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Agents vs. Underwriters-Competitors or Partners?

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January/February 2001 - Volume 80, Number 2

by Deborah DeMaddalena

As a 25-year veteran in the title and settlement services industry, I have lived through untold market cycles and shifts over the years. I've watched legislative changes come and go and continually evolve. Political and economic influences have created the most dramatic changes in our business and will continue to do so.

Although in the past, technology had played a minor role in some of the changes, the arrival of the Internet by way of the "" revolution shook our industry and in many instances placed us in a state of flux. At question is the very foundation of how business is conducted—who is best positioned to provide the products and services our segment of the industry has traditionally been responsible for delivering?

As our industry moves further into the 21st Century, the relationship between title underwriters and title agents will very likely provide tremendous opportunities. There is little doubt the products and services we provide today will continue to undergo a metamorphic process. New and different kinds of products and/or services may replace traditional ones completely. Unfortunately, some potential pitfalls that are fueled by the competitive differences between title underwriters and title agents, also loom in the periphery. These competitive differences could open the door to other entities encroaching into the title and settlement services arena if we do not align our collective resources and respective positions even further.

United We Stand.... Divided We Fall
It's indisputable that underwriters and agents are dependent upon one another. Agents need the underwriting services and support that title insurers provide. Underwriters need agents in order to grow national referral and distribution networks. Ironically, it is also true that underwriters and agents are vying for the same customers in many geographic locations.

In some camps, there is a perception that underwriters acquire independent agents in order to eliminate this competition. I don't believe the elimination of competition is the primary driver of underwriter acquisitions. In an acquisition, the underwriters benefit only if they are confident they can secure and maintain an agent's employee and customer base. The reality is more likely that both the underwriter and agent are making sound and prudent business decisions. Agency owners decide to sell their operations to maximize their investment or become part of a larger structure. To expand their business universe and preserve or expand their market share, underwriters acquire experienced and viable companies. It's simply a good business decision for both parties. While title agents and title underwriters have evolved differently, they share far more practical business conventions than differences. Agents and underwriters are continually working together in setting policy terms, auditing services to ensure compliance with underwriting and escrow standards, and prevention of potential claims and most importantly, providing service to their customers. Like any strategic business partnership, certain players bring certain advantages to the table. It all goes to the core of why companies seek business partners — "Why should I get into business with somebody if I don't have anything to gain?" The good news is that everyone does have something to gain. Underwriters and agents have evolved into a symbiotic existence, the question is not "why should I work with them" but rather "how can I succeed with them today?"

For the agents, underwriters produce economies of scale at many levels. They can pass on referrals for bulk pricing in purchasing capability, technology initiatives, and packages or bundled solutions. These market advantages enable agents to service large customers and handle national business that they may not have otherwise been able to satisfy. Agents also benefit greatly from the underwriting counsel they receive.

For the underwriter, a geographic area where an agent has developed significant relationships with customers, the partnership is highly valuable in terms of underwriting premiums. These agents contribute the knowledge, the experience, and the customer relationships. Another source of misunderstanding revolves around the commercial arena. Agents who have developed a strong presence in the commercial marketplace believe there is a gap in underwriter referrals. Cross referrals seem to be a good starting point for discussion, but again it comes down to good sound business strategies—both sides have to evaluate what is good for their own business and their customers.

My perspective is that right now there exists an opportunity for total unification between title underwriters and title agents, industrywide. That's a pretty tall statement, however, the bottom line for both groups is actual business they might not have otherwise captured, and continued longevity in our industry.

 ALTA® Participates in Standards Group: Fannie/Freddie Make Announcement

At the recent work group meetings of the Mortgage Industry Standards Maintenance Organization (MISMO), 150 business and technology professionals in the real estate and mortgage finance sector (including a representative from ALTA®) met to establish XML data standards enabling the paperless real estate purchase, mortgage finance, and closing process.

MISMO is also participating in high-level discussions with other organizations pursuing the same goal-AARTT, NAR's RETS, and LegalXML. All of these groups are interested in cooperative efforts to ensure that XML standards for the industry are interchangeable and will help the entire industry achieve the common goal of a completely paperless transaction.

The big news from the meeting, was that under the MISMO umbrella, Fannie and Freddie have developed a common GSE Automated Underwriting Document Type Definition (DTD), which has been approved as a standard MISMO DTD. The acceptance of the Automated Underwriting DTD enables work groups to continue development of DTDs that can effectively exchange data with Automated Underwriting systems during a paperless mortgage origination process.

County recorders are becoming more involved in the XML development process, participating in MISMO's Real Estate Property Information and e-Mortgage work groups. The MISMO leadership is also working with county recorders directly by coordinating with the Property Records Industry Joint Task Force as it develops an XML standard for county recording data.

The Title Insurance work group voted to follow the architectural design of the Automated Underwriting DTD and anticipates completion of the Title Insurance Order and Response DTD for inclusion in the next version of the MISMO Standard.

MISMO was established in October 1999, at the MBA Annual Convention. Taking up where the MBA EDI Work Groups left off, MISMO meets on a trimester basis to develop XML standards for business processes in the real estate and mortgage finance industry. Nearly 100 subscriber organizations and 500 individuals are participating in work group meetings, conference calls, and listserves. Subscriber organizations include ALTA®, Fannie Mae, Freddie Mac, ALLTEL, American Pioneer, Chase Manhattan, Countrywide, eOriginal, Fidelity National Financial, First American, Home Side, INFO1, InGeo Systems, LandAmerica, Old Republic, and RealEC.

To get involved or learn more, visit or contact Kelly Romeo, ALTA® director of information systems & technology at:

The Realities
Both sides benefit from a strong alliance where all members are truly partners in the industry. This ensures we present a solid and powerful front where legislative issues could have a significant impact on our business. Supporting a strong national network via local, state, and federal, lobbying efforts is crucial to preserving our place in the real estate transaction. Let's look at the recent enactment of the E-Sign legislation by President Clinton in October 2000. Extending the scope of UETA (the Uniformed Electronic Transactions Act), which is legislation that opens the door for full electronic real estate transactions, will push us ever closer to the notion of paperless closings. Surprisingly, it is not technology issues preventing this from becoming an overnight reality, but rather a whole host of business, legal and political questions, which beg to be addressed.

As title and settlement service agents play such a large part in the closing transaction, it seems that as an industry, we should be well informed and actively working together with other groups such as the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), the National Notary Association (NNA), and the National Association of County Recorders (NACRC), to establish standards and workflow that would ensure that our voices are heard and our interests are protected. (See the sidebar on ALTA®'s involvement in one of these groups on page 24.)

In today's business world, competition is fierce. Companies are continually looking for ways in which to expand their markets, grow their revenue and keep profits healthy. All companies desire to be successful. In order to do so they must be profitable. As technology and eBusiness come into play, and new tools and processes become available, the playing field becomes level for all participants (small mom and pop shops, medium and large entities) to compete because they have access to a complete platform of products and services that they can distribute locally, regionally, or nationally, regardless of their size.

The mantra of the "00" decade is better, cheaper, faster. Technology certainly plays a big part in helping achieve this end. But, at the end of the day, it's the business relationships and partnerships and the service provided to customers that sustain the health and longevity of companies and industries.

Deborah DeMaddalena was most recently executive vice president for Micro General, the leading provider of production and workflow software for the title and real estate industries. For more information about Micro General, contact Pat Dwight at or 949-622-3927. Micro General's Web address is:

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