Animal Spirits Podcast - Talk Your Book: Down with Title Insurance

Episode Date: December 4, 2021

On today's Talk Your Book we spoke with Doma founder and CEO Max Simkoff about title insurance, home appraisals and making the purchase and refinance of your house more efficient. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talker book is brought to you by DOMA. You can go to DOMA.com to learn how they were changing real estate transactions and Michael's most hated thing in the world, title insurance. I guess you can go to their website or ask your lender if they're using DOMA and if not, why aren't they? Doma.com. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holtz Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions

and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritt Holt's wealth management may maintain positions in the securities discussed in this podcast. Michael, this is a big day. A huge day. We've been circling this one for a while. You hate title insurance.

We've talked about that. I hate it as well. We've both gone through a number of refinances over the years. Thank you, Jerome Powell and the company for that. And it never made sense to us why closing costs were so high and why this title insurance thing actually exists. And why you have to pay for title insurance every single time you refi. You've already established that you own the house, no?

Or you've already insured? I just don't get it. Yes. I actually kind of understand why it's. still check that box if you're buying a new house or selling your house. But when you're refinancing, and I refinanced three times with my current house, guess what? I'm pretty secure in that title and not having to pay that. So, Max Simcoff founded DOMA because he was going through the same thing. We've wanted to talk with him for a while because we just don't understand

this. We want to talk to him so badly that this is a Saturday release. Yes. That's how fired up we were. And I got loud a few times on the podcast. Did I not? Yes, I think you did. Yes. And Max Simcoff is the perfect person. Like, we never met him. We heard my Patrick's podcast, but I had so much, I could have spoken title insurance for five hours with that guy. Yeah, so we were on the same wavelength, I'm great. And the way that they're going about this is really cool because this was a guy who

had no background in this, but just decided to get into it because he had similar feelings about it as we did. So without any further ado, here is Max Simcoff from DOMA. It has been a long time coming. We are so excited to talk to Max Simcoff. Max is the founder and CEO of DOMA. Max, thank you so much for coming on today. Thanks for having me on guys. Before I just unleash hell on this entire industry, I think a good place to start is with the company, with DOMA. Who are you? What do you do? Is there like a cool origin story where you as pissed off as I am? What's going on? Actually, that is the origin story. Let me start high level. Doma today is in the business of using machine intelligence to

remove as much friction, frustration, and expense from the process of closing a residential real estate transaction as possible. We're ultimately operating with a vision of bringing about a contingency free closing. And that extends beyond just title insurance. We see it applying to things like appraisal and inspection and other stuff we can talk about later. But the founding story of the business was, in fact, when I went through a series of residential real estate closings. I bought a condo as a first time homeowner, got a mortgage. A couple years later, did a simple rate and term refi. And that was kind of the first time the light bulb went off where I was like, wait a second, I just bought this title insurance thing two years ago. Why am I buying it again?

And it was one of these experiences in life where like the more that this thing gets explained to you, the less sense it makes. Someone's basically just like, oh, well, you need to buy title insurance again, because there could be outstanding issues on the title that need to get cleared. And I was like, what do you mean outstanding issues? Like, I'm the owner. Wouldn't those issues have originated for me? And they were like, well, yeah, technically maybe. I was like, well, how about we do this? How about instead of charging me $1,500 for another title insurance policy, we just pay $50 to get a notary to have me sign a certified affidavit that says under penalty of perjury, I didn't originate any new interest in the property. Because, I mean, you're basically asking me

to indemnify myself against myself. Like, why don't we do that with a simple document? It was the third or fourth time I refinanced that that's when I was like, this is just ridiculous. Now I'm paying again, $1,500, $2,000. And I just started asking these why questions like, why do you pay that much? Why is the product structured the way it is? Why do title companies also manage the closing and escrow process in addition to the title process? And aren't there efficiencies that can be found there? And ultimately, a lot of those me asking why questions got me to a point where I was like,

somebody should just do this way better, way faster, and ideally bring the price down. was that? I bought a condo in 2011. I went through these rate and term refies probably two or three times between then in 2015, and I started the company in 2016. And we've all had those stories. I've refinanced probably three or four times myself in the last, I don't know, 10 years. And no one really bothers to look at the line items usually. Most people don't. But I'm finance guy. I do that too. And I also, we just did one a month ago. We refinanced again. And we had to go into the title insurance office, their title office. Why can't we just do this on DocuSign? It looked like a funeral parlor probably.

High pile carpet, mahogany desks. And then you have this huge pile of paper that you sign your name on 15 or 20 times and then you leave. There's no reason to drive all the way there you'd think with docu sign and the ability for all this other stuff. So is it just as simple as we do it this way because we've always done it this way and no one decided to make any changes? A lot of it is that. A lot of it is that the process of title and escrow was basically invented in the 1890s and then didn't change much between then and now. and that the technology that is used at best was built and distributed in the 1990s. On the digital signature thing, this one's actually I find to be kind of fascinating.

The main reason you can't sign all of your docs electronically on doxySign, for example, is because in most states there's a law that says that in order for that mortgage to be recorded, it needs to be notarized. And so that is literally the only reason that you have to affix a wet signature is because the best thing to improve an in-person sign now is something called, called remote online notarization, and it's not widely accepted. And even where it is, it's still like a 45-minute webcam session where you're like digitally signing docs while somebody watches you sign. Like, I've put it this way. Look, I don't mean any personal offense against the

notary industry, but when you think about what they're supposed to do, a notary is two-factor authentication a hundred years ago. You know those texts that you get that's like, put the number in, like a hundred years ago was like a human being standing next to you, being like, yep, Ben is definitely Ben and Ben is not under distress. That's the other thing that not supposed to do is make sure you're not signing these documents under pressure or whatever. And the joke I like to make is I'm like, by the second or third time I was doing a rate and term refi, I was doing it now with my wife. And getting a refinance or a purchase, such a stressful experience, I defy any married

couple to give me an example of how that joint decision and process didn't entail some potentially marriage ending fight, which it did for me. And like, if anything, if I were a notary looking at me and my wife signing those documents, the first thing that would have seemed immediately obvious was that both of us were under duress. We were probably forcing each other to sign these docs. And yet they're just like, yep, sign the docs. Like put the notary stamp on, get it done. When I first bought my house, my friend introduced me to his title guy.

I know this guy from the neighborhood. Sat down. I was like, wait, what is title insurance? So why don't we like take four steps back? Can you just explain what is this bullshit all about? The oversimplified description of what it's all about is because in the United States, which again, this is not a product that exists in most of the rest of the world, actually in most of the rest of the developed world. In the United States, the liability for clear

and accurate record keeping and establishment of ownership really doesn't sit with the county records offices. Again, that's not the way it isn't to pick any other developed country, anywhere else in the world. And basically the county assessor, a recorder says that liability is on us. We'll make sure that we keep accurate records. So you don't need insurance. We'll just keep records and you can access them and get accurate information. In the U.S., because of a Supreme Court decision that got made in the late 1800s, right before the first title insurance company was founded, basically it's what I would term as a buyer beware kind of market. So if you buy a piece of real estate and you didn't do a thorough research of the historical chain of ownership of that

property, and it comes with something attached to it that you don't like, you own it. You own that liability. You will sit behind it in the kind of payment flow of who gets what interest in the property if that ever needs to get work. Can we talk about this ridiculous idea that somebody's going to knock on your door and say, excuse me, sir, are you the rightful owner of this house? Yes. No, actually, my great, great grandmother left me this in the 1790s. Like what? Well, how do you get around all these rules of like what did you figure out as the loophole that you could make the process easier? Well, so here's the funny thing. So the example that Michael was just giving, it does happen very infrequently, like almost less than 1% of the time, way less. I think the average loss

ratio. Now, here's where we get into some very confusing and perhaps somewhat convenient statistics. The loss ratio in the industry is generally sub 5% nationwide, and it may have been as low as three or four percent in the last few years. That sounds high. What does that even mean loss ratio? Loss ratio means the percentage of the insurance premium that you pay in claims. Claims that get made. That's, by the way, it's very, very low.

A normal insurance company, a well-performing efficient insurance company should probably be like high 50s to low 70s percent. You're saying they have an enormous margin on this. What a business. You should have just started a title insurance company. What a business. Well, but hold on. So remember, here's the confusion.

and somewhat convenient fact. That's the loss ratio after all of the research has done up front to quote unquote clear any issues. So what the industry has historically pointed to is, hey, we did all this valuable research up front to prevent the issues from happening. And that's why the loss ratio is so low. Now, whether or not that is true, what we did, which I think is pretty revolutionary, but not that novel. It's not like we came up with this idea. As we said, look, why don't we start with refinance title insurance? And let's just see if we could algorithmically predict the likelihood of risk without running the search. So without finding the issues and fixing them, at instant point in time, say, we think it's

highly likely that this is not going to uncover issues if we did the search. And as such, we'll just insure it. Like, we'll just insure that risk and immediately clear it, remove some time from the process, remove some costs from the process, and then also charge the consumer a lower fee for this product. And we started with refinance because I love that you guys brought up this example of having done this multiple times. because on a refinanced title insurance policy, the policyholder is not the individual.

What you are paying for when you do a refi in the form of new title insurance is for the lender's benefit. It has no benefit to you whatsoever. My head's going to explode. That's just them covering their ass, basically. What it's doing is it's because when you think about it, when you get a refinance, you're getting a new mortgage. And because you're getting a new mortgage, that new lien holder in the property, a mortgage bank basically says, I need to be sure that I'm going to sit first in line. And the way that I do that is I'm going to make you the customer pay for a new title. So they should pay for it. You don't pay banks enough? I mean, I think there are a number of arguments that could be very well argued on refi, that there are a number of entities that could be

paying the cost for this solution that are not the consumer, given that the benefit is not really to the consumer on refinance. But what we did there, we effectively proved that we could do this much better, much faster, and then deliver it at a lower, more affordable cost to the end consumer. And that was really the crux of the initial model in the business was then take that same machine learning approach and apply to every other aspect of title and escrow. Exactly. You need title insurance. Nobody's saying you don't need it. It's like you need life insurance, but there's got to be a better way. So if you would please help me address this listener question that literally came in this morning. By the way, this came in from an attorney,

obviously. With regard to title insurance, while it is a large part of the transaction, action costs of purchasing real estate, I cannot ever recommend someone forgo purchasing title insurance when buying real estate. I just say this as a real estate attorney, blah, blah, blah, blah, blah, blah. For example, title insurance will defend you if the title company misses a lien on an old mortgage. If a neighbor is encroaching and tries to claim a piece of your property is actually theirs, deed signed fraudulently, blah, blah, blah, blah, blah, blah.

He goes on to say this. Imagine this scenario. Tomorrow, you receive a summons to appear in court and defend against a claim that a person you purchased your house from was not the true owner. They pretended, all right, you know what, I don't need to imagine that. does that happen? I get it. You need title insurance. Not very often. The process by which we do it now sucks. It's so expensive. How does DOMA fix us? We started with refi because that was the easiest thing to start with where we could apply an algorithmic approach. We could do it

programmatically. And we could do it at large scale. We started working with some of the biggest lenders in the country who have now become really significant partnerships for us. Wells Fargo, Chase Home Lending, Kenny Mack as an example. I mean, some of the biggest mortgage originators in the country. And now where our focus is going to move to is applying. the same approach to purchase transactions. So we're doing it for refi. We're doing it at scale. We're doing it at a lower cost. But now we want to just bring it to purchase. And I had people laugh at me for saying this originally, which is that like, I looked at the title insurance industry. I'm like this low loss ratio, like people don't see value in a product that pays out

very little of its premium in clients. People see tons of value in car insurance, by the way. If you ask people whether they get value from the car insurance policy, most people would be like, yes, absolutely. Because they either know somebody who has been in a significant. auto accident, or they have been in a significant auto accident, and they've had reason to make a claim and experience the value. And so the basic premise here is, like you said, it's not like we don't need title insurance. It's just that it should be paying out a significant percentage of premium in the form of claims so that it reinforces the value that it's providing. And it actually puts its money where its mouth is in saying you're protected. Not we did all this work up front,

and you'll just have to take our word for it that you're protected because no claims ever happen. Let's talk about appraisals. I had a problem with this process, too. This is like the festivist airing of grievances where like I've got a lot of problems with you people. We have bones to pick. Many bones to pick. So I did a home equity line of credit six months ago and they needed an appraisal there because they had to figure the appraisal to talk about the loan to value to figure how much they could give us. And I got the appraisal. And the person comes and takes the pictures and then they do their comps. And they charge me $400 for it. And they gave me back the value

and it was way low on it. And I thought about, wait a minute, this is not right. And I looked at the comps and the comps were nowhere near our house basically. They've just used whatever they could find. And I called them and I said, listen, something's wrong here. And it wasn't that big of a deal because it was a purchase. But I said, I paid money for this. They didn't do their job correctly. And I almost wanted to fight it, not that I really could or ask for a new owner, ask for a refund or something, because they did it again six months later for my refine. It was a new company. And there was like a $150,000 difference in the appraisal. And it was more of a principal thing to me. Like, listen, I paid for this

service and you didn't do your job. Because I kind of have an idea of the value of the house, obviously, and based on places selling around us and what we paid. And obviously, technology can help there. How does it help make that more efficient? I've got good news for you. A lot of what was preventing technology from fixing challenges and appraisal was the regulatory and secondary mortgage market framework that's been in place for a long time that has recently started to change dramatically. For a couple of reasons, I can walk you through. Before I do that, the example you just gave is a good one, and it's frustrating. But let me point out an even more ridiculous one, which is that on a purchase transaction, in a home equity line of credit or refi, the tricky thing

is you do have a customer who's trying to borrow money without any market setting price. They're basically saying, I need an independent appraiser to come in and evaluate the property, and I can talk in a second about why that's going to get way better. In a purchase transaction, you have two unrelated third parties, advised by two other unrelated third parties in the form of realtors. They agree on a market clearing price. It is the definition of Pareto efficient. Two people who generally don't know each other are coming together for a single point in time where one of them very badly wants, wants to buy the asset, the other one wants to sell at a market clearing price.

And then you have to pay for an appraiser to come in right behind that transaction and magically, 98% of the time independently value the property at exactly what those unrelated third parties have agreed to transact the asset. It is the definition of insanity in my mind, where it's like why are people paying for this independent third party? Who, by the way, the licensed appraiser population is aging out. Median age is like late 50s. It's a two-year apprenticeship position. they're not being replaced. We've got unprecedented demand for housing, appraisal timelines extending two to four weeks, going upwards of $800 to $1,000 in appraisal. So this is the perfect storm. Here's the good news. The secondary markets and the regulatory framework has realized that

manual appraisals are not the future. And there are a couple things that happened recently, I think are really fascinating. One is Freddie Mac released a study that shows that there's a pretty significant degree of bias in appraisals. You guys should read this fascinating study. It is one of the most well-done statistical analyses I've seen come out of the mortgage market, probably in the last 10 years. They held every variable constant except for the ethnicity of the person who is getting the appraisal. And they found, lo and behold, that all else being equal in certain minority demographic tracts

that lower appraisal values are being ascribed where everything else was equal, quality of the property, comps, everything else. That's obviously a very, very bad outcome that's called attention to the fact that having an in-person appraiser go to someone's house and then make a, yes, subjective evaluation of what the property's worth, oftentimes probably influenced by who they see living there is a hugely biased and unfair inequitable process. The second thing that's important that just happened is that Fannie and Freddie have both accepted permanently something called desktop appraisals, which is that on certain information that does not require someone to go to the house physically and take photos and write the

report, they will allow for it to stand in lieu of a traditional appraisal. And these are two things, I think, are really important because it means that the next few years, you're going to see a lot of that process go virtual. You're going to see a lot more machine learning get put against it. And you're going to see a lot less frustration from when you're doing a HELOC, having a human being come out and subjectively decide that your home is worth $150,000 less than they show. So how does this process work? Who are your clients? I say, I don't want to pay title insurance for the third time. I already did this twice. Do I go to DOMA? Do you work with the bank? Who are your customers? On refite, we're getting business referred to us

from lenders. So if you were doing a refi and it was with one of our customers, you could say, look, the good news is if you're doing business with one of our customers, it's highly likely you're going to get referred to us anyway and then you'll get the lowest price and it will go the fastest and it will be the best experience. You can also, by the way, ask your lender. You could say, look, I don't want to go with who you're recommending. I would rather we go with them. And we do have deals come to us that way. It's not often because consumers, most consumers aren't as pissed as you guys are or as familiar with the process, but we do get some deals that way. If you're purchasing a home, that traditionally gets referred to us from the realtor.

So that's a real estate agent saying, we think you should use dough. How about the selling side? Let's say I decide, you know what, I don't want to use a realtor anymore. I think the housing market is going great. People are selling quickly. I want to do for sale by owner. But I don't know how to handle any of this other stuff, the contract, the closing. That's a lot of what the realtor helps with.

They handle a lot of that paperwork. Is that in the future for you as well where you could say, I'm going to sell my house because I know it's easy right now and people want a house and there's not enough houses to sell. I'll take that 6% out of it. At the very least, you need to use escrow, which is something that we can set up and facilitate. And again, that's not like crazy expensive. We believe that the cost and efficiency of that should come down to. The title insurance piece still gets paid in most markets by the buyer.

In some markets, it does get paid by the seller. By the way, it's the buyer's choice to get title insurance as long as they don't have financing. So if you're making an all cash offrunner home, you don't need to pay for title insurance. And it will take you a few conversations, by the way. Oftentimes the listing realtor will insert in that purchase contract, hey, we're going to use this title company. And they're going to open up a title search and blah, blah. And you have to be like, I don't want title insurance. And they'll be like, no, no, no, no, you really shouldn't do that.

You're like, I don't care. I don't want title insurance. I don't need to have it. I'm paying all cash. And I can make that decision. The thing you may find, by the way, is that sometimes that will then cause the escrow fee to get increase because they'll have these escrow and title insurance fees that kind of work sometimes in lockstep with each other.

Max, you know what the problem is there's so much information asymmetry in this market. For example, I honestly don't even know what the hell escrow is. I literally got a check yesterday for a separate. several thousand dollars, money that came back to me in escrow, and I was like, hell yeah, this is awesome. I don't know why it came from. I know it's my money. I overpaid. Where do we even begin? Let me tell you how that works. Escrow, I believe it is actually a really valuable service in transaction because here's what needs to happen when you're selling real estate, buying real estate, even getting refinance. There's all this other stuff that needs to get paid off, an outstanding

mortgage, prorated property taxes, if you're selling a home, transfer taxes, you need to establish proof of homeowners insurance. Maybe you're getting a new homeowner's insurance policy, that needs to be prorated and factored in. Everything's basically getting paid in and out of escrow. It's kind of the transaction ledger. And here's what the industry does to help them with the challenge of misestimating fees, which they do all the time. It's very, very difficult for people. We have a whole suite of machine learning tools we focus only on this part of the process. And so what the industry has traditionally done is, because regulations say that if they underestimate fees by a certain percentage, it triggers a new wait period and

notification. So if I tell you it's going to be, I don't know, $10,000 to settle up fees across all these different things and then it ends up being $15,000. We're now required by law to say you have 72 hours that you have to sit and wait with that new fee information before we can do anything. So what they do instead is they just overestimate everything and then they cut you a check to refund the over it. They did a few weeks later. Unbelievable. So who's actually doing the work here? For example, the person that I mentioned, very nice person, but he's the one that set up the title insurance for me, I gave him a check at closing. What does this person actually do day to day? Are they just looking for clients or is this person the one responsible for

I can't imagine he's searching the county records? What does this person facing me do? Depends on where you are. You're in New York, right? Unfortunately. Okay. The person you're referring to I'm guessing as an attorney. No, the title guy. The title person. Huh. Is he a broker? New York is a state that I'm less familiar with because it happens to be the only state yet where we're not licensed as an underwriter. But my understanding was that New York and like Georgia and some other places, they're what are called attorney states where you actually have to have an attorney involved in performing some aspects of the title insurance underwriting process. He works for the title company.

But he's not an attorney. No way. However are you telling me, you did have to hire an attorney to close your house, though, right, Michael? Which I thought was bizarre because I never had to do that. Oh, yeah. And where are you being? I'm in Michigan.

Yeah, exactly. that's not an attorney. And the fees are so much here. It's absurd. Yeah, yeah, yeah. Michael's closing costs in New York are so much higher than mine in Michigan. He told me his, and they're like three times higher. And guess what, Max? My neighbor's house is 14 feet away from mine. On both sides. Yep. Yep. In New York, in Texas, by the way. So for different reasons, fees are way, way higher for like similarly situated properties. We get in a whole other story about why that is. I believe in New York, the primary reason for that is it's an attorney state. there's got any attorney involved in the closing.

You have to perform certain tasks. And then you're paying attorney rates for them to do that work. Basically, the further west that you go, with the exception of Iowa, which has a state-run title insurance program, single flat fee, by the way, for your title insurance premium, $150. Jeez. For title insurance premiums set by the state, subject for a different discussion. And they probably have people from the 1800s who own a farm that they actually could do a title

search for, right? They do. They probably have real records challenged up. When you get out west, like to California, there's no attorneys involved in the process. It's basically you don't have to be licensed as an attorney to get the searches done and complete the work. So one of the other problems Michael and I have had, we both dealt with us, is that our refinancing took forever. We're like, why? The bank already has all this information on us. We've made our payments. Our housing prices gone up and we've paid off some of the debt. So why should it be such a problem? Is it the Dodd-Frank regulation stuff? Or is it do you think that they are so busy with paperwork that they try to like string you along? What is it that takes along with that process? it's typically two things, two major things, and there's a couple minor things. The two major things are title and escrow and appraisal, two that we've already talked about. And by the way, the recent study came out from the National Association of Realtors where they literally qualify that. They're like,

we looked at deals that extended past optimal timeframes. It was effectively appraisal and title and escrow that we're driving a huge amount of the delay and timing. Put a different way, if you can pull both of those contingencies out, and this gets back to that original vision I mentioned that we formulated DOMA, if you can pull them out of the process entirely, those transactions are close in seven to ten days. Financing the transaction self, not that complicated for most people. Oh, yeah? Oh, yeah? Don't even get me started on the process in terms of the documentation that I was sending back and forth a billion times. Oh, God, I'm scorched earth on this industry, Max. So how are you fixing this? I guess that you're going to algorithmically or machine learning,

whatever we're saying these days, you look at a house, you say, all right, well, listen, this house was built in 2011. I'm pretty sure there's no title issues here. Is it stuff like that? Like, what are the inputs? That's basically on the underwriting first. Let's take a refi transactor. You're doing refi. You're working with one of our customers at what's called the intent to proceed. So as soon as you said, I want to work with this lender to complete this refinance.

My online application is complete. We get the order kicked over to us. We run our instant underwriting algorithm. And 80% of the time what it does on factors like some of the ones you mentioned, all property characteristics. When was the home built? How many bedrooms and bathrooms? What's the square footage?

Construction permanent information. What have you? Everything we can pull in. We say we think this one can be instantly underwritten for title insurance. It then moves to the escrow process. And in the escrow process, all that fee balancing stuff that I mentioned, which has been a huge amount of work traditionally. Because traditionally it was someone at the lender having to communicate with someone at the title company who has two monitors up on their desk, a bunch of paperwork on their desk. And they're trying to scan through everything and be like, well, does Michael have travelers for his homeowner's insurance or does he have GEICO?

And if it's this one, is this policy still in existence? By the way, does he have a first mortgage that needs to get paid off from five years ago? They're trying to figure all this stuff out manually. We've applied machine learning that. We're like, look, Michael still shows an outstanding first mortgage from seven years ago or 10 years ago with Wachovia Bank. It's probably not valid because Wachovia is kaput. It now became Wells Fargo.

There's no way that mortgage is outstanding. So we're not going to call Wells Fargo, like the industry is traditionally done, and try and get a payoff letter so they can put it in the file to prove that you don't need to pay off mortgage. Our algorithm is just going to say, it's likely not valid. We're going to screen it out. We're going to instantly balance and settle the fees. We're going to send that information back to the lender asynchronously.

And basically what this means is DOMA is sucking out like seven to 10 days of your overall refinance process, while we're also doing it with far less errors and a better customer experience. I've said probably 475 times, not ironically, that the blockchain might fix this. If title insurance is held on the blockchain, what do you mean you're checking county records? What are you checking? It should be right here. Here's a funny thing. If it were on the blockchain.

So, Bub, I agree with you that putting title on the blockchain, it would drive a huge amount of improvement to status quo. A couple of things to keep in mind. One is our model that we've now deployed on refi, about to deploy and purchase, we skip that stuff. Putting it on the blockchain just means you have instant access to historical county records to surface things that might be an issue that you then need to go fix. We're like, you don't need to go fix that stuff. You don't need to fix it. Most people will own the home. They will enjoy the home. They will not have reason to make a claim. The lender won't have reason to make a claim because the person is paying their mortgage. You don't need to concern yourself with

bunch of stuff that may or may not be outstanding, that nobody's ever really cared about, just skip the underwriting step in the traditional sense. And that's the thing that I think gets missed when people are like, well, put it on the blockchain. It's like, well, if you put it on the blockchain, it just means that title insurers are going to be able to instantly surface their list of issues. And they're going to be like, aha, look at this mortgage. It's like, no, forget it. That doesn't need to be satisfied. We're already taking care of it in the lending process. Now, if you do put it on the blockchain, it would make things more efficient. And here's the only rub. You're going to need to convince 3,000 county recorders all over the country.

who work today on literally 55 different systems of record. There's like 55 different software platforms that these 3,000 county recorders use to run their entire day-to-day business, and you're going to have to convince them to move into the blockchain. Well, I'm not going to do it. What if a company gets spun up and just, is this a business opportunity? Every great idea is a business opportunity. Somebody could do this.

They definitely could do it. I'll start a Dow right now. Okay. Is your pitch to these lenders then just that, listen, we're making your life easier. We're making your life more efficient. And that will be a good thing for your clients, too, because their life will be easier. Is that the main pitch? Yeah.

I mean, the pitch is better, cheaper, faster. I think we're unique in our vision and our ability to execute on this because we didn't come from this industry. I had no real estate experience before I started this company. I didn't have any title insurance expertise. A lot of our senior executive team, these are people that come from industry leading technology companies. They also don't have real estate or title experience.

We have a fair amount of title expertise in the business. And it's important to inform how we shape the strategy of the company. But it really is. We're focused on solving this from the consumer's perspective and making it much faster and more frictionless at a lower cost. Amen. Max, that's all you need to say. We're in. So in conclusion, Doma is fixing this broken, archaic industry from the 1890s Supreme Court.

Guy with a neck beard probably wrote the loss here. Looked a little bit like me, probably. All right, but it's not as if people should necessarily go to DOMA.com. This is more of a you're working with their bank. If you're doing refinance, ask your loan officer that you're working with. Again, chances are if you're working with the likes of Wells Fargo, Penny Mac, Chase, HomePoint, some of our largest strategic customers, you're likely going to be recommended that you use us anyway, and it'll be automatically in a great instruction in the process. And if you're working with a realtor, ask your realtor. And in most states, we'll be able to work with you. Love it. Max, this is great. Thank you so much for coming on, letting us rant, setting us straight and helping the world be a better place. Thanks for having me. I really enjoyed it. Thank you, Max. That was so much fun. Thank you, DOMA.

Go to DOMA.com to learn more and tell your lender. You don't want to pay those ridiculous fees. Use DOMA. Protect yourself.