Origination News Feature Story

'Entitling' Consumers

By Brad Finkelstein

STAMFORD, CT-There is a need for transparency in the process by which consumers purchase their title insurance policies, said the top executive at an underwriter who has a unique business model.

One of the reasons for this different business model said Timothy Dwyer, president and chief executive of Entitle Direct, Stamford, Conn., is that the product is overpriced, with much of the commission going to the agent. So Entitle does not have any agents, but instead deals directly with the consumer.

The company is now looking to get the word to mortgage brokers about its services, so the brokers can help their clientele, he said.

Mr. Dwyer said the need for a company like his came about in 2005 when he closed on his own home and "was appalled" by the process.

He was no novice regarding financial issues, having worked as an investment banker with an expertise in assisting insurance companies. Mr. Dwyer also has a background in accounting. But among the piles of paper he saw at the table was a form notifying him his attorney was the title agent and would get a commission on the title policy.

Mr. Dwyer said if he felt dismayed about the closing process, he asked himself how would the average consumer feel.

So he decided to have a "midlife crisis" which would lead him to enter the title insurance business. Looking to get the venture off the ground, he worked with a team of actuaries, lawyers, marketing and advertising people and even a former regulator.

Mr. Dwyer considered creating a new company, but after meeting with regulators in Hartford, he learned it would take at least five years of operation before it would be allowed to expand to a multistate business.

Instead, in June 2007 his group was able to acquire an Ohio-based underwriter, Guardian National Title Insurance Co., which stared business in 1978. The company is rated "A prime" by Demotech, the highest rating given for a privately held company.

It raised capital and filed applications in 33 states by Labor Day of 2007. As of now, 32 of those 33 applications have been approved.

One year later, it issued its first policy as Entitle in Pennsylvania, which Mr. Dwyer noted was symbolic because that was the state in which the initial title insurance policy was issued.

In setting up Entitle, it looked at the rates charged by other title companies and it was able to slash them by 35%. Mr. Dwyer said this is because approximately 70% to 90% of the premium goes to the title agent.

Entitle's product is a regular, full-service, American Land Title Association policy. There are mortgage brokers who have been introduced to Entitle through their clients and the feedback the company has received so far has been positive. The mortgage brokers are seeing that Entitle can save consumers around $1,000 in closing costs and this sum could make the difference on whether a loan is able to refinance.

Mr. Dwyer said his own mortgage originator, who specializes in zero-closing-cost loans, told him Entitle is a "grand slam," especially because it means less money out of his (the originator's) pocket.

Entitle has an operations center in the Pittsburgh area that deals with its clients.

It has its own representatives at closing and it will close a loan at wherever is convenient for the customer.