Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Patrick Burns, CEO of Spruce, to talk about how they’ve reinvented what it means to be a title company.
Q. Why is now the right time for a technology driven title company to enter the real estate industry?
A. The responsibility of title and escrow companies has always been to efficiently and securely close real estate transactions for homeowners and mortgage lenders. But what that actually requires has changed dramatically in the last 5-10 years, and many title companies have had difficulty keeping up with the demands of the job.
There’s been a big increase in the compliance burden on lenders, a continued rise in origination costs, and a dramatic shift in consumer behavior that has made acquisition in the industry a very different prospect.
Everything Spruce is building is to help mortgage lenders and real estate companies address those challenges head on. We built our company, operations team, and software from the ground up to provide a modern solution to these problems.
The foundation of that is a world-class operations team working on our proprietary software platform that leverages intelligent automation and gives us the agility to develop and adapt to changes more quickly than others not using their own software. For example, we can deliver the entire title and closing process –– from Loan Estimate-ready quotes to scheduling and funding –– via a modern REST API. We’ve also automated the escrow process to the point where funding is at the touch of a button, meaning borrowers, realtors, and other parties get their money quicker and more securely.
Q. How does Spruce help lenders improve their operational efficiency?
The job of a mortgage originator is harder now than it’s been in a long time, especially in the refinance market. Given that, lenders should be asking themselves: “Are the title companies we work with enabling us to face these challenges, or holding us back?”
We sit down with every new lender partner for a consultation before deploying an integrated solution with their production team. An ‘integration’ for us means both workflow and technology, and we cater to everything from an out-of-the-box solution using our web interface for teams without an IT budget, to a fully built-out API solution. In both cases, there is a tremendous amount of value to be had from leveraging our technology, for all parties involved.
Q. How is the borrower experience different with Spruce?
A. Our customer-centric approach includes all aspects of the way we interact with borrowers, but is most obvious in our digital closing experience. For all transactions, we empower the borrower with an online experience, co-branded with the lender, that enables them to schedule their closing, link their bank account for a secure and convenient funds transfer, and review their closing docs. We’ll even get on the phone or live chat, and walk them through each doc before they meet with the closer to sign.
We’ve all read about digital document execution –– but scheduling, payments, and education are are all critical elements to get right, and we’re enabling that now –– even without any digital document execution. Our focus on the consumer experience maximizes the chances of them viewing the entire process favorably. Happy customers come back for more loans and share their experience with others.
Q. Why aren’t other title companies placing a bigger emphasis on technology?
A. I would say that the industry is trying, for the most part, but older companies work on legacy systems that have been joined together over time, and just aren’t able to move as quickly as we’ve been able to. For example, our automated escrow system was built from scratch with our bank partner. If you look at one of the more traditional title companies, they’re working from literally dozens of bank accounts that they’ve inherited through acquisitions or old relationships, each with their own accounting and funding protocols. You can’t unwind that easily.
It also helps that we’ve been able to raise over $20mm from leading venture capital firms, which has allowed us –– even when we were a smaller company –– to invest heavily in our technology and in building our team of experts.