Editor’s Note: This is part of our continuing series on affiliated companies. Our goal is to feature companies which have had history and experience with affiliated businesses to learn about their success and share the RESPA compliance lessons they have gained in these affiliations over time.
In 2003, McDonnell and Associates, PA was launched to provide a more convenient model to help loan borrowers.
The Columbia, S.C.-based law firm – which focuses on real estate law, title development and settlement services – eventually set itself apart by offering a traveling attorney model.
The idea was to transform the mortgage loan closing process by employing attorneys who travel to clients for closings. The firm uses attorneys throughout the state as notaries are not allowed in South Carolina.
“An attorney traveled throughout the state of South Carolina, which at the time was novel and new and really helped us grow,” CEO Edward McDonnell told RESPA News. “We offered in-office closings, but we also offered the convenience of closing at the location that the borrower chose, and we quickly grew.”
The company has made the Inc. 5000 List of the fastest-growing companies in the United States three times. Today, the law firm operates throughout South Carolina, and has offices in North Carolina, Pennsylvania, Alabama and Georgia.
One secret to McDonnell and Associates’ success was the decision to simultaneously open its first affiliated business – Boomerang Title – with the parent company.
Boomerang Title is licensed in 32 states. The law firm’s other affiliated business arrangement (AfBA), Simplicity Closings and Title, operates in North and South Carolina.
Vetting your partners
McDonnell stressed the importance of vetting any potential AfBA partner.
“You should strongly consider whether to enter into any affiliated business arrangement very seriously,” he said. “For every 100 you get asked about, you’re going to say yes to one of them. It’s very hard to identify and vet out a good partner. It should be rather obvious that the business mindset is the same at the get go, and if there’s any hesitance on your part you should probably walk away.”
McDonnell met his first affiliated partner in college.
“I went to business school in addition to law school, and while there, I took a course in business production outsourcing and one of my classmates had previous experience in title search – title abstracting – prior to going to college,” he said. “I decided to open up a title agency with that person, and Boomerang Title has grown to be a true title company and has been nothing but a great relationship.”
In fact, of Boomerang Title’s comptroller, Tracy Donnelly, McDonnell added with a laugh, “She’s my wife now.”
RESPA compliance tips
“The main thing to remember when working with an AfBA is to consistently train staff on the nuances of AfBAs, including proper disclosures, separation of staff, space and duties,” Donnelly said.
McDonnell said it’s important that education never stop.
“You just need to keep yourself well informed and pay attention to the regulations,” he said. “Obviously, you want to do research on your own, but I would also highly recommend getting a third-party (RESPA) counsel to help you in ensuring that accountability.”
McDonnell added true transparency is a must, which can be done by utilizing technology when possible to make sure there is accountability with everyone involved regarding electronic disclosures and metrics.
For instance, the law firm uses Ops Insights, a business intelligence, analytics and compliance management tool, to help monitor productivity.
“It will also reinforce compliance by making sure any and all disclosures are included in all files,” he said.
McDonnell and Associates also has a chief compliance officer, Jennifer Cooper.
“She’s well versed on all the regulations,” McDonnell said. “Obviously, I keep myself abreast as well, but it’s always good to have somebody in-house and somebody out of house to get different perspectives.”
Cooper’s duties include communicating with and training staff on compliance.
“Successful implementation of ALTA Best Practices means ensuring insurance and settlement procedures have safeguards in place to abide by all applicable laws and regulations,” Cooper said. “We utilize Ops Insights reports to generate data directly related to productivity and to determine what works and what doesn’t on a daily, and sometimes hourly, basis. We always strive to stay ahead of industry changes, which means constantly updating policies and procedures to ensure NPI and client funds are safe with us.”
McDonnell said his firm also is big on attending multiple industry trade shows – including the American Land Title Association, Mortgage Bankers Association, National Settlement Services Summit (NS3) and RESPRO – to educate themselves on anything related to affiliated businesses or joint ventures.
“You also need to read the right articles,” he said. “It’s an ever-evolving regulatory environment based upon the current atmosphere. Just take a conservative approach, and make sure you take the time to fully vet your partner.”