Editor’s Note: This is part of our continuing monthly series on affiliated companies. Our goal is to feature companies which have had history and experience with affiliated business to learn about their success and share the RESPA compliance lessons they have gained in these affiliations over time. 

Scottsdale, Ariz.-based Taylor Morrison Home Corp. is currently the fifth-largest homebuilder in the United States. Last year, its affiliated title business, Inspired Title Services, made more than $20 million in gross revenue, operating in Arizona, Colorado, Florida, Georgia, Nevada, North Carolina, South Carolina, Texas and Washington.

“Inspired Title was formed five years ago to serve the unique title and settlement needs of Taylor Morrison homebuyers and to provide true one-stop shopping and a great homebuying experience,” Bud Moscony, vice president of title services for Inspired Title, told RESPA News.

The homebuilder’s mortgage company, Taylor Morrison Home Funding (TMHF), began in 2009, when Taylor Morrison (TM) acquired Mortgage Funding Direct Ventures, a management company which had partnered with production home builders to create in-house mortgage subsidiaries. Since then, TMHF has expanded nationally and grown from a mortgage brokerage to an independent mortgage banker.

Taylor Morrison Insurance Services – the newest addition to the builder’s family of affiliates – was started in August, utilizing third-party carriers that specialize in new home construction to provide homeowner’s insurance for TM homebuyers in all markets.

Compliance is key

When it comes to RESPA compliance, Moscony said the Taylor Morrison family goes above and beyond.

“Being owned by a large publicly-traded parent affords you the benefits of a complete compliance department,” he said. “Our first task for title was to go through American Land Title Association’s best practices. We have internal auditors who partner with us to assure that we are doing what we need, to minimize risk. We also go through external audits by regulatory bodies as well our title insurance underwriters.

“We have a ‘clean desk policy’ to make sure there’s no non-public information sitting out – that it’s locked up and secured. We have random compliance checks by our compliance group to make sure the officers are being fully compliant. In addition, at the time of the referral, our homebuilder provides the RESPA affiliated business disclosure to homebuyers; we ask for a copy of it for our files. We will not issue a title commitment to anyone – to any of the parties – until we verify we have a signed AfBA disclosure in our file,” Moscony said.

Another key component of their compliance strategy consists of actively participating in key industry associations. For instance, the lender is an active member of the Mortgage Bankers Association and Inspired Title is an active member of the Real Estate Services Providers Council (RESPRO). Moscony chairs RESPRO’s Homebuilder Task Force.

Staying compliant also extends to Inspired Title’s website.

“When folks call for our fees, we want to drive them to our website,” Moscony said. “There’s an affiliated business arrangement disclosure on that first page when you first arrive on our website. We have you click through that you acknowledge the affiliate business disclosure. As we grow our software systems into a more integrated and electronic platform for our homebuyers, we’re incorporating compliance controls as well.”

Perhaps the most important compliance component is providing the AfBA Disclosure at the time of the initial referral of the affiliate. Generally, homebuilding companies have an established process for giving it out either as part of the agreement of the sale or right before or after it.

The key, he said, is to have an established process in place, which you test regularly for efficacy. If so, an occasional slip shouldn’t get you into hot water.

“Historically, some regulators would lean towards giving you a pass if you missed a random disclosure saying, ‘OK if you’ve got a process in place, which you test regularly to make sure it is being followed, and you missed a random AfBA on Sally Jones for 123 Main St., we get it,’ ” Moscony said. “But we’re a bit more risk adverse. Tawn Kelley, president of Inspired Title and my boss, said to me, ‘No, please make sure that every one of our files has an affiliated business disclosure before you send out the title commitment.’ I said, ‘Absolutely.’ ”

More visibility, control

Moscony said affiliated businesses always have been a great way to align with the customer even during industry ups and downs, maybe even more so during the COVID-19 pandemic.

“I think that many of the affiliated companies today were started by companies that wanted a better experience for their customers than what they were getting,” Moscony said. “I hear from a lot of companies that the title companies they were dealing with weren’t doing a great service to their customers.

“How do we improve that experience? We take control, and we do it ourselves. Even today is a great time to start an affiliate. I think that having all the parties to the real estate transaction aligned, is a more efficient way to a more successful home purchase. Consumers today want to accomplish tasks quicker, faster, better, more conveniently. And affiliated businesses provide that one-stop shopping experience, true alignment, and peace of mind.”

With COVID-19, in some ways TMHF was insulated from the immediate business dropoff other real estate companies experienced due to the build cycle for a new home.

“Moreover, because Taylor Morrison Home Funding prequalifies each homebuyer before they sign an agreement with our builder, our lender affiliate provides our builder with a true line of sight into that potential homebuyer,” he added.

Typically, it takes the company about six to eight months to build a home.

“So once the pandemic hit, our lender affiliate proactively reviewed the loan backlog to provide as much  backlog visibility to our builder as we could,” Moscony said. “So we would review the backlog to see which buyers were required to sell an existing home as a condition of closing on their new home, who was furloughed, who may have just been laid off from a retail, hotel, travel or entertainment job.

“That allowed us to be proactive so we could reach out to our homebuyers and say, ‘How can we help you get ready to close on your new home?’ For some folks in this crisis, with the turmoil in the mortgage market, it was getting their loan interest rate locked. Or if someone’s been furloughed, we can reach out and say, ‘We know you’ve been furloughed, we know you’re going to get called back in July, let’s delay the closing until after you’re back at work and we’ll finish the closing then.”

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