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May 3, 2022

The Connection Between POS & Title Companies

What are the main driving factors for the recent merging of title companies and Point-of-Sale (POS) providers?

Consolidation is to be expected when the market looks like it does today. After a year or two of high lender profitability, the market shifts and profitability falls. When it does, M&A activity goes up.

But we’ve been noticing some interesting transactions that don’t fit the normal paradigm during a period of increased M&A activity. Namely, we’re seeing a connection between title companies and Point-of-Sale providers. I find this interesting. 

Here are a couple of examples. 

Last year, Blend signed a definitive agreement to acquire Title365 from Mr. Cooper. The company said it made the decision as a result of its exploration into streamlining title, escrow, and settlement services. Blend said the acquisition would help the company “quickly advance our impact in the space.” 

Blend had already created a homeowner’s insurance marketplace that included 25 carriers. Title365 would be part of the company’s title marketplace. The acquisition gave Blend access to a bit more of the home finance transaction. But did it unlock the doors to increased profitability? 

Looking at this from the other side, Stewart Information Services Corporation made the decision earlier this year to acquire Cloudvirga, a customer engagement platform, which is marketing speak for POS. 

At the time, Stewart CEO Fred Eppinger said, “Combined with our newly acquired capabilities such as RON, a notary network and valuation services, Cloudvirga’s platform will accelerate our digital offerings in all markets, complement our existing capabilities and enhance our ability to provide customers with end-to-end mortgage services and solutions.” 

But again, where is the revenue in these deals? 

I know from our own technology development that POS systems were basically an interim technology that will soon become unnecessary as more high power LOS platforms like our own MCP build these tools in. In our case, it’s our borrower center that accomplishes everything an external POS does, with less risk and at lower cost. 

So, why are title companies and POS providers merging? I suspect it has a lot to do with consumer data. Title companies have traditionally received their business from their relationships with real estate agents. But there are changes happening in that industry that may change everything about the way we buy and sell real property. 

If real estate agents lose control of the purchase money transaction, technology firms, especially if they have a direct connection to the borrower, may have more influence over their client than title insurance companies that lack this technology.  

It’s a bet that probably won’t pay off for a few years yet, if at all, and one that these companies probably wouldn’t have made if they didn’t have so much capital lying around after the last two banner years. 

Either way, smart lenders are considering these things and working on their own purchase money lead generation strategies so they can be the companies borrowers turn to when they’re ready to finance their next home purchase.

By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence 

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