Title Radio to discuss how to compete

As seen in: The Title Report
5/19/04

On May 13, October Research Corporation and The Title Report unleashed a new kind of virtual seminar format – Title Radio ’03, a live talk radio program held at Beachwood Studios outside of Cleveland, Ohio. The show was broadcast over telephone wires to more than 1,000 attendees, who signed up to hear the ins and outs of how to compete and be successful in the packaged real estate settlement services arena.

The live show enlisted progressive thinkers Dave Oakes, director of operations for Atlantic Assurance; Norm Gottschalk, SVP of information technology, GATORSystems; Bill Thomas, CEO of Specialty Title Services; John Barnes, VP product management, BCE Emergis; and Joe Murin, president and CEO of Basis 100 Inc., who convened for an in-depth conversation on the much anticipated—and sometimes feared—new business opportunity on the horizon as a result of pending reform to the Department of Housing and Urban Development’s (HUD) to the Real Estate Settlement Services Act (RESPA). The program also included pre-recorded insight from some of the top underwriters in the United States, including Ted Chandler, COO of LandAmerica; Gary Kermott, president of First American Title Corporation; Stewart Morris Jr., president and co-CEO of Stewart Information Services; and Patrick Stone, CEO of Fidelity National Information Solutions. According to Tatiana Parker, managing editor at October Research Corporation, Title Radio evolved out of a simple idea. “We were being asked to make our virtual seminars more interactive and exciting. So we decided to bring all the panelists into Cleveland and into one studio and push the interactive side of things to the next level. What we did not count on was producing a two-hour radio show. It ended up being a bit more ambitious and expensive than what we thought,” she said. “But, it has been one of those projects that you fall in love with because you are having so much fun and doing so many new and different things. What is most rewarding, however, is the fact that we have produced ‘something completely different’ for our industry and the readers of The Title Report.”

Title Radio moderator Matt Barr, managing editor at October Research Corporation, said the premise behind the subject matter in the first Title Radio is that “no matter how the new RESPA rule shakes out, it is likely to include a “relaxation of HUD’s prohibition of referral fees, volume discounts and other barriers to preferred provider status,” he told the audience, which included mortgage originators, government entities, independent agents, among others.

And, while some lenders and originators are already packaging services (such as ABM-AMRO), when RESPA reform is finalized, settlement service providers and title agents need to be positioned to take advantage and not get left behind as larger companies compete with a new bundled offering as a new business opportunity, Barr told the audience.

Future markets The first topic tackled by the in-studio panelists and underwriters was what new customer markets will surface with packaged services and how title and settlement service professionals should respond to those markets.

“I personally don’t see a whole lot changing in the markets,” Kermott said. “Title agents will want to provide their local customers with as many products and services as possible, so they will need to have access to those. The regional and national customers will want one point of contact, so it will become important for agents to become a part of a network.”

Murin told the audience that he has concerns that bundled services will be a “cram down” at first, with purely the means to enact bundled services where spreads had been made all along the path from procurement to the consumer. “I am concerned those consumers won’t benefit initially from bundled services. We need to think of a means to a better end versus a bundled service wrapped around traditional ways of delivery. Until that happens, the value isn’t there,” he said.

Barnes said the major driving forces behind future markets would be the type of loan and lender and the technology used. “On the retail side, the lenders will have control over the bundles, so they can assemble them easily. However, you are also looking at lenders that will try to put together packages that they can offer to brokers at a wholesale level, and those lenders will also be looking at technology that can help them build bundles based on the products, price and turn times and service levels those providers bring to the market,” he said.

RESPA concerns Stone commented that title agents right now are “unnecessarily threatened by the movement to bundled services.”

Thomas disagreed with Stone. “I think every title agent in the country feels threatened. When the RESPA changes were published, we were particularly concerned on how we would transition into this market where the distribution channels are going to change. How would I reach those orders if our traditional clients no longer controlled the point of sale? To me, the future of packaged services has a lot to do with whether it’s driven by actual regulation or by the lender forging ahead with it because he doesn’t want to wait for RESPA reform,” he said.

And, because RESPA reform does require some set pricing structures three days into the buying process, how does price come into play in those future packaged services?

“Price is important, but more important is consistency in price. The cost is a known quantity and can be reliably included in the package,” commented Chandler.

Morris Jr., said, “The agent has a challenge and it will be interesting to see if the expectation of the lender to crank down the price will work and will the quality of the products delivered and services still be there if they get that low price.”

“I think the agent will have to address the issue of transfer pricing. This will be the hardest concept for the title industry to understand because for years, it has operated in a regulatory environment of fixed prices,” Stone said. “I do not believe we will have multiple bundles from different people. I think the bundle will be a fixed price, including the title product, and the title agent will need some flexibility in meeting that demand.”

Oakes commented that title agents are likely to have experiences similar to what real estate brokers have had over the past few years. “They’ve had to broaden their offerings to earn the same dollars they did yesterday, I think title agents will have to decide what products to offer, what geographic areas they want to service and where their expertise is,” he said.

Key decisions in bundling The panelists spent time dissecting key decision points for a company charting a course in the bundled services arena. Barnes said that finding the right people to partner with is crucial.

Thomas agreed, noting that success in bundled services will be largely dependent on a central ordering process, that will be important as well as increasing geographic coverage. “If you don’t have the money to get into appraisals or flood zones, you need to bundle what you do well with what your partners do well, and that will be your package,” he said.

“You’re either going to be a bundler or a provider of one or more services,” Oakes said. “You want to know what customers you can best serve and whether you can effectively provide services to those markets.”

Gottschalk echoed Oakes’ thoughts, adding that it will be especially important when making technology decisions. “If you are a bundler, you’re going to need the help of outside companies to provide the secondary services, you will need to invest in technology that will help them grow and connect with other companies. For example, a local title agent isn’t going to do appraisal work, but they may have an interface set up with a local provider that does do the appraisal and is able to return that work back to them electronically without the lender needing to touch it at all,” he said. “Title agents need to invest in technology and produce the same turn times as settlement service providers such as Atlantic Assurance if they don’t want to be driven out of the market.”

Coming soon to a telephone near you Early feedback from audience participants indicated that Title Radio ’03 was a success. October Research is already in the planning stages of another show, which will focus on technology for the title industry. “The Title Radio panel was engaged and lively, and their insights were invaluable,” commented Barr. “When I look back and think about all the people who put so much effort into it, it's truly gratifying that it went so wonderfully well. I had a blast, and I hope and expect listeners did, too.”

And stay tuned! CDs of Title Radio ‘03 will be available soon!