Doma offers “instant underwriting” of title insurance for mortgage refinancing, along with remote and digital closing and escrow services for all types of mortgages.

Doma, a startup that’s digitizing the title and escrow business, has added another big lender to its roster of clients, Wells Fargo Home Lending, as it continues down the path to going public.

Doma offers “instant underwriting” of title insurance for mortgage refinancing, along with remote and digital closing and escrow services for all types of mortgages.

Kristy Fercho

“Doma’s technology-led approach to instant title underwriting and more streamlined closing is aligned with our commitment to reduce time to close, lower costs for our customers, and create an exceptional experience,” said Kristy Fercho, the head of Wells Fargo Home Lending, in a statement.

Doma’s clients include Opendoor, Chase, PennyMac, Homepoint and Filo Mortgage, and last year more than 11,000 Realtors referred purchase title business to the company, the company said in an April 16 investor presentation.

Founded in 2016 as States Title, Doma announced in March that it would rebrand and go public through a blank check merger with Capitol Investment Corp. V, a publicly traded special purpose acquisition company (SPAC).

Max Simkoff

Speaking at a March 25 investor conference, CEO Max Simkoff said that when Doma launched instant title insurance underwriting for mortgage refinance as the company’s first product in 2018, “We were only licensed as a title insurance underwriter inside of probably three or four states.”

But Doma quickly got on the fast track to growth by acquiring “one of the last remaining fully nationally licensed, fully capitalized title insurance carriers” from homebuilder Lennar, Simkoff said.

According to an April 1 article in The Information, Lennar also invested $50 million for a 23 percent stake in Doma, which could end up being worth more than $800 million when the blank check merger is completed. Lennar’s investment arm, LenX, has provided $324 million in backing to 20 startups in recent years, the article said. According to LenX’s website, those companies include Opendoor, Blend and Notarize.

Just three of those investments — in Doma, Opendoor, and Hippo — could end up being worth more than $1.5 billion, The Information’s Cory Weinberg reported (a copy of Weinberg’s article was provided to the Securities and Exchange Commission by Capitol Investment Corp. V). IBuying giant Opendoor went public in December, while digital lender Blend — which acquired Title365 from Mr Cooper in March — filed a confidential draft registration statement in April for a future IPO.

Although Lennar has helped Doma accelerate its growth, Simkoff said the company’s technology is what appeals to clients, including “instant underwriting” of title insurance.

“It’s a deceptively simple but revolutionary twist on removing a huge amount of labor time and cost involved in title underwriting,” Simkoff told investors in March. “What it does is it replaces the traditional process of doing a title search, which typically can take three to five days duration and can be hundreds of minutes of manual labor on behalf of the title company and mortgage originator or the realtor. And what the instant underwriting algorithm does is it predicts the probability of title defect risk without actually running the title search. It takes that risk on our balance sheet.”

Simkoff said Doma is able to perform instant underwriting on 84 percent of the title insurance orders it gets from PennyMac.

“The beauty of what we’re doing here is we also happen to be doing it in a market that has seen almost zero innovation for the last 150 years where we have a distinct first mover advantage,” Simkoff said. “We spent over $65 million just in R&D alone to develop a permanent competitive lead here.”

Other companies working to streamline the closing process include Qualia, Notarize, and SimpleNexus.

In the months and years ahead, Simkoff said Doma will continue to grow its market share in the title insurance, escrow and closing businesses, which the company says represents a $23 billion total addressable market. Doma also has its sights on the $8 billion-a-year appraisal market and the $3 billion-a-year home warranty market.

Email Matt Carter

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