R.I. firm finds that speed pays

The mortgage market became increasingly complex and technical in the last two decades, and now companies like Linear Title and Closing in Middletown are bringing the process of closing transactions up to speed.
While nearly all businesses connected to real estate finance suffered during the recession, Linear and its subsidiary Abstrax LLC were among the handful of Rhode Island firms that have rebounded into strong growth.
Their innovation was to automate and integrate as much of the lengthy process of clearing title and completing real estate transactions, either new sales or refinances, as possible to speed things along.
“I think they were early on in automating the closing process and using the Web to facilitate it,” said Peter C. Dorsey Jr., president of The Business Development Co., which provided an early-stage loan to Abstrax. “They are doing it well enough and doing it substantially. And as much as it is automated, there are strong background functions done manually, so they have created a substantial amount of jobs.”
Linear was founded in 2005 by Nick Liuzza, a New Orleans resident whose wife, a Rhode Island native, drew him north.
The firm grew to 50 people by 2010 and swelled to more than 300 people early this year when record low interest rates were driving new sales and refinances. After shrinking back down to about 250 workers due to rising interest rates and seasonal fluctuations, Liuzza said he expects to be back over 300 employees soon.
Linear creates, moves and constantly updates the voluminous documents required to close a transaction with clear title.
Traditionally, the market for processing these transactions has been split between a few very large underwriters and smaller local agents.
Linear positioned itself in between them and focused on automating the process internally, with vendors it hires for some functions, and with the lenders themselves to make everything as fast as possible. “Our processes are really different and are built around automating traditionally manual functions,” Liuzza said. “Linear is automation on steroids. Everything is about getting to the closing table faster.”
One example of the efficiency of Linear’s automation, Liuzza said, comes through when some detail of a transaction, such as the loan amount, needs to be changed.
Under a fully manual system, recalculating fees and other figures in the documents, then passing them back and forth between the different organizations involved could take days, Liuzza said.
With the automated system, software can instantly recalculate fees and push amended documents back to a lender’s underwriting department in the time it takes to send an email.
Liuzza said 71 percent of Linear’s transactions close within seven business days.
Another advantage of Linear’s automation model is that it doesn’t require employees to have experience in title insurance as long as they are comfortable working with technology and have other strong skills. Liuzza said finding good candidates for those positions from Rhode Island’s numerous colleges has not been difficult.
Part of Linear’s efficiency comes from having its own dedicated title-search company, Abstrax, to do the job of checking for liens, additional mortgages or other encumbrances with a property.
Abstrax was started by Rich King, a Linear employee who had been doing the company’s in-house title search and saw enough potential to form a separate company.
When Abstrax was founded in 2012, Linear orders represented the bulk of its work, but as things have grown they now represent slightly less than half, according to Jaclyn Emma, marketing and sales director at Abstrax.
After becoming an independent company, Abstrax’ growth convinced Linear to acquire the company earlier this year.
With some communities moving land records online and others remaining paper only, title searches in 2013 combine both digital and manual investigation. Abstrax has a staff of 80 employees investigating properties in various registries and online subscription services, but also keeps a roster of contractors who run to the county courthouse and search for documents where records have not been digitized.
The migration of records to the Internet presents both opportunities and challenges for American companies like Abstrax. Online records are easier to search, but also open the door for lenders to outsource the work offshore.
Abstrax is currently filling between 500 and 800 searches per day and can turn around most orders in 24 to 48 hours, Emma said.
Interest rates and conditions in the real estate market have a large influence on the volume of work Abstrax gets and what kind of work.
Searches on distressed properties, in which lenders and investors need to know about any municipal liens or whether a mortgage remains in first position, make up about half of all searches, Emma said. When interest rates rose, orders tilted toward full searches for sales and away from the heavier volume of lighter searches for refinances.
In addition to traditional real estate, Linear has begun venturing into the mobile-phone tower market, writing title insurance for companies looking to make sure the towers they are renting space on are not going under.
Linear has its own default division to deal with distressed properties, and both companies get most of their business from states, including California, Florida, Nevada and Texas with the most active real estate markets and greatest exposure to the bubble.
On how he sees the market responding six years after the crash, Liuzza said the returns are still mixed.
“From our perspective the market is moving faster,” Liuzza said. “I don’t think it is moving fast enough, and you have tons of homes who are still behind and are facing foreclosure.” •

No posts to display