I have been hearing all week long that something was afoot at North American Title Company, that a big announcement was coming Friday, and that there has been a lot of personnel movement as of late.

Well, comes word that North American is merging some of its operations with a Silicon Valley-based start-up that was created to disrupt and streamline the $15 billion title insurance industry with technology. It’s called fintech: computer programs and other technology supporting or enabling banking and financial services, and it’s one of the fastest-growing investment areas for venture capitalists.

The company is States Title, and the CEO is Max Simkoff. The two-year-old company’s motto:  “We believe real estate should be simpler, safer, and cheaper to buy, to sell, and to own.”

As we know, buyers use title insurance when buying and financing the purchase of a home. I have often wondered exactly what Title companies do, hence our own Lydia Blair has been educating us the last few months. (And then there are isolated, rare Title Company nightmares.) Basically, title agents scour public records to ensure that buyers (and lenders) avoid liens and ownership disputes on properties, and guarantee full ownership of a property.

But by using technology to scour public records, tech title companies could charge buyers less, which could also eliminate the use of title agents: industry experts say that could result in a 25 percent savings for consumers on title premiums.

Title companies are also highly regulated. So it was a pretty big deal when States Title, a California-based start-up, was approved by regulators this August. States was the first tech-focused title company to be approved in the Golden State. California’s insurance commissioner, Dave Jones, believes “new technology and more competition would help lower costs for consumers”.

“Title-insurance transactions are often labor intensive and suffer from delays,” Jones said in a statement. “States Title uses a digital platform which is data-driven and automates the process.”

(Speaking of disruption, just wait ’til blockchain hits the title biz.)

According to The Real Deal, the title industry has historically been dominated by four companies: Fidelity National, First American, Old Republic, and Stewart Information Services Corporation. Fidelity bought Stewart for $1.2 billion in early 2018. But Disruptors are creeping in:

But tech has started to play a larger role in the industry. The startup company Spruce recently raised $15.6 million, and Daniel Price’s OneTitle launched in 2014. OneTitle focuses on issuing policies, while Spruce focuses on acting as title agents. Price previously told TRD that he thinks title insurance “is at a major inflection point. This is an industry that has seen perilously little innovation for more than a century.”

North American, which was founded in Dallas, was acquired by national homebuilder Lennar Corporation last year and is a wholly-owned subsidiary.

Jump for the official release: (more…)