10/13/2020 2 Comments Becoming First American 1 of 2First Meeting In 1994, the U.S. Congress passed The Flood Insurance Reform Act. The law required that lenders determine the need for flood insurance and ensure that the coverage stays in force for the life of the loan. That such an innocent and irrelevant sounding law would have an enormous impact on my life is surprising but true. This law spawned a number of entrepreneurial companies wishing to offer this service to lenders. The companies utilized electronics as much as possible to determine if the property was in a flood zone as well as track the insurance for the life of the loan. These flood certification companies also backed up their certifications with an errors and omissions policy, and would reimburse the lender if they were wrong and there was a financial loss. Until this time, appraisers were required to make their best-efforts using FEMA flood maps to determine if a house was in a flood zone. This was not always possible because the exact location of the property could not always be located on the flood map. Sometimes, appraisers would report “could not determine”. Some of our lenders asked us if we could help solve this problem for them. What they wanted was the flood certification (a piece of paper) attached to the appraisal. They would pay us a reasonable fee. At that time, our company was no longer in survival mode and we had stabilized. As Yoga teaching recommends, we were breathing more from our belly. After dogged effort, we found a small flood certification company from Texas that agreed to work with us. They would do the research and send us the flood cert electronically, and we could bundle it with our appraisal. Our clients were pleased and after a few months of working out the kinks, we decided to expand this line of business. We paid for a vendor’s table at a very small bankers convention in New Hampshire and set up our information. The vendor at the abutting table was called First American Title / Lenders Advantage. They were also selling Flood Certifications. In fact, they were using the exact same flood certification company as us. Interesting coincidence, we thought. My partner, Steve, and I got to know our “neighbors” throughout the day and found out that First American Title is part of a multi-billion-dollar corporation called First American Financial. The corporation had begun to branch out from their title business over the past five years. Their mantra was “from cradle to grave,” and wished to offer every product needed to service a mortgage loan. The challenge for the title office in Boston was that they did not have relationships with lenders, only attorneys, because, in Massachusetts, only lawyers do titles. We told them that our lenders really wanted a bundled package of appraisal and flood cert. They informed us they had a significant advantage over us. Two days before they had purchased the flood certification company and now had complete control over it. And then, to our surprise, they invited us to meet their boss in Boston. They had talked to their boss on the phone who thought there might be a synergistic way to work together. Three weeks later we drove to Boston. Their office was located on the 16th floor of an elegant building near the financial district. We met their management team in a beautiful conference room overlooking the Boston skyline. We did not have a clear expectation. We came to listen. As each person on the management team explained their role, we began to get a picture of a very well-run business with cordial and dedicated people. We wondered out loud how we might work together, what each of us had to offer the other, and why this might be a good fit. I instantly liked their head of operations, Rhonda, a woman both candid and warm at the same time. Little by little each of the team members left the room and the only people left were Rhonda, Steve and I. We laughed and asked her “Is it something we said?’ “Oh, no, she answered, “this is when we discuss the details of the deal including the money. Then I asked “may I make a recommendation?” “Go ahead, I’m listening.” “Since it is clear you are in charge, I suggest that you decide the details. The important thing is that both of us feel that we got a great deal. If you can do this, then I believe we will simply say yes.” Steve concurred. She was quiet for a moment and laid out a deal that was so good for us that we told her that she was giving too much. She said that what they were giving us was easy for them. What they wanted was the relationships with the lenders which we had. She offered to split whatever money we made together. But far more important was that First American Title would invite us and our lenders to attend all their many seminars as well as other events they sponsored. This would all be offered for free. Moreover, every year at the New England Mortgage Bankers Convention, First American Title rents one of the great mansions in Newport, Rhode Island and has, what some have said is, a Great Gatsby party. You and all of your lenders are welcome. And she went on and on with more opportunities. It was amazing. Finally, at the end, she asked if there was anything else we would like. By now I felt quite comfortable so I told her that in addition to working with lenders we were expanding our business to work with lawyers. Since First American Title knew and worked with so many excellent real estate lawyers in Massachusetts, she offered to send a letter to everyone in their lawyer panel (hundreds), and she would inform them that we were working together. And indeed, we developed a line of business with lawyers. And so it was that we met and got to know First American.
2 Comments
David Feldman
10/13/2020 02:52:36 pm
So good to hear from you. It is so intriguing to look back at those days from the perspective of today. Please share as you wish. Part 2 is when we are actually purchased. Coming soon I hope. And I do remember when you arrived.
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David FeldmanDog walker, Dog Mediator, Father, Husband, Categories |