RESPRO Member Interview of the Month Ruth Thompson President, Founder and CEO, Desert Document Services, Inc.
As President CEO and Founder of Desert Document ServicesSM, Inc., Ruth Thompson established the company on the principles of quality service and superior technological skill. Now in its 16th year, Desert Document Services, Inc. provides document preparation software and support services to industry professionals in all 50 states.
In 1993, Ms. Thompson was selected as a finalist in the Arizona Entrepreneur of the Year Program sponsored by Inc. Magazine, Ernst & Young and Merrill Lynch. She is currently a board member of Mortgage Originator Magazine and the Downtown Tempe Community, as well as a member of the Mortgage Bankers Association of America and the National Association of Mortgage Brokers.
RESPRO®: DesertDocs provides document preparation services designed to allow your customers to streamline the process of creating closing document packages. Can you describe your services in detail?
Thompson: We are a service provider managing loan-specific data for loan closing document packages. We have three different products that we market, but our most important and well-liked product is DesertDocs Pro. The Pro software is a Windows95 application that is installed on the customer's network where data can be imported from their Loan Origination Software. Last minute updates or changes can be easily entered directly into the Pro software. Once the information is complete, the customer has the option of either printing the package locally, for traditional courier delivery, or publishing it to the World Wide Web. If published to the Web any closing agent with a browser and qualified access to the DesertDocs secure web site can print the document package in their location, in seconds.
We manage the variable loan data by the investor, broker, loan program and the property state. In addition, we give the investor or the broker the ability to send those documents anywhere, anytime.
RESPRO: How much of your business is conducted over the Internet?
Thompson: A large share of our business is transacted using Web technology. But about 13 percent of our business is with mortgage brokers and lenders that haven't embraced web technology. They prefer that we do the input and overnight the documents to them.
RESPRO: Who are your customers? Are they located in any geographic area, or do you operate on a national basis?
Thompson: We do business in all 50 states. We work with the top five lenders in the nation and they are in all 50 states. Our customer are comprised of mortgage lenders, brokers, conduits, attorneys, and anyone who is licensed to engage in mortgage lending.
RESPRO: DesertDocs is an independent service provider that is not affiliated with other companies. Approximately how many independent document preparation companies are there in the country?
Thompson: There are about three or four document preparation businesses that operate on a national basis. Probably two of these businesses are independent companies, and one or two have been acquired by other companies. There are about a dozen document prep firms overall.
RESPRO: Has this industry consolidated like other closing service industries, and if so, how has that affected your business strategy?
Thompson: Document companies haven't really merged with one another, but closing service providers are developing strategic alliances with document companies. I think the use of the Internet and strategic alliances is the future for this industry. It allows for the exchange of electronic data, which improve the data's integrity because it flows without human intervention. It also will reduce the fee, which ultimately benefits the consumer, and that's what it's all about.
RESPRO: What kinds of strategic alliances does DesertDocs have?
Thompson: Many law firms and title companies use our software under a private label. They can post closing packages on the Internet and the recipient can access the documents from anywhere in the world. For example, if a title company has multiple branches or notary services, it can post the documents on the Internet and their branches and notaries can access those documents with a security code and get the borrower signed. It saves a whole lot of time.
RESPRO: So an independent company like DesertDocs can survive and even thrive in the future though strategic alliances?
Thompson: Yes. With strategic alliances and web technology, the possibilities are endless. Independent companies will have a lot of opportunities to be included in bundled services. Sure, there are opportunities for consolidation, which allow technology to flow more freely. But that can also be accomplished through the Internet. Today's advanced telecommunications Web technology provides a very open platform for businesses to share this information without being acquired by one another.
RESPRO: You said that only 13 percent of your customers have not adopted web technology. Does the other 87 percent not even deal with paperwork anymore?
Thompson: Some of them do. They want to still feel it, to touch it, to have the capability to print it or view it. In addition, state and Federal laws haven't caught up with the Internet, so everyone has to print the documents. The big problem, of course, is the consumer signature. When the consumer goes to closing, they need to sign on paper. I call it "dead tree" technology.
RESPRO: Obviously, your company serves an important role for mortgage originators because of the extensive documentation needed at mortgage closings. What's the cause of these documentation requirements? Federal laws? State laws?
Thompson: Under Federal laws, we have Reg-Z, RESPA, and HUD disclosures. State laws require disclosures relating to late charges, unauthorized practice of law, prepayment penalties, escrow cushions, form revisions for the state law changes, the list goes on and on. Some state regulators are getting even more intense with that they want disclosed.
RESPRO: I take it that you don't necessarily believe that all the documentation required is necessary? That they could in fact be consolidated and still serve the same purpose?
Thompson: Disclosure requirements are there to protect the consumer, but I think that in the future we're going to see some of those laws consolidating.
RESPRO: What would you at this point see as your biggest regulatory headache being right now, either at the Federal or state level?
Thompson: There really isn't one headache we have at either the federal or state level. This is our business environment, this is why we survive. We're here to make sure the information is disclosed to the consumer. I think our biggest challenge as a document preparation software company is helping our customers understand changes to federal and state laws. Often, information about regulatory changes does not filter down to the level of the users of the software - the closers, funders, and even the consumers.
RESPRO: There has been a bill introduced in Congress that essentially would make it easier to electronically transmit disclosures and acknowledgments required by federal laws - such as the Truth in Lending Act, RESPA, Fair Credit Reporting Act, and Equal Credit Opportunity Act. Do you think that would alleviate problems for you and your customers?
Thompson: I think that disclosures would be made in a more timely fashion for Internet-savvy consumers. It would also be easier for consumers who aren't Internet-savvy to get the information because you could more easily pass it along to the right entity to give to the consumer. Some laws require the disclosures to be physically mailed. Often, our customers will say, "Can't you just e-mail that truth in lending disclosure to me?" And we say "Sure, we can do that." We provide it to our customers through a secure web site. Then the customer has to print the form and send it by mail, because that's what's required by regulation (dead tree technology). I think any new law will have to state whether or not e-mail is acceptable.
RESPRO: As you know, there also have been Federal proposals to allow mortgage lenders to guarantee up-front the price of a total closing cost package. Some closing service providers fear that lenders are going to squeeze their profits without passing on the reduced price to the consumer. Do you share these concerns?
Thompson: You do end up with an economy of scale with the bundling of services that you can pass on to the borrower because it does cost less to do multiple transactions through one site. I think that it's a development challenge, but one that we actually look forward to since it also would enable us to get the job done with that economy of scale.
RESPRO: One last question. You aren't an affiliated business arrangement like the most RESPROŽ members. What benefits do you get from your RESPRO membership?
Thompson: We may not be an affiliated business arrangement in that no one has an ownership interest in us, but we are affected by the same regulations. I receive not only a great deal of contacts from my membership, but I also learn a lot about what is happening with the regulatory environment that governs what I do for a living.
RESPRO: Thank you, Ruth.
Reprinted with permission by RESPRO® from the July/August 1999 RESPRO newsletter.
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