by William Welge
The role of the abstracting professional will never be eliminated, according to this case study, but how he or she does the job may indeed change. Are you prepared?
They are the foot soldiers of the title insurance industry. For years title abstracters and examiners have spent hours each week driving to courthouses and county recorders’ offices, combing through dusty archives to do the research needed to issue title insurance. For years they have worked by fax and telephone, typewriter and good old-fashioned shoe leather, accessing the relevant data where it was physically stored and bringing it back to the office where a data-entry person would then retype the information into a report format. Until now.
One of the last sectors of the real estate settlement services industry to embrace recent technological advances, the title examination business is now embroiled in a debate that, for some, pits quality of product versus speed and turnaround time. While the consumer, title insurer, and mortgage lender clamor for a faster title search, some abstracters counter that increased speed amounts to a reduction in quality. These abstracters openly admit that they fear replacement by unqualified operators performing a title search simply by running a program from a desktop or by cheaper, offshore labor able to tap into the “thin title plant” databases that some believe will eventually replace the county records traditional abstracters use now.
“In my position, I get feedback from abstracters nationwide on this issue, and the majority of it is negative,” notes Robert Franco, owner of the abstracter-frequented Web site Source of Title. “I often hear from local abstracters in areas where thin title plants are more prevalent that the volume of work is shrinking and the orders they still get are becoming more involved as the clients request searches that go further back than the thin title plant’s records,” said Franco.
Other abstracters, however, are embracing the use of electronic abstracting technology. They see it as a tool to improve performance and profit, rather than as a weapon to be used against them by the competition or as a competitor in and of itself. These professionals could provide a look at the future of an evolving profession. Rather than fighting technological advances, these abstracters suggest that abstracting technology makes their lives easier.
Making Work Easier
Naz Bernardo, president and chief executive officer of Resource Confidential, Inc. in Syracuse, N.Y., has been using abstracting technology for years. Mr. Bernardo is in the vanguard of traditional title abstracters who are now embracing the latest technology. He believes that electronic abstracting software will help his business rather than derail it. “With the new technologies, there is really no difference in the search process. Experienced abstracters are still necessary to complete searches, whether they’re done online or at the county courthouse. Now, however, abstracters need to be computer knowledgeable.”
Mr. Bernardo, who implemented his electronic abstracting platform in the early days of the technology, had clear expectations about the system he purchased for his business and has not been disappointed. “I expected the technology to do four things, Bernardo said. “First, it would enable our Quality Control Department to confirm the results of a manual search immediately. Second, it would enhance our training program, bringing a shorter comprehension time for our new staff abstracters. Third, we would be able to instantly obtain documents needed by clients to verify legal descriptions, loan amounts, and the like. And finally, it would improve our productivity and time of service by providing our abstracters with immediate access to the exact same data they would review while doing an on-site search.”
Like many abstracters using electronic abstracting platforms, Bernardo is pleased with the faster turnaround time. Rather than being bogged down with the travel time and administrative expenses associated with a courthouse search and report generation, his abstracters are able to access the records from the office. “Our business has increased over 15 percent,” he said. “What was once a 24- to 48-hour process now takes four to six hours.”
Mr. Bernardo adds that the kinds of products he is fulfilling are changing. “The searches being ordered tend to be deed only, mortgage, specific mortgage, deed and mortgage, or current owner searches.” He also has found an additional benefit with regard to administrative costs. Not only has the amount of travel time required of his staff been drastically reduced, but his reports no longer need to be retyped by an in-house data-entry person. The result has been an increased ability to take on volume.
Other abstracters embracing the latest title technology have been pleased to discover that several common delays involved in the traditional courthouse abstracting process are reduced or eliminated by using abstracting platforms. Some of the delays eliminated include lost or missing hard copy records or microfilm reels, inoperable or otherwise occupied microfilm readers or occupied copying machines and an inability to access data after normal government office hours (Monday through Friday, 9 a.m. to 5 p.m.). Similarly, the potential for human error (data inaccuracies because of errors in the data tabulation or inadvertent rekeying of information and inadvertent data omissions by record examiners as collected data is mishandled or misplaced) can be reduced using electronic abstracting technology.
On the other hand, the increased use of technology does not necessarily create a whole new list of administrative tasks to be performed by the business using it. “There have not been any major changes in routine with the exception of making sure we have a dependable Internet service provider and that we perform quality control functions online,” Bernardo reports.
But if the examination process is made faster and easier with this technology, should abstracters fear replacement by a cheaper workforce, stationed at desks and able to churn out title reports at half the cost of a traditional abstracter?
Like many using electronic abstracting platforms, Mr. Bernardo believes that the role of the abstracting professional will never be eliminated, although how he or she does the job may indeed change. “I believe there will not be any impact on the way they perform their jobs,” he says. “The basic steps still must be followed, and attention to detail must be foremost at all times. However, the type of work being performed will evolve. Instead of the full title search or some other variation of title search being requested, the customers will look for more ownership (deed only), mortgage, or current owner search products.”
Having immediate access to accurate and current data has always been a challenge to the abstracting community. An examiner’s product is dependent upon the most accurate and up-to-date information possible. Critics of electronic abstracting platforms and thin title plants have argued that while the new technology makes data more accessible, the data itself can be suspect. They argue that the process of automating the data can be flawed, and that nothing can replace the quality of a traditional, on-site search.
Mr. Franco agrees that electronic abstracting technology can speed turn-around time and, in many ways, make the abstracter’s job easier. However, he emphasizes that there will always be a need for the professional examiner. “There is nothing inherently wrong with electronic abstracting. Much of the work done at the local courthouse is performed on computer terminals. There is also nothing wrong with the use of title plants. In many counties, title plant records have been relied upon for many years and often are better indexed than the counties’ own records. However, the use of thin title plants presents a serious problem for abstracters. By definition, thin title plants are not complete and, thus, cannot be relied upon to ensure marketable title. There are many records that a thorough abstracter must search that are not indexed with the real estate records.”
Compiling Quality Data
Mr. Franco’s point is one that has the leading developers working until the wee hours of the morning on a regular basis. Above all, data is the lifeblood to the abstracting profession, and most abstracting-technology developers agree that for the system to be effective, it must have access to a robust reservoir of records. As a result, there is much more to electronic abstracting today than the thin title plant. Some developers are going beyond the thin title plant to multiple sources, creating a much more comprehensive database. For example, Realty Data Corp (RDC) is building its databases using sources above and beyond the traditional thin title plant. Such sources include county clerk files, state bankruptcy files, county tax assessor’s records, courthouse records, and document databases, which can come directly from the county as well as from third-party providers. The result is a “thicker” title plant.
RDC specializes first and foremost in getting quality data from multiple sources into its Oracle databases ready to be searched. It then uses technology to create researcher and examiner workflows that walk the user through the process of gathering the data, creating the report, abstracting off the images, and delivering the reports into any format from HTML and XML. RDC is also partnering with multiple business-to-government companies that work directly with the counties to make data available online. Instead of simply relying on the extrapolations of title plants, the leading electronic abstracting providers are going directly to the source— the county government. The result is that an examiner using the electronic product is able to review the same data online as if he or she was physically at the county recorder’s office or courthouse and also has access to other records he or she may not have had in the past with traditional “thin plants.”
Mr. Bernardo agrees that the quality of data is essential to the automation process, which is why, more than ever, the title examiner remains critical to the title search whether technology is utilized or not. “We will always need human abstracters, even if they are only utilized from a quality control aspect,” said Mr. Bernardo. “Verification of the county records is critical to the accuracy of the data.” Although some have voiced concern that professional abstracters will be replaced by cheaper, outsourced labor using the latest electronic abstracting software, the reality is that title insurers are not likely to incur such risks on a wide scale. Professional examiners and abstracters will still provide the “sanity check” necessary to any title search, whether performed electronically or manually.
Another reason technology will not make the professional abstracter obsolete is that there will always be local customs and quirks that require the supervision of a qualified examiner. Mr. Franco agreed. “If you look at the state of Florida, which has one of the most liberal stances in making their public records available online, you will see that many of the companies providing searches there are located outside of the state. This technology makes it possible for anyone to search the records, but you have to wonder if a company searching records in multiple states is familiar enough with the local title standards to provide a reliable abstract.”
So how will technology impact the role of the title examiner? Franco believes some will incorporate the technology, while others will continue using traditional methods. “Those who decide to incorporate the thin title plant technology into their searching will have to cover a larger territory to increase their volume and provide lower prices,” said Franco. “This will be easier to do with online searching, but they will need to become more knowledgeable about the real estate laws in more jurisdictions.
“They will also have to become mini-vendor managers in order to provide services to their clients on those orders that require searching beyond the records contained online,” Mr. Franco added. “They will, in essence, become clients for the traditional abstracters. I believe that this will be the approach adopted by more of the abstracters that provide services in the second mortgage and equity markets.”
It is difficult for even the staunchest opponent of abstracting technology to argue that the latest electronic platforms will simply go away. Electronic title searching, in one fashion or another, simply delivers too many time and cost efficiencies to title insurers and vendor management companies in a market where time and cost grow more important by the minute. This doesn’t mean, however, that technology will replace human abstracters. As it has in other industries, new technology will only change the way professionals complete their jobs. As a result, it may be time for abstracters industry-wide to rethink the way they approach such technology and find out how it can best serve their businesses.
William Welge is president of Realty Data Corporation in Garden City, NY. He can be reached at firstname.lastname@example.org or 516-877-8715.