Doma sells off more title operations in Texas and Midwest

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Digital title and closing provider Doma continues to sell off title operations around the country as part of a strategy shift, this time offloading retail title locations and operations centers in five states to buyers Capital Title of Texas LLC and Near North Title Group.

Doma’s sale of local retail and title operations in Texas, Illinois, Indiana, Minnesota and Wisconsin, announced Wednesday, follows a deal announced in May in which Doma sold 22 retail title locations and operations centers in California to Williston Financial Group (WFG) for up to $24.5 million, depending on earnouts.

Terms of the sales to Capital Title of Texas and Near North Title Group were not disclosed.

Max Simkoff

“These strategic transactions are aligned with our mission-driven go-forward strategy and refined focus on our core underwriting and technology business,” Doma founder and CEO Max Simkoff said in a statement. “Our Texas and Midwest operations have a track record of providing excellent customer service.

“We believe we have found optimal homes for our local team members in the branches we have sold. I want to thank these teams for their hard work and dedication to Doma and our vision over the years.”

Doma has developed a machine learning platform, Doma Intelligence, and other technology that automates the title and escrow processes, providing “instant underwriting” of title insurance for lenders who are refinancing existing mortgages.

On a call with investment analysts in May, Simkoff said Doma has underwritten over 85,000 loans for many of the largest national mortgage originators in the country, with 80 percent of those orders granted instant approvals.

“Our world-class team of machine learning experts have achieved this outcome by training our models on over 20 years of risk data through hundreds of thousands of past title policies,” Simkoff said at the time.

But adapting that technology for purchase mortgages has been challenging. Rising mortgage rates curtailed the refinancing business of Doma’s clients last year, prompting the company to trim its workforce by 52 percent, eliminating 1,076 positions to finish the year with 1,062 employees.

“Doma’s go-forward strategy is centered around harnessing the power and benefits of its instant underwriting technology via the efficient and profitable distribution of its core technology by external partners with the end goal of bringing down refinance-specific costs for homeowners,” the company said Wednesday.

Capital Title of Texas, which is buying Doma’s retail and title operations in Texas, claims to be the largest independent title company in the U.S. and is a member of the Bill Shaddock Family of Companies.

Other companies under The Shaddock Companies’ umbrella include underwriter First National Title Insurance Co. and Shaddock National Holdings, which acquires independent title companies across the United States.

“We have successfully partnered with dozens of local title companies to facilitate their exit or expansion strategies,” Shaddock National Holdings pitches prospects on its website, focusing on owners who don’t want to sell to private equity firms, investment clubs or one of the big four title insurance underwriters (Fidelity, First American, Old Republic and Stewart).

Near North Title Group, which is acquiring Doma’s midwest retail title operations in Illinois, Indiana, Minnesota and Wisconsin, is an integrated title, escrow, construction escrow and 1031 exchange company that claims to facilitate more than $10 billion in residential and commercial transactions through nearly 60 locations.

“Near North is continuously expanding its market presence through acquisitions and organic growth as it provides customized solutions to its clientele, leveraging years of industry expertise and underwriter relationships that allow for maximum flexibility in facilitating even the most complex real estate transactions,” the company said in announcing the deal with Doma.

Since launching in 2017, Doma has racked up an accumulated deficit of $536.9 million through March 31, including a $42.1 million first-quarter loss. After raising less than anticipated when it went public in a 2021 merger with a special purpose acquisition company (SPAC), Doma faced with the prospect of being delisted from the New York Stock Exchange after the company’s share price slipped below the $1 minimum last summer.

Doma executed a 1-for-25 reverse stock split on June 30 to head off delisting. At the new split-adjusted price, shares in Doma have traded for as little as $4.25 and as much as $26.10 over the last year, closing at $7.81 on Wednesday.

On July 11, however, the New York Stock Exchange notified Doma that it was suspending trading in the company’s warrants due to “abnormally low” trading price levels and was commencing proceedings to delist the warrants.

In a regulatory filing, Doma said trading in the company’s common stock was not affected, and that it did not intend to appeal the New York Stock Exchange’s decision to delist the warrants, which can be exchanged for common stock.

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• Source: https://www.inman.com/2023/07/20/doma-sells-off-more-title-operations-in-texas-and-midwest/