees Summit Pleasant Hill Waltham Lake Forest Bloomington Toledo Bloomington Greenville Chicago St. Louis Savannah Brandon Belmont Pewaukee
AL CA UT CA NY TN CA MD FL NV NC AZ CO MS TX KS NY AZ CA WI TX UT CO NC WI CA MO CA MA CA MN OH MN OH IL MO GA FL NC WI
www.abstracttrust.com www.alexandermccabe.com www.allianceamc.com www.appraiserloft.com www.bankerschoiceappraisalsllc.com www.clarityamc.com www.clearcapital.com www.coesterappraisals.com www.digitaldocs.net www.wapnv.com www.appraisalsanywhere.com www.etecams.com www.fnt-res.com www.fncinc.com www.courthousedirect.com www.irr-residential.com www.kirchmeyer.com www.kpdinc.net www.lci-network.com www.micorp.com www.mdasolutions.com www.metroclose.com www.natl-title.com www.onestopappraisals.com http://www.niemiappraisal.com/ www.pcvmurcor.com www.peakamc.com www.propsci.com www.protk.com www.qualvs.com www.quantrixllc.com www.valuationpartners.com www.rels.info www.samco-amc.com www.solidifi.com www.springhouseamc.com www.thebenchmarkgroup.com www.turbodeed.com www.usareis.com www.whrg.com
TABLE OF CONTENTS
Cover Story: Adapting To A New Appraisal Reality . . . . . . . .8 Our profession has undergone significant changes over the past two years, but appraisers working in the profession in any capacity for the past 30 years have had to work through change on a continual basis.
A Message From The Chairman . . . . . . . . . . . . . . . . . . . . . . . .5 The New HUD-1 and GFE: More Than Just a Form Change . . . . .6 New Title Opportunities in Texas . . . . . . . . . . . . . . . . . . . . . .12 Marketing in 2010: More Conversation; Less Interruption . . . .16 Keeping That Blog Going . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Jeff Schurman: What Impacted TAVMA Members in 2009? What’s Ahead in 2010? . . . . . . . . . . . . . . . . . . . . . . . . . .20 About TAVMA Founded in 1998, TAVMA is a non-profit trade association tasked with enhancing public awareness and promoting ethical conduct to settlement services industry vendors and service providers. The Association acts as a forum for the exchange of vital information and presents the positions of its member companies to media, government, user groups and vendors. TAVMA member organizations are committed to promoting excellence and integrity while adding customer and consumer value to the settlement process.
Find this and more at www.tavma.org Winter 2010 — TAVMA 3
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Leadership
A Message From The Chairman quality services as well as decreased turn times and, most importantly, uniformity ’m proud to be the chairman of the of product. TAVMA members have board for the Title/Appraisal Ven- proven their value. dor Management Association for ere are many industry challenges 2010 and would like to share with you ahead that will require us to continue to some of my goals for the coming year. demonstrate that value. We will continue My primary goal is to refocus our ef- to support those members who are subforts on being recognized as the leading ject to legal action for participating in organization for our part of the mort- loan closings in those states with prohibgage lending industry. Specifically, we itive UPL laws. We will continue to supare the voice of the settlement services port our appraisal members and the spirit industry. From the very inception of our of the Home Valuation Code of Conduct organization, we have worked to pro- without agreeing with all aspects of the mote a level playing field for all who Code or allowing individual states and produce title insurance and settlement special interest groups to complicate our services, as well as those that provide a business and hamper our lender clients proper medium for title, closing, and ap- with decentralized industry regulation. praisal ordering and management. And we will continue to promote Over the past 10 years, our emphasis the platforms that we have developed has shifted back and forth between the to serve lenders and the consumers they title and appraisal sides of the business finance in the most efficient manner as the needs of our industry have driven possible. us. I imagine we’ll continue to shift our It is my goal for 2010 to actively profocus in the future as mote the value proposithe needs of our memtion of the Vendor It is my goal for bers require. is fits Management and Ap2010 to actively well with our mission of praisal Management promote the value promoting the settleCompanies that ment services industry proposition of the TAVMA represents. In as a natural complethe past, too much emcompanies that ment to the residential phasis has been placed TAVMA represents. finance industry. on the so-called added TAVMA members cost of the functions have developed a certain type of central- provided by our members and not ized platform for the efficient delivery of enough has been attributed to the qualthird party services. In this way, we have ity improvements, process cycle time rebeen able to bring not only economies of ductions, and product uniformity results scale, but also quality production of third delivered by our members. party reports, and innovations to the inPart of my mission in 2010 will be to dustry. Our success has been tied to our tell that story, to shed light on the benability to bring to the lending industry efits we bring and the essential nature of more efficient workflows and higher our contribution to the work of serving
By Ed Krug
I
Ed Krug mortgage lending institutions and ultimately the borrowers who depend upon them for both title insurance policies and valid real estate appraisals. I urge you to join with me to continue to promote our platform of appraisal and vendor management as a valid and quality method of obtaining the proper results for our industry.Together, we can reemphasize and refocus our message so that the world may know that we truly are the voice of the settlement services industry and all of the men and women who, as part of it, provide those essential third party services. About the Author: Ed Krug has been a practicing attorney for 36 years. He has served as a Counsel, Director and past President of TAVMA. He has also served on the Board of Directors of RESPRO, the Real Estate Service Providers Organization. ❍ Winter 2010 — TAVMA 5
Title
The New HUD-1 and GFE: More Than Just a Form Change The obvious: Form changes mean software changes lthough we have known It goes without saying that the first about them for over year now, firms in the industry to feel the brunt the regulatory changes to the of the new GFE and HUD-1 were the Good Faith Estimate (GFE) and technology vendors. Few (if any) in HUD-1 are the talk of the settlement the mortgage process choose to services and mortgage industry as process their ends of a mortgage with2009 winds to a close. While the re- out the aid of a production system: forms mandated by the U.S. Depart- Loan Origination Systems (LOS) for ment of Housing and Urban lenders and brokers generating GFEs, Development (HUD) may appear to and title production systems for vensome observers to be little more than dor managers and title companies a change of forms used in the origi- charged with finalizing the HUD-1. nation and closing process, industry As we know, the settlement process veterans know that this transition will from the time of purchase agreement be much more than a change of pa- until the closing is a chaotic and deliperwork. cate ballet of deadlines, timing and In the past four months, RESPA re- good old fashioned sweat equity. form has driven the birth of a cottage Technology has made a tremendous industry of education. Webinars, on- difference in improving efficiencies site seminars, and accelerating consultant conthe delivery of tracts and on-site each “order.� "The tactics and the training have Now, key forms details will be the emerged from and interfaces in every corner of difference when it those critical systhe industry, detems will need to comes to compliance." signed to prepare be changed. firms of all sizes Complicating for the moment this change is the when that first 2010 GFE comes reality that the new forms mandated through the system. To be sure, the by HUD, and how those forms should tactics and the details will be the dif- be populated in some situations, are ference when it comes to compliance. less than crystal clear. A myriad of hyBut the impact at the 30,000 foot level pothetical complications have not alis also spectacular. However one feels ways clearly been addressed by HUD, about the potential effects of RESPA in spite of multiple speaking engagereform, there can be no doubt that it ments and FAQ documents provided will have a dramatic effect on lenders as a means to compliance guidance. and brokers, title companies and ven- While most of the larger technology dor management firms, and the way developers have now rolled out the they all do business. new forms, they have done so at a
By Barbara Miller
A
6 TAVMA — Winter 2010
significant cost in research and development. More importantly, the developers have needed to distribute and install the new forms with existing customers, all at cost. Finally, those companies using proprietary or smaller systems (or, even worse, antiquated software with no support) have found themselves seeking ad hoc solutions to bring themselves into compliance. In many cases, these companies
have been forced to make an investment they had not planned on in this difficult market, purchasing an entirely new system solely for the sake of compliance. And there is still uncertainty as to whether or not the forms will need to be tweaked again as the hypothetical is replaced by reality. The ominous: Form changes mean process changes….and new processes Even more importantly than the need to use and populate a different type of form will be the significant addition of “teeth” to the process of reconciling and/or curing incongruities between a GFE and HUD-1. Liability in almost all cases now rests with
the lender where a HUD-1 fails to to come to the table quickly to collabproperly match the GFE. As a result, orate on the new challenges facing new levels of coordination, new proce- them as a result of the new RESPA redures for reconciling prior to closing quirements. Finally, adding to the uncertainty and new process maps for curing after the close must be forged. The origi- facing lenders and vendors alike is the nation and settlement services cycle fact that some lenders will be rolling may often seem chaotic. But at its out the new GFE prior to January 1, 2010. This means heart, it is a chorethat title and settleographed timeline, The boom line of the ment companies designed to beat will need to be the end of the new RESPA scheme is ready to close or“lock-in” period. that the GFE and ders coming to The new forms will HUD-1 must now, them using the new now add to that essentially, match up. GFE and the old timeline, forcing GFE for a short additional tasks time. and procedures into Undoubtedly, the first quarter of an already crowded progression of deadlines. Although it will not be im- 2010 will be one of challenge for most possible to adjust, it will take some mortgage and settlement companies. time and likely lead to some mistakes Any time a major change affects a company’s operational workflow, it is and lost deals in the very short term. beyond difficult to anticipate all possiNot just a forms issue, but a bilities. The change has also had a communications and collabo- chilling effect on planning—especially ration issue as well for smaller companies uncertain exSome companies have been over- actly how the new regulations will heard suggesting that RESPA reform alter their relationships with a variety is little more than a forms swap, with of vendors and customers. It is clear the heavy lifting to be done by the that, no matter how well prepared any technology providers. But the shift of company is for RESPA reform, there liability to the lender on a number of will need to be some flexibility as the issues could lead to heavy penalties if transition gets underway. treated as such. The bottom line of the new RESPA scheme is that the GFE and HUD-1 must now, essenAbout the Author: tially, match up. In many cases, where Barbara L. Miller is co-founder, this fails to happen, the lender will president and chief operating off icer have 30 days to “cure.” Who will do of TSS Software Corporation. Ms. this, the lender? The settlement Miller’s professional career spans all agent? A third party vendor? Will aspects of the land title business, from lenders begin to offer creative agree- searcher and processor to title agency ments to their preferred settlement manager. Ms. Miller’s intrigue with agents, requiring (as much as possible title technologies and their future in states with filed rates) a consistent impact on the real estate transfer process settlement fee? Will lenders, to the was the impetus for forming TSS extent they can, require their vendors in 1993. She is a frequent speaker at to share the pain where the GFE and title insurance underwriter-sponsored HUD-1 do not match? Clearly, events as well as national and state land lenders and settlement firms will need title association conferences. ❍ Winter 2010 — TAVMA 7
Cover Story
Adapting To A New Appraisal Reality Embracing the Opportunity to Exhibit Proficiency By Chuck Mureddu arnest Shackelton set sail to the Antarctic in 1914 with a crew of 27 and, through the ordeal, he referenced the phrase “Fortitudine Vincimus” which means “by endurance we conquer.” After their ship Endurance was trapped and slowly crushed by pack ice, under Shackelton leadership, the crew struggled to stay alive surviving the extreme cold, seal attacks and navigational challenges all without losing one man. ey endured and conquered the hardships of the Antarctic, surviving to tell their story. I first saw the phrase used as part of my boss’s electronic signature when I was the chief appraiser for Net Bank. He continually reminded us of the significance of its meaning and I think the message is an important one. We all need to learn from our strengths and weaknesses, have patience, develop survival skills, and relish the possibilities changes have to offer. Certainly, our profession has undergone significant changes over the past two years, but let’s face it, those of us who are appraisers working in the profession in any capacity for the past 3 decades experienced change on a continual basis. I started appraising in 1982 and before that, I had no idea I would have entered the appraisal profession. The real estate market at the time was going through a correction, in some cases declining 3% per month. Mortgage rates soared to almost 17% the year before and the unemployment
E
Endurance trapped in pack ice during the Imperial Trans-Antarctic Expedition 8 TAVMA — Winter 2010
rate was 10%. It turned out to be one of the best times to learn my craft because the times were so challenging, especially in New England. Less comparable sales were available let alone the data sources to pull them. Understanding the characteristics of the real estate market including national, regional, and local economic trends, along with employment, purchasing power, supply and demand, and all other forces influencing value was necessary and of course, still is. I learned so much during this time and I made a good living. I was blessed with a great mentor who guided me through the learning process and moved me in the right direction. I remember having to visit the town halls and registry of deeds regularly to research subject properties and comparable sales information. Uniform reports did not exist yet and not everyone had a computer in their office to help increase productivity. We used film and so of course, we had additional drive time to get our film developed. Cell phones and email did not exist. It took a lot more time to complete an appraisal assignment correctly. With all of the subsequent advancements in technology, change was necessary. If any industry is adaptive to change, the appraisal industry is definitely at the top. In today’s tough competitive environment, we are again forced to rethink the way we do business. The good news is we have powerful computers and software, robust online data sources, digital imagery, better delivery methods, and many other resources that help us tremendously to provide quality products and services. I hear a lot of buzz today on how much harder and longer it takes to complete an assignment because of new forms, an increase in client requests and additional reporting requirements. The buzz is not universal, but as in continued on page 10
How AMCs Work with Lenders and Appraisers MCs have become an integral part of the real estate industry and are currently engaged in about sixty percent (60%) of residential mortgage loan transactions. AMCs have grown substantially in recent years by offering value and benefits to both lenders and appraisers. AMCs act as centralized appraisal sources for mortgage lenders that operate over broad geographic areas. In every engagement, a lender has two choices: manage appraiser fee panels in-house or outsource vendor management to one or more AMCs. The AMC contracts with local appraisers who perform appraisals and issues appraisal reports. As a result, the vendor management model has streamlined the overall appraisal process, improved consistency, quality and service, and reduced lenders’ reporting and compliance risk through innovation, information technology, quality controls, and professional management of vendor contracts and workflow.
A
What AMCs do AMCs order, process, and conduct administrative underwriting reviews of appraisal reports. In addition, AMCs also provide a range of services to both mortgage lenders and appraisers that relate to the overall appraisal process. They manage and oversee networks of independent, third-party service providers, as well as the ordering, tracking, and delivery tasks associated with the vendors’ offerings. AMCs receive a management fee based on the value of this wide range of services. Among other things, AMCs: Recruit and qualify vendors for the networks, as well as verify their licensure and/or certification, check references and audit work samples; Negotiate fee and service level expectations with individual vendors; Assume loan-level administrative duties for the large numbers of transactions in their pipelines, including order entry and assignment, tracking order status, updating clients on delays, performing both pre- and post-delivery quality control, transmitting to and archiving final hard copies of appraisal reports for clients, handling accounts payable and receivable, engaging in dispute resolution between lenders and appraisers, and ensuring proper record retention; Provide a single point of contact for lenders and uniformity across jurisdictions; Perform quality reviews of completed appraisal reports to ensure conformity to appraisal guidelines of Government Sponsored Enterprises; Warrant the quality of appraisals ordered from participating vendors; and Develop and offer technology interfacing that permits auto assigning, tracking, and reviewing and the electronic delivery of reports to increase the efficiency of the appraisal process. When a lender places an appraisal order directly with an appraiser, the appraiser is responsible for developing and reporting the appraisal, but a continued on page 10 Winter 2010 — TAVMA 9
Cover Story
any profession, there are always those Like anything, there are improvements nity to collaborate with the founders who frequently complain and resist to be made and the AMCs appear to be of an AMC as a member of their exwhile others embrace, adapt, and pros- moving in the right direction. ecutive management team from its inper. The reality is that it takes less Oh, those evil AMCs. We hear ception. It was a good fit for me as we time to complete an assignment if the constantly how AMCs charge exorbi- all shared the same philosophy to proappraiser uses all the tools available tant fees that lenders are willing to pay, mote experience, integrity, quality, and and is competent enough to do the as- only to reduce the appraiser’s fee after transparency. The first and most imsignment both technically and portant challenge an AMC geographically. I have many faces is building an appraiser friends surviving quite well in panel comprised of the best and In today's tough competitive this business and they have dimost qualified appraisers availenvironment, we are again forced to versified their client base inable. The vetting process is rethink the way we do business. cluding business relationships very demanding, but we recogwith Appraisal Management nize and appreciate that the Companies. quality of our panel is what Appraisal Management Companies they do all the work. We hear how makes our company successful. or “AMCs” have been around for quite they supposedly use the “bottom of I believe most AMCs have the some time. ey are not new and many the barrel” appraisers who are willing same philosophy. It’s a misnomer that appraisers and appraisal companies have to take lower fees in return for higher AMCs are making exorbitant profits found that working with AMCs pro- volume but with reduced quality. This and that they do not care about qualvides them with more business that is could not be further from the truth, as ity or the level of experience of the apconsistent and requires less marketing I know many appraisers who work for praiser doing the work for them. On on their part. e Home Valuation AMCs who are some of the best and the contrary, many AMCs are held to Code of Conduct or HVCC brought brightest appraisers out there. Some very high standards by their clients additional opportunities for AMCs and are designated through very reputable and are rated for the quality of the I also believe it is the first real document appraisal organizations. work they deliver. that promotes appraiser independence. Recently I had the unique opportuAMCs work very hard to negotiate
How AMCs Work with Lenders and Appraisers continued from page 9 multitude of other administrative, business development, and customer relationship management tasks. Conversely, when an appraisal is ordered through an AMC, the AMC handles the ordering, processing, report delivery, and accounts payable and receivable. Moreover, the AMC is responsible for sales and marketing and soliciting appraisal business, developing and maintaining advanced information technology and transaction management systems, complying with service level agreements, and overseeing the appraisal process. Essentially, the appraiser or appraisal firm is responsible for the appraisal (USPAP Standard(s) 1 and 2), and the AMC is responsible for the many transaction coordination functions outside of the appraisal. For example, AMC relationships with appraiser vendors provide a number of benefits to the vendor and reduce the time and costs that appraisers otherwise must expend in, among other things: soliciting clients for ap10 TAVMA — Winter 2010
praisal work; scheduling appraisal assignments and property evaluations; obtaining property profiles from title companies or real estate agents to secure the base information from which an appraisal assignment may begin; obtaining copies of sales contracts; reviewing appraisal reports to determine if they are in appropriate form and free from errors when delivered to the lender; engaging in customer service; delivering preliminary and final reports to clients; and billing clients and collecting fees. These benefits are tangible economic gains to appraisers, which result in efficiencies and economies of scale. If appraisers have to perform these functions and incur these costs themselves, their overall charges for appraisals may be higher than those charged by AMCs. Appraisers who are interested in working with TAVMA member AMCs can obtain a free list of our AMC members and links to their websites by sending an email to Jeff Schurman, executive director, at jeff@tavma.org. Enter “AMC List” in the Subject line.
competitive fees with their clients and that enables them to pass more along to the appraiser. Moreover, we consistently fine-tune and improve our processes, quality control functions, and communication to all parties so that we can continually improve on quality. Additionally, we market our company along with our highly vetted panel of appraisers to national and regional companies. Most importantly and as mandated by HVCC, as a third party we provide a firewall between the client and appraiser. We enable the appraiser to do their job without the fear of losing a client because they did not meet a number. As for AMC profitability, a good deal is when all parties in the transaction are professionally satisfied and they all benefit financially. AMCs do not profit near as much as most people may think. The costs associated with providing all the AMC services as noted above are significant and include technology, licensing fees, operational costs, and marketing costs.
Each of us has the freedom to choose how we do business today. ere are many niches in our industry ranging from traditional and non-traditional products, origination to secondary marketing, loss mitigation work, quality control, and review work. We also have the freedom to choose our clients. As with any business, there are good business relationships and not so good ones. ere are many benefits of working with an AMC, including access to lenders from whom they would not otherwise receive business. AMCs can fill those voids when times are tough.
Ask yourself whether the AMC considers you just as another vendor or as a partner with whom to share in the success. Find an AMC that promotes loyalty and, above all else, rewards you for delivering quality products and services. Today brings many challenges and opportunities. Old dreams can be crushed or changed but we can learn from them and make new dreams that keep us excited. Appraisers are a very special breed and I believe we have always taken fortitudinous efforts to adapt to the changes ahead of us and stay committed to our profession. ❍
About the Author: Chuck Mureddu was formerly the chief appraiser for Net Bank and has more than 28 years of combined mortgage lending experience including appraisal management, institutional risk, loss mitigation, and whole loan exit and securitization strategy. Chuck served as a Subject Matter Expert for the appraisal qualifications Board (AQB) participating in the development of the Certified General Appraiser exam for 2008. He is now a valuation risk consultant and partner with Quality Valuation Services (QVS) as EVP of business development. Quality Valuation Services’ mission is to provide premier quality and compliant solutions to select clients that are prepared to meet new higher standards, policies, and procedures with a nationwide panel of 6500 geographically specialized valuation professionals.
T H AN K YOU F OR YOU R ME MBE RSH I P TAVMA renewal notices will be arriving in your mail
box within the next week or so. Please look for this important notice and renew your membership. We look
for ward to ser ving you in 2010. Winter 2010 — TAVMA 11
Title
New Title Opportunites in Texas By Paul Cones, President, Integrity Title Records, Ltd., LLP and Susan B. Strickland, Attorney at Law exas is one of the top real estate markets in the country but has proved challenging for potential title agents to enter this lucrative markets due to misconceptions regarding the rules and regulations for entering Texas. One point is very clear when considering the Texas option — times have changed and affordable alternatives
T
now exist for those desiring to do business in Texas. Over the last decade, Texas’ population has increased to become now the second most populous state in the union, with over 24 million people located within the state (see Fig. 1). This population boom has translated into an enormous amount of real estate business. The title premiums
generated in 2007 for Texas was over $1.3 billion (see Fig. 2) Regulations and Premium Splits When looking at most coverage maps of vendor management companies providing title insurance, Texas is often not highlighted. Texas has a reputation for having a higher-than-
County
Harris Dallas Tarrant Bexar Travis Collin Denton Fort Bend Montgomery Williamson El Paso Hidalgo Galveston Nueces Brazoria All remaining Counties Total Figure 1 Population of Texas (2006 data)
12 TAVMA — Winter 2010
usual number of obstacles for companies desiring to provide title insurance services in the state. This is mainly due to Texas’ highly-regulated environment and because it a “Title Plant” state. However, several recent studies, including a report by the U.S. Government Accountability Office, cite the strict regulatory scheme in Texas as the model for achieving improved oversight of the title industry. Premium rates are promulgated by the state, and there can be no deviation from those rates which creates a more level playing field between independent agents and the large direct operations of the underwriters. Competition is based on customer service, not price. Title agents seeking to be licensed
"One point is very clear when considering the Texas option -- times have changed and affordable alternatives now exist for those desiring to do business in Texas."
in Texas must remember that: 1) referral fees are illegal under Texas law (as they are under federal law); 2) the agent must have a distinct physical location in at least one county of the state and must own or lease a title plant in that county; and 3) the agent must employ at least one "qualified" Escrow Officer that is a Texas resident (however, a law enacted this year now allows Texas escrow Officers to be residents of adjoining states).
To address solvency concerns, especially after the United Title of Texas shut-down and subsequent bankruptcy, the Texas Legislature enacted a law this year (HB 4338) that increased agent requirements. The bill set minimum capitalization requirements based on the population of the county in which an agent is licensed, with the largest minimum requirement being $150,000 for agents continued on page 14
TOP 15 TEXAS COUNTIES Population
Metro Area
% of State Pop.
Title Premium
% of Premiums Collected
14.92%
$ 255,177,103.36
19.35%
3,596,086
Houston
2,284,096
Dallas
9.48%
$ 157,167,699.06
11.92%
1,559,148
Fort Worth
6.47%
$ 120,037,022.36
9.10%
1,471,644
San Antonio
6.11%
$ 95,209,129.69
7.22%
857,204
Austin
3.56%
$ 94,020,037.35
7.13%
597,147
Dallas
2.48%
$ 82,222,271.97
6.23%
510,795
Dallas
2.12%
$ 55,871,234.12
4.24%
419,772
Houston
1.74%
$ 43,546,021.12
3.30%
344,700
Houston
1.43%
$ 39,853,413.52
3.02%
303,587
Austin
1.26%
$ 36,052,670.08
2.73%
705,436
El Paso
2.93%
$ 29,118,448.07
2.21%
635,540
Valley-McAllen
2.64%
$ 24,810,539.73
1.88%
266,775
Houston
1.11%
$ 18,506,698.31
1.40%
315,206
Corpus Christi
1.31%
$ 14,566,054.08
1.10%
263,149
Houston
1.09%
$ 14,482,987.39
1.10%
41.38%
$ 238,221,101.53
18.06%
100.00%
$ 1,318,862,431.74
100.00%
9,975,132 24,105,417
State
Figure 2. Top 15 Counties Population and Premium Chart Winter 2010 — TAVMA 13
Title
audited annually by a certified public over the delivery time of Title continued from page 13 with a physical location in counties accountant. This annual “Escrow Evidence from that county. Delivery with a population of 1 million or Audit” is required to safeguard con- times are critical to vendor managers more. The law also requires agents to sumer’s and lender’s funds, detect who want to be competitive in the submit their quarterly IRS tax with- theft, and to review closing practices. state. If an agent is not licensed in a holding report and proof of payment Information concerning income and county in which it has an order for to TDI. Also, the title agent’s man- policy issuance — the “Statistical Re- title, it must rely upon an agent who is agement personnel will be required to port” — must be provided annually, licensed in that county to provide take a Professional Training Program upon demand of the Department. Title Evidence from its title plant. unless the individual has at least 5 The information in the Statistical Under TDI rules, a “reasonable time” year’s management experience of a Report is used to calculate the pre- for delivery of title Evidence varies mium rates promulgated by TDI. from 10 days to 30 days, which are Texas title agency. In Texas, an agent may split a title The formats for the annual escrow typically longer wait times than most premium but must perform a core audit and the statistical report are vendor managers can tolerate. Not a long ago, access to a title plant service to earn their portion of the also promulgated by TDI. Agents in Harris County, the largest premium. The core funccounty in Texas and the tions of Title Evidence, third largest in the county, Title Examination and "Under TDI rules, a "reasonable time" cost over $18,000 per Closing a Transaction are for delivery of Title Evidence varies from month. Title plant access in all defined terms in the 10 days to 30 days" Dallas County was approxiTexas Department of Insurmately $25,000 per month. ance (TDI) “Basic Manual,” So, in the two largest popuwhich is the regulatory outside of the state do not use the lation centers in the state, the combined bible of the title industry. e Rule regulating how title agents same formats in their accounting cost was over $40, 000 per month just split premium is known as Procedural practices for other parts of the coun- for title plant access. In 2003, Integrity Title Records enRule 24 or “P-24.” P-24 has been con- try. Therefore, an out-of-state agent troversial because TDI must weigh the must pay particular attention to set- tered the market for title plant services needs of rural agents (there are 254 ting up its accounting procedures in which forced the existing plants to reCounties in the state) who deal mainly order to comply with the Texas regu- duce prices. The high cost of title plant access is no longer a barrier to entry as with acreage or undeveloped land, and lations and avoid penalties it had been for many years. Integrity’s metropolitan agents in areas like Dallas Title Plants low cost, reliable web-based platform and Houston where most transactions A Title Plant is defined under Pro- with no inter-county restrictions has are residential subdivisions. Under Rule P-24, an agent is re- cedural Rule 12 known as, “P-12” attracted great interest and support quired to provide Evidence only or which roughly translated says that all from independent agents and underEvidence and Examination or Closing title agents must own or lease a set writers alike. Integrity was the only only or Examination and Closing to of geographically indexed property title plant provider in the Houston earn a premium. An agent cannot re- records with a “start” date of January area that experienced zero down-time ceive a portion of the premium for 1, 1979 in each county in which they during and after Hurricane Ike. The providing the title Examination only. have a physical location. Therefore, if 18 counties that Integrity currently ofThis was a recent change by TDI to an agent operates a physical office in a fers covers 64% of the Texas populadeter agents from simply retyping a particular county it must own or lease tion and represents 75% of the earned title commitment or performing very a title plant in that county. However, premiums in Texas. little work and receiving a portion of an agent may be licensed in other New Opportunities counties in which it does not operate a the premium. As other markets suffer the effects Finally, TDI has promulgated physical office. Title agents become licensed in a of the recession, the robust Texas real unique accounting regulations that pertain to doing business in Texas. county primarily because they want to estate market provides tremendous The bank accounts through which have a physical location in that county opportunities for settlement service the escrow funds are run must be or because they want more control providers that want to do business in 14 TAVMA — Winter 2010
the state. There are three business models to consider: Full Service Model – perform all core services, Evidence, Examination and Closing. Full Service Agents typically have Abstracters/Examiners on staff as well as Escrow Officers to close the transactions. Agents with a transaction in a remote county can use a mobile notary to sign the documents. Pros – complete control over the transaction from start to finish Cons – more costly to operate and Agents must maintain a sufficient level of business to warrant the cost Escrow Only Model – primarily performs Escrow and Closing functions and outsources Evidence and Examinations. Escrow is highly scrutinized and regulated. Agents must have an Escrow officer physically located in the state. Agents are allowed to charge an escrow fee in addition to the title premium because the custodial responsibility of funds is not part of “Closing the Transaction” as defined by TDI in the Basic Manual (however, the Escrow Officer must “determine” that all proceeds have been properly disbursed). Typically, “Escrow only” Agents are licensed in one county and purchase Title Evidence and Examination from other Agents throughout the state. Agents doing closings only are still required to have access to a title plant in order to operate as a licensed Texas agent. Pros – lower cost because only one title plant for one county is required, ability to earn Escrow fees, ability to provide retail closing services Cons – highly regulated (which means Escrow Officers should be thoroughly screened), delivery time for Title Commitments is dependent upon the cooperating title agent providing Title Evidence or Examination services. Ev id ence/E xa min at ion Onl y
Model – primarily performs evidence and examination services and outsources Escrow and Closing. Vendor Managers that are able to form strong relationships with Escrow Teams can be licensed in Texas and rely on other Agents to perform closings. These Agents are still required to employ a licensed Escrow Officer but the Title Examiner can get licensed as an Escrow Officer to meet this requirement. Regulatory requirements are less
title agency operation in Texas. Background Paul Cones is President of Integrity Title Records, Ltd. LLP which builds and maintains title plants. Cones founded Courthouse Specialists in 1982 (predecessor to CourthouseDirect.com). He has been instrumental in implementing technology solutions for the abstracting and title industry. He is a member of the Texas Land
"Now a Vendor Manager title agent can be licensed in all of these counties for less than they would have paid for one county five years ago." burdensome and the Agent maintains complete control over delivery times for the Title Commitment. Pros – control over deliver times for Title Commitments, minimal regulatory requirements, less risk of loss of funds in the Escrow account, premium splits under P-24 are higher for these services Cons – no Escrow fee can be charged, must have access to a title plant in each county in which they are licensed in order to perform search and examination of title Summary Seventy to eighty percent of all premiums in Texas are generated in the top 18 metropolitan counties around the cities of Houston, Dallas, Fort Worth, Austin, San Antonio and El Paso. Now a Vendor Manager title agent can be licensed in all of these counties for less than they would have paid for one county five years ago. Knowledge of and compliance with the Texas title insurance laws and regulations along with a professional staff of Escrow Officers and Title Examiners with Texas experience are the keys to a successful
Title Association, the Texas Society of Professional Surveyors, the International Right of Way Association, the American Land Title Association, the American Association of Petroleum Landmen, and is current President of the Real Estate Service Providers Council-Texas Chapter and serves on the Board of Directors of the Independent Title Agents of Texas (ITAT). Susan B. Strickland is a Texas real estate attorney with 30 years of experience in the title insurance industry. During that time she functioned as underwriting counsel, commercial closer, and operations manager for various title insurance agents and underwriters, as well as providing extensive education for those companies and the Texas Land Title Association. Presently she is in private law practice, handling real estate matters, consulting with title insurance agents and underwriters, providing education to the title insurance industry and realtors, and working with the Texas Land Title Association in a variety of capacities. She provides consulting for title agents seeking to become licensed in Texas. ❍ Winter 2010 — TAVMA 15
Marketing
Marketing in 2010: More Conversation; Less Interruption Effectively getting your message across to the customer. By Brian Rieger n marketing circles, social media has been the buzz for a few years now. Over and over, it has been said that sites like LinkedIn or Facebook are the new and best ways to tell one’s story. But this is an oversimplification. One can still effectively win new business and increase brand aware-
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Brian Rieger ness using time-tested vehicles such as advertising or direct marketing mailers. The difference lies in a careful analysis of why social media is catching on. In fact, the settlement services industry’s rapid adoption of social media is indicative of a much larger trend. Those understanding this trend are the most likely to build 16 TAVMA — Winter 2010
the most effective marketing. Rule number one in building any marketing strategy is to understand the preferences and habits of the target market. What some fail to realize is that, whether a “B2B” or “B2C” campaign is envisioned, all consumers have changed dramatically in the last ten years. Today, the typical consumer is much more sophisticated, and much more selective in his or her research and purchase tendencies. While the consumer of twenty years ago was more open to information provided by advertisers, consumers today are not. Today’s consumers may be exposed to hundreds—if not thousands—of advertising messages in a week. Today’s consumers are besieged by data in all aspects of their lives. Today’s consumers are much more cynical about advertising messages. As a result, today’s consumer tends to prefer that the research be left to him or her on a purchase decision. He or she will be the judge of when it is time to buy, and he or she will use the Internet to get the information needed to make a decision. The hard,
uninvited pitch is not often welcomed any longer. Traditional advertising and marketing strategy relies upon the “interruption”
technique. Quite simply, the rationale was that, if a message could interrupt the consumer’s thought process and win his or her attention, the brand message would be impressed upon that consumer. However, in light of the changes discussed above in our way of
life, inter- the prospect is unlikely to retain any ruption just as impression at all. You’ve just wasted often leads to irri- your time and resources. Authenticity: Your market is more tation, or negative brand awareness. In some sophisticated than ever before. The ad cases, bad advertising or mar- slogan may be catchy, but the product’s keting can actually drive potential failure or poor customer service will render your advertising to be beyond customers away. So is direct marketing dead? useless, and even damaging. Be sure Should we all eliminate our advertising your message is who you really are. Sophistication: There is no such budgets and get ready to Tweet with thing as an “impulse buy” in the reckless abandon? Absolutely not. mortgage and settleSocial media cerment services industainly has its purtry any more. More poses, and can be an Today's consumers than ever, transacintegral element to are much more cynical tions are done on a a healthy marketing about advertising relationship basis, and public relations even if the relationstrategy. But it is no messages. ships are forged more a silver bullet using hi-tech means. than Web advertisAs such, treat your ing or e-mail marketing. It is just another arrow in the prospect as the sophisticated person he marketing quiver. The key is to have or she really is. Don’t blast all-caps ads an effective strategy, and a little pa- in the discussion forum on LinkedIn. tience. A few things should be kept Don’t tell them your new REO service will “change the world” (unless it really, in mind for any campaign: Consistency: Your market sees a truly will). And don’t deluge them lot of messages every day. If your with e-mails four times a week. Unfortunately for the sellers of message changes over and over again,
goods and services, it now takes more marketing, advertising and public relations vehicles to get the sale. The shelf life is longer, and the consumer is more reluctant. Remember that your prospect prefers to purchase on his or her terms, not yours. And respect that. Engage the prospect in conversation, rather than barking at him, and you may just find that your marketing strategy is a success. About the author Brian Rieger is the principal of True Impact Communications (www.trueimpactcommunications.com), a full-service marketing and public relations agency serving the mortgage and settlement services industry. He has served as a trusted advisor to large and small firms in the industry for seven years. Brian was also the Vice President of Seminars and Studies at publisher October Research Corporation for five years. You can contact Brian at (330) 348-1678, or at brian@trueimpactcommunications.com, and you can see his weekly blog (on similar topics) at www.trueimpact communications.com/blog. ❍ Winter 2010 — TAVMA 17
New Media
Keeping That Blog Going Everyone knows they need it, but how do you keep it alive? Focus on the value When people ask me about the f you’re a reader of this publication, value in blogging, I realize that they are you know that we are strong pro- asking about the value for their own ponents of blogging. TAVMA has companies. It takes time and commitbeen operating a blog as part of its web ment to write a good blog, even though presence now for nearly two years and most executives I know have all the talit has added great value to TAVMA ent and ability it takes to do the job members, primarily because of the dili- well. Some are surprised when I tell gence and attention paid it by execu- them the real value in blogging is delivered to the reader, or there is no tive director Jeff Schurman. Many of you have also embarked on sense in even starting. Sure, it all comes the blogging journey, full of hope that back when avid readers move swiftly the promise of increased business through the normally long sales cycle would soon be delivered. For most of because the blog has already introduced them to the us, that delivery is company and its late and there’s no executives. Sure, convenient place on The real value in blogging there are referthe web to track the is delivered to the rals that come shipment. Well, reader, or there is no to the company that’s not entirely via the blog true. You can tell if sense in even starting. and search enyour blog is going gine traffic and to pay dividends by offers to speak watching how much traffic it attracts and what your and write for other publications. readers do with the information you But none of this will happen if the provide them. In a future story, we will blogger doesn’t first focus on the talk more about gauging your audience, value delivered to the blog’s target but a vital first step is attracting those readership. Adding value is the first prerequisite readers in the first place. The real key to making a blog work to success in blogging. When it comes is keeping it going. Like the old adage to written content, value is delivered that showing up will get you ahead of whenever the information benefits the vast majority of the competition, your intended market. In short, you the most successful blogs are those that have to write something that will make have become accepted in the market- the members of your audience more place primarily because of their successful. Too often, marketing departments longevity. Anyone who has blogged much knows that this is the real chal- become involved in the blogging lenge for the online writer. How can process and the blog becomes a collecyou possibly come up with enough tion of marketing collateral aimed at great information to continue to add bringing in new clients. This rarely works. While it does provide some value in a blog over the long term.
By Rick Grant
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18 TAVMA — Winter 2010
valuable search engine optimization benefits, it rarely convinces prospects that you are a viable partner for the long term. e blogging function would be more at home in the customer service depart-
ment, because that’s what it’s really all about. A quick visit to your company’s help desk will tell you what questions your customers are asking, what challenges they are facing. ese are the topics that your blog
should address, among others. The key here is to think about everything you write from your customer’s point of view. As you think about the many things that will help make them more successful, you’ll find that you have expertise in house to aid them in many areas. Create this list on paper as it is the key to keeping your blog alive for the long run. Where the blog posts come from By engaging e f f e c t i ve l y in the
blogging process, you are actually becoming a publisher, no different than the trade publications you read for your own education. Your audience will expect to see your content on a regular basis. This has been a
major hurdle for companies moving are simply comments on industry into content marketing because they news, events or the insight of other have not been taught how this is typi- bloggers. These can be written as a cally done by professional publication comment on another site that links back to your own website or on your editors. When I was editing magazines for own blog as a more detailed treatment the mortgage industry in New York, I of the issue. These posts are a great way would sit down each fall with my staff to demonstrate your industry knowland think about the kinds of content edge. They also let you weigh in on imthat would add value to our readers. portant topics and establish you as a ere are always hot topics, important thought leader. After you’ve been careful to develop industry niches and annual features that must be covered. We added those enough content ideas to make sure to our calendar. We would try to get as you’re bringing real benefits to your specific as we could about the problems readers, then you can focus some attention on your our readers faced, in own business. order to bring them “Think about all of the There’s no reason information that would really add people you are writing for you can’t discuss what you do and value to their busiand create a master list your distinctive nesses and careers. of topics that will aid competence on Most TAVMA them in their work.” your blog. It just members are writcan’t take center ing for a number stage. of different auBusiness anniversaries, important diences and should take that into account on their blogs. AMCs may conferences, statutory deadlines, the be providing information to their beginning of the spring moving season lender clients, but also to the pro- and holidays are all easy excuses to blog fessional appraisers that they work about your business. In addition, there with each day. On the title side, are many events that occur during the companies are working with their year that lend themselves to blog posts. lender partners, but also working to These include new clients, closed deals make title agents more successful. (happy customers), successful referrals Think about all of the people you and traditional testimonials, commuare writing for and create a master list nity service efforts, mentions or stories of topics that will aid them in their in the media, new hires and awards or work. Don’t limit this list to products recognition. Taken together, this list will provide or services that you provide, but be as an ample source of blog content that expansive as possible. What you will find is that the list will last for years. you have created suggests blog posts of About the Author: a number of different kinds. Generally, we expect to see posts for each target Rick Grant is the principal at Rick Grant public that relate to individual success, & Associates (RGA), Jim orpe, Pennteam success, overall business strategy, sylvania, a marketing communications new resources, technology tips, and in- and PR consultancy. He currently writes formation you get from business con- for a number of trade publications and is ferences. an avid blogger. He can be reached Some of the simplest and most ef- at rick@rickgrant.net or by dialing fective blog posts a company can write 570-325-2818. ❍ Winter 2010 — TAVMA 19
Q & A
Jeff Schurman: What Impacted TAVMA M About Jeff Schurman Jeff Schurman serves as the executive vice president and executive director of the Title/Appraisal Vendor Management Association (TAVMA), a trade association that promotes the real estate vendor management and settlement services industry. In this role, he is responsible for coordinating associationsponsored education, outreach, membership development, and legislative action programs. In addition, he is a frequent conference and webinar speaker on topics relating to the vendor management industry, vendor/client relations, and the exploration and possible futures of the real estate settlement services industry. Jeff serves on the Board of Directors and Executive Committee of the Pittsburgh Pastoral Institute, a Pittsburgh-based statelicensed and nationally-accredited interfaith counseling and psychotherapy organization. There he serves as Treasurer and member of the Executive Committee. Jeff is a Past-Chair of the Appraisal Foundation's Industry Advisory Council (1998). Jeff is also a member of the World Future Society, and the American Society of Association Executives, where he holds the Certified Association Executive (CAE) credential, the highest professional credential in the association industry. Jeff is a 1980 graduate of La Roche College, where he obtained a Bachelor of Science degree in Business Administration and Management. He holds a Master of Arts degree in Leadership and Liberal Studies from Duquesne University. 20 TAVMA — Winter 2010
Q:
What were the most significant events that impacted TAVMA members in 2009?
A: ere were two issues in our part of the industry that had significant impacts on our members this year. e first was the lawsuit between National Real Estate Information Services (NREIS), Pittsburgh, and the Massachusetts Bar over the company’s alleged Unauthorized Practice of Law. NREIS defended itself in that case and won. e industry now has a precedent for future UPL issues, there and in other states. at event has long-term implications for our industry that are definitely positive. e prevailing thought has traditionally been that anything at all that happens during the closing is the practice of law, which would even include the making of the copies and setting the appointments. In Massachusetts, that’s all called the practice of law because the closing process had never been well defined. e NREIS case solved that problem. e second issue had the most immediate impact on TAVMA members this past year and that was the Home Valuation Code of Conduct (HVCC), on the appraisal side. at Code, handed down by the GSEs and the Attorney General of New York, was focused on keeping appraisers and lenders at arm’s length in order to keep lenders from exerting undo influence on the appraiser’s valuation. But the Code also put a new emphasis on the appraisal management industry, impacting the way appraisals are ordered, tracked and delivered. e HVCC is also positive for our industry, but I think appraisal management companies (AMCs) would have been more successful in 2009 with or without the Code. e HVCC prevents mortgage originators, especially mortgage brokers, from ordering appraisals directly. at’s a significant change in the way appraisal ordering is done and introduces the AMC as a solution. However, as the market has changed, the share of mortgage business originated by brokers has fallen precipitously, so they wouldn’t have been ordering appraisals anyway. At the same time, national lenders are doing more direct lending and they already use AMCs, so they would have been ordering more appraisals through AMCs anyway. e net result for our members would have been nearly the same.
Q:
As you look forward to 2010, what issues will continue to impact TAVMA members?
A: e HVCC will continue to be an important issue in 2010, but the issue that will have the most impact on our members will be the various states’ attempts to regulate the AMC industry. We
embers in 2009? What’s Ahead in 2010? Members expect 30 additional states to present proposed legislation next A: I would say the HVCC. While our members, and year aimed at regulating AMCs in some way. TAVMA itself, has many qualms with the Code, it has e impact will likely be that the AMC will have to reg- really generated interest in TAVMA because we’re the ister with the state, through either a banking agency or a fi- main organization in place to address the regulation of nance agency or through the appraiser board and then they AMCs. TAVMA represents almost 75% of the appraisal would be subject to regulations created by that entity for management industry. We are a big organization in our AMCs doing business in their state. at should be the big little niche. issue for AMCs in the coming year and also for TAVMA. As companies are looking around for an organization that is would not be good for our industry or for the states. will align well with their interests and help them present It would be like applying for a driver’s license in all 50 states. those interests to state legislators, TAVMA is the obvious You can do it, but is would be very difficult. ere could be 50 choice. Business owners should ask themselves, who is going different sets of paperwork, fees and fee renewals. to best represent my company’s interests? Is it me, the come additional difficultly is that not all states will be uni- pany owner? e appraisal institute? TAVMA is the only orform in what their requirements will be. Some states, like ganization out there that is looking out for the specific California, have regulations that are fairly straight forward. interests of the appraisal management industry. e memOther states, like North Carolina, require that the lender pay bership for a small company is only $250. the appraiser directly for the appraisal and then pay the What else should TAVMA members AMC. Contract law would say that the AMC has the conbear in mind to be more successful tractual relationship with that appraiser. Why is it that in next year? every other profession in North Carolina where there is a contractor and a client the contractor is paid by that client A: To remain competitive, companies really need to do two except in the appraisal business? ese issues are likely to conthings: innovate consistently and never stop improving on the tinue to crop up. TAVMA is not opposed to regulating AMCs. We productivity of their companies. e larger firms in our space are doing these things very well, but I worry support that as the good companies operatabout smaller competitors and their ability to ing in this space are following those prac“A far beer compete with the economies of scale enjoyed tices already. A far better and meaningful by the larger players. way to regulate AMCs would be to do so at and meaningful But smaller firms, even small AMCs that the federal level with one set of rules for the way to regulate may gross $250,000 per year with three ementire industry. This solution would be less AMCs would be ployees, can be great competitors if they expensive for both sides. to do so at the focus on productivity and innovation. By Since most states will have a regulation that federal level” doing these things you are creating for your allows that state to pull an AMC’s license if a license gets revoked in any other state, AMCs client the ability to be more innovative and that get into trouble in any state will have to productive themselves, so they can grow go to court and fight vigorously or risk their entire business. their businesses. To the extent that smaller firms are able to is will cost states money. e top 20 AMCs have 85% of implement the information technology systems they need, the market share among all AMCs. ese are the mostly to provide their customers with top-notch service and to likely to get into trouble in a state as they are doing the bulk control the transactions going through their systems, they’ll of the business there. When threatened, those companies will be more competitive. do exactly what NREIS did in Massachusetts and take the For appraisers, I have been shocked by the lack of states to court. We should strive to avoid that. Web presence many of these professionals currently have. It can be very challenging finding an appraiser’s website. 2009 was a challenging year for There’s a whole world of web technology out there. many trade groups, but TAVMA did well. Marketing today is much different than it was 20 years To what do you attribute this year’s ago. You have to keep up with that sort of thing. It goes TAVMA success? back to the idea of innovation. ❍
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Winter 2010 — TAVMA 21