by Anne L. Anastasi, CLTP
Our industry has made the relationship between underwriter and agent complex. The relationship is often viewed as adversarial or parental, as competitive or resentful. There are underwriters that have said they do not need agents, when we know for a fact that they would have difficulty affording the bricks and mortar and weathering the cycles of the market with expensive overhead with direct operations everywhere in the country. And for those agents who wish the underwriters would go away, we remind you that the very definition of the word agent renders this impossible. Certainly you could open your own underwriting company, but let’s be realistic about the expense, liability, regulations and time commitment required.
When I first started college I was told that if you steal from one person, it’s plagiarism, if you steal from ten people, it’s research, and if you steal from hundreds, you are a scholar. Speaking as a scholar today, please sit back, don’t get defensive, and let’s talk about how we can all become better partners. Once we realize that we are in a partnership in the truest sense of the word, we will have a better chance to prosper and survive, and I am not using the word “survive” lightly. The very real threat of our legislatures, regulatory agencies, and customers requires strength that will only come if we are working together as one voice.
There are at least seven things that the underwriters and the agents can do better to be a better partner—so open your mind to improving your relationship for your sake and the sake of our industry’s survival.
Let’s begin with the agents
The number one thing that you can do to be a better partner is remit. It’s not your money! Cut your remittance check at the closing, staple it to a copy of the HUD 1, pull the policy jackets, and put the policy numbers on your remittance check. The rule in all of our companies is that the remittance checks must go out to the underwriter by the 5th day of the month following the closing. It’s that simple. A copy of the policy can follow when it is completed.
Think about fairness. How would you feel if the consumer said to you that they would send their title fees to you three, four, five months after the closing. You would tell them that you couldn’t possibly allow that because you have bills to pay, payroll to meet. Similarly, your underwriter has bills to pay and payroll to meet.
Be truthful when asking for risk decisions. You know that you can make a decision go any way you want by what you say, how you say it, and what you don’t say. Do not exaggerate, fabricate, or procrastinate. Be fair and be honest—the underwriter is your partner. In all of my years in this business there have only been a handful of title issues that could not be resolved. Ninety nine percent of the time your underwriter counsel will find a way to resolve a title issue. You may have to delay the closing, but at least it will close, and if you play your cards right, you will look like a hero.
Keep orderly files. It may sound elementary, but you should have a system and adherence should be mandatory. All your proofs should be clipped together, your title work should be neatly clipped, etc. The potential for loss is increased when your file is unorganized to the point where you can’t find what you need. An orderly file will do more for you than just save you money—when it comes to a claim, it will save you time, and today time is as important as money.
Reconcile monthly. We have all learned from Frank Abagnale—and will hear more about his thoughts at the ALTA® annual convention in October—that banks give us 30 days to find errors in our bank statements. Thirty days to find checks that were forged, 30 days to find checks that were incorrectly paid, 30 days to find deposits incorrectly credited. If you are not reconciling monthly, how do you know when a payoff check goes uncashed and interest is still accruing? How do you know when recording checks are uncashed indicating that your documents were never recorded? Frank also told us that banks do not even look at checks written for under a certain threshold—normally around $50,000. If you are not reconciling monthly, it is possible that someone is cashing checks under the threshold without so much as a signature.
Terry, our reconciler, called me in the car one day: “Anne, are you sitting down?” “Terry, I am in the car,” I said cautiously. “Is there a bridge abutment coming up?” she asked. “No,” I said, “Why?” “We have a forgery.” On the day that the cancelled checks are delivered, Terry looks through them knowing that she will reconcile within the 30 days, yet she still fans through the checks looking for an odd size, color, signature—anything. On this day she fanned through the checks of one of our biggest agencies and found a check that was a different color with an incorrect address and an unknown signature. It was a computer generated check that was poorly done; yet it was cashed.
By the time I got back to my office the FBI was at my door, and within 24 hours they had a picture of the person (from three angles) who had cashed the check. Fortunately, it was not an inside job, but unfortunately it was a part of a check forging ring. We closed the account that day, and yes, it was a major undertaking, but what if? what if Terry hadn’t fanned the checks, what if we didn’t reconcile, what if??
Deposit Immediately. We work all our lives to establish a good reputation for our companies, but bounce a check once and all that work is wasted. With the influx of business your bank float is healthy today, but do not get lax on your deposit routine because other factors can affect the float. In January a bank mistakenly bounced a Treasurer’s check in the amount of $932,000, which put a severe dent in our float. If you bounce a check, even if there is an explanation, the affected person will tell five people, who will then tell five more, and so on, and so on.
Loss training. Please make sure that all your people know how to respond to a phone call about a potential loss. There was a situation where an agency was unfairly held liable for a loss because the receptionist said, “I’m so sorry we did that.” Your staff should be trained on what to say and how to say it. And remember your partner; report even the hint of a loss to your underwriter because most likely they will have some good advice.
Be the best. You cannot makes demands of your partner unless you give in return. You can’t complain unless you assist in the resolution. Be the kind of agent that your underwriters brag about having on board, and not just for your remittances but also for your integrity, knowledge, and contribution to the industry.
Underwriters, it’s now your turn
Keep your agents informed. Agents have access but rarely take the time to keep up with proposed changes in legislation. Keep your agents informed during the process, not just after passage because maybe, just maybe, your agents have a thought on the subject. This needs to be done for state as well as federal issues.
A decision maker must be present at all times. There is nothing worse than calling your underwriter with a question from a closing and being told that no one is available or they are all in a meeting or they are all out to lunch or they are all on vacation.
The majority of closings around the country occur
during the last six business days of the month. We don’t
allow any vacation days or personal days during the last six business
days of the month—it just makes good business sense. There
was an underwriter counsel who took umbrage to my statement on
this subject during a talk I gave at the California Land Title
annual convention last year. He said, “I won’t let
my agent’s business cycles dictate my vacation schedule.” You
may form your own response to that statement.
But agents don’t cry wolf. When you call and are asked if your question can wait until the next day because your resource is working on another problem, if you can wait, then wait. This is your partner.
Al Maguire, former Marquette basketball coach, during his stint as a color analyst for March Madness once remarked, “Small points win big games.” He was talking about a Rhode Island player who was missing free throws and how, even though they are only worth one point, they do add up.
Educate. Offer classes on title issues as well as business issues. Most agents run small operations and do not have access to expertise on interviewing, hiring/firing practices, business insurances, 401(k) programs, Section 125 benefits, E&O pitfalls, employee bonds, investing, and a myriad of other topics.
And when it comes to title issues, some underwriters will complain that the questions they are being asked are found in the underwriting manuals provided to the agents. How about having a class on how to find things in the manual? Maybe that would cut down on some of the calls. But never, never make an agent feel stupid or embarrassed when he/she calls with a question. Once an agent losses face, he/she may not want to call again and that may force a poor decision on the agent’s part that could cost everyone when the claim arrives.
When was the last time you called your agent to say thank you for their remittances? We make it a habit of calling our customers on a monthly basis to say thank you for your business.” Why should a customer use us if we don’t say thank you? Why should an agent use you as an underwriter if you don’t say thank you?
Wayne Calloway, former CEO of Pepsi, said “Nothing focuses the mind better than the sight of a competitor who wants to wipe you off the face of the map.” We don’t know whom he was talking about, but the message is very clear. There is always a competitor waiting to take your business. Agents are constantly being wooed by other underwriters. Small points win big games.
Make a decision on Affiliated Business Arrangements. Develop a strategy of fairness. If an opportunity comes your way in an area where you have a strong agent, then allow your agent to participate. If you do not have an agency presence in the area, you could use the opportunity as a marketing tool to pick up a strong agent, or you could decide to service the business directly. Your decision should be one of strict compliance however. Most importantly, you should train your agents on the rules, and you must enforce your agent’s compliance with rules.
In our travels around the country, my partner Chip Lutz and I constantly hear complaints about competing agents who are allegedly violating the HUD rules on AfBAs. We always ask who is doing it, what they are doing, and what underwriter is allowing this to occur. Of course some allegations are misunderstandings or just competitive jealousy, but for those allegations that are real, the underwriter will never have a chance of capturing agents in the local area.
And speaking of integrity. Are you signing up agents that have questionable business practices just for the sake of market share? Why would an agent want to partner with and give money to an underwriter that allows, and thus supports, an agent who unfairly competes? We all know of agents who are still giving kickbacks. We all know of agents who have sham AfBAs with no capital, no employees, no expenses, and no shame. We all know of agents who violate their state’s promulgated rate structure. Obviously their underwriters know because they are auditing the HUD 1s. Let me repeat, why would an agent want to partner with and give money to an underwriter who allows these practices to happen?
Be the best. Be the kind of underwriter who says thank you, who helps resolve problems without embarrassing the questioner, who enforces compliance, who walks away from business that isn’t being done properly, who helps train agents to become better business people. If you are doing it, boast about it.
But agents, remember all these things have a cost. The underwriters have to make money too, so if you want to demand great service or if you want to demand that they drop a noncomplying agent, be fair when negotiating your splits—there is a price to integrity and good service.
It was an honor to be asked to write this article. I just hope we all realize that together we are much stronger than apart.
Anne Anastasi is President of Troon Management Corp., the country’s only independent consulting authority on AfBAs. She has been the keynote speaker at countless state conventions speaking on this topic and AfBAs. She can be reached at 215 441 5500 or by visiting Troonmanagement.com