Dan: Today, we are talking with Mark Eibner, principal of Meridian Title and Escrow. Mark, thanks.
Mark Eibner: Pleasure to be here Dan.
Dan: Yeah. Well, let's talk a little bit about the title business because I am sure your average consumer doesn't know an awful lot about it and I also want to talk about ABAs, affiliated business agreements and so forth. First, let's talk with ABA. What is it?
Mark Eibner: Well, an affiliated business agreement is just another unique way of doing business where actually the owners or the shareholders are in fact people that are doing business as real estate brokers or mortgage brokers. So, it is really no different than a traditional title company experiencing the fact that you are either a corporation or an LLC. It's just that in this particular case your closely held participants are owners in the company.
Dan: All right. Let me give people an example. I am a realtor, I could own a portion of the title company, correct?
Mark Eibner: Correct.
Dan: That's how that would work?
Mark Eibner: Umhum.
Dan: But I have a buyer or a seller, I am representing one of the two and I direct them to business in my title company; is there a problem with that?
Mark Eibner: No problem with that at all. In fact it is done quite frequently and in fact in most parts of the country, ABAs are used on a regular basis. I think where people run into problems is let's just take ABA or AfBA title companies where the single entity company owns it like ABC Real Estate Company and they actually force or persuade their brokers to use their title company when in fact their brokers are not really owners in the organization. I think that's how most people see ABAs, not a traditional... in an ABA like ours, all the shareholders are actually real estate brokers or mortgage brokers.
Dan: What does the Colorado Real Estate Commission think? Do they say something to the effect of you need to disclose to a seller or buyer that you are directing them to use this title company and I own a share in it?
Mark Eibner: Well, actually that's regulated by our friends at RESPA.
Dan: Okay.
Mark Eibner: And absolutely you have to in fact inform buyer's and sellers on every transaction that you in fact are part of an ABA, you could make a profit, may not make a profit, but you have to give disclosure, yes.
Dan: And you can say to Mr. Buyer or Seller, the reason why I am sending you here is because given our model and structure, we can provide lower rates, lower fees, lower cost and if you don't want to use that, this title company, you are free to go pick whatever title company you want, correct?
Mark Eibner: Yeah, absolutely. I have all my clients sign what we call good faith title estimate, which can be obtained through mytitleins.com and it simply basically lists each for the transaction [music] mortgage is, what the payoffs are etc., how old the existing title's policy was, what the cost is going to be for the buyer, what the cost is going to be for the seller, and lo and behold nine times out of ten Meridian Title and Escrow is usually at least between first, second or third lowest on a cost structure.
Dan: All right. Well, because you have owners who are realtors and other people, mortgage lenders and so forth as part ownership, does that model lend itself to having lower rates in fees for people?
Mark Eibner: Well, I think it absolutely just simply because in most cases you are not really paying title reps, you are not paying all the marketing fees, all the advertising, all the myriads of let's just say marketing schemes that traditional companies, title companies use, just to get you to use their title company. Instead all that marketing money is put aside and in fact you are in fact the best rep for the title company itself and if there are dividends paid to the shareholders, quarterly in our case, then that's usually a result of the fact that we were not having to compensate the traditional marketing and the traditional marketing reps.
Dan: Mark, good information. Thanks. Appreciate it.
Mark Eibner: You bet. Thank you.
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