Earlier this year, First American made its latest move toward a fully digital mortgage with its purchase of mortgage tech firm Docutech. Now, that purchase is driving up the company’s revenues.
The company rebranded to First American Docutech in September after the purchase for $350 million in February this year.
In the third quarter of 2020, First American’s information and other revenues were $282.7 million, up 38% compared with the same quarter last year. The company said this increase was primarily due to the growth in mortgage originations that led to higher demand for the company’s title information products, the acquisition of Docutech and revenues from services provided to support a temporary pandemic-related government program in Canada.
Docutech, a document, eSign, eClosing and compliance technology provider, is one of the top tech companies in the housing industry. The company’s digital document technology is used by Black Knight, Ellie Mae, Fiserv, CoreLogic, Blend, Tavant, Floify, Maxwell, Roostify and more than 175 lenders.
“The acquisition of Docutech reflects our steadfast commitment to invest in and grow our core business,” First American CEO Dennis Gilmore said earlier this year. “Moreover, it demonstrates our dedication to improving the home-buying experience for consumers and driving the digital transformation of the real estate settlement process.”
Overall, the company’s total revenue was $1.9 billion in the third quarter, up 15% from the previous year. Closed title orders were up 30%, driven by an 85% increase in refinance orders. However, this shift to refinances also caused the average revenue per order to decrease 13% annually.
Net income in the third quarter increased to $182.3 million, or $1.62 per diluted share, down slightly from $187.2 million, or $1.65 per diluted share in the third quarter of 2019.
“Our third-quarter financial results were strong, achieving a record pretax title margin of 19%,” Gilmore said. “Our purchase and refinance businesses are performing well, benefiting from strong order trends and our continued focus on cost efficiency. Given low mortgage rates and robust demand for housing, we expect refinance and purchase activity to remain at elevated levels for the remainder of the year.”