There are probably not many companies in the mortgage business that can boast record sales growth of 40 percent in 2013, followed by growth of about 25 percent in 2014 and that expect similar growth this year. But Ernst Publishing Co., Albany, New York, has managed to pull that off by providing what has to be one of the more mundane--"boring" even, according to senior management--but important services in the industry. [paragraph] Ernst was largely unknown to many in the industry until a few years ago and is still virtually anonymous to consumers. What Ernst does is ensure, as well as guarantee, that the fees lenders charge residential mortgage borrowers are 100 percent accurate. Those fees include everything from termite and radon inspection charges to title insurance premiums to local government recording fees and taxes. [paragraph] While that sounds simple enough, remember that there are thousands of local government entities--states, counties, cities, districts, etc.--around the United States, all with their own sets of fees. Large, national lenders may have more than 100,000 fees to manage across the country. And not only do those fees change constantly, those entities are under no obligation to inform anyone when they do.
Making sure those fees are correct is critically important to mortgage lenders, especially with more stringent reporting and disclosure requirements by the Consumer Financial Protection Bureau (CFPB) slated to take effect in August.
If lenders get it wrong, they risk overcharging the customer, which would be a major CFPB violation. And if they undercharge the customer, they have to make up the difference--which could total thousands of dollars in some extreme cases--or have the customer walk away from the closing table.
"The new rules require even more accuracy and will impose a high price on lenders that can't tell consumers exactly what they must pay when they get to the closing table," says Gregory E. Teal, Ernst's president and chief executive officer.
"Federal regulators have made it clear that they will enforce these new rules aggressively and require all players to keep audit trails to prove that they have compliant processes in place. Compliance is now the most critical part of the lending game. We have to be compliant every single time we interact with the borrower," Teal adds.
The name of the company is itself a misnomer. Ernst really doesn't publish anything--in hard-copy form, that is--anymore.
It got its name from the bulky three-ring binders it used to print and update every quarter that contained the fee schedule of every local government entity in the country that had anything to do with recording mortgage and real estate transactions.
Now, of course, Ernst's database is automated and available online.
But the company is still a family-owned and family-run business, started by the late Carl Ernst and his wife in 1989. The firm, which goes by Ernst Information Services today, or simply Ernst, is now headed by Teal, Carl Ernst's stepson.
Teal was the company's first chief technology officer and took over the company's day-to-day operations shortly before Carl died of cancer in 2010 at the age of 69.
Teal got his start at the company filling the binders, along with family members, in their garage. Today the company is located in downtown Albany, a block away from the imposing State Capitol building. It employs about 35 to 45 people, with about 20 to 25 in Albany, depending on projects...