|by Robert Franco | 2008/11/26 | Source of Title, Used with Permission
A couple of recent (Source of Title) posts regarding offshoring have stirred up some controversy. Sunil Ojha started a blog defending the practice of searching titles from India. In Misunderstanding and Clearification (sic) of Same and Resolved Your Real Issue, OJha explains why offshoring makes good business sense and how it can be done effectively. Whether you agree or disagree, the real question is why is anybody offshoring to begin with? There is no doubt that offshoring cuts costs and that is attractive to companies looking for any advantage in today’s business environment. But, abstracting was always a localized practice that required a particular knowledge of state and local real property laws to produce a reliable product. Why would anyone trade quality for savings? More importantly, have they?
Let’s start with a basic premise that it is possible to reliably search an online title plant. I am the first to say that I have some doubts about online records, but it is possible. The real problem that I have with online records is that not all of the information we search is available electronically; thus, the so called “thin-title” plants are incomplete. However, title plants are the norm in some parts of the country, and even required in some places. If they are complete, there should be no problem using them for abstracting purposes.
So the real difference between searching a title plant from India and searching a title plant locally, is the skill and knowledge of the abstractor. As I have stated many times, there are vast differences between the states that have a huge impact on the status of title. I believe that I have a strong understanding of the real property laws in Ohio, but I would never even consider tyring to do a search in another state.
Some of the biggest differences between the states could be dower, community property laws, state Medicaid recovery laws, recording statutes, etc. Anyone can find deeds, mortgages and liens, and report their volumes and pages, and recording dates. That is the simple part. But, understanding how those documents affect title is what makes the local examiner such a value to the industry.
I think it is a given that just as I would not be competent to abstract in any state other than Ohio, a searcher in India could not be competent to search multiple states. It is conceivable that an Indian searcher could learn one or two states, and develop a sufficient level of competence. Varun Sharma points out that this is exactly what they do in India (see comments).
Even then, it takes several months or even years of on-the-job training to really develop the necessary skills to become a competent, professional abstractor. I would imagine it would require even more time for someone in another country, who is completely unfamiliar with our laws and culture, to grasp the concepts. Based on a previous statement made by the head of an Indian outsourcing company, I have my doubts about the quality of training they receive.
Forty days of training is hardly suffient. Regardless, to assume that searching titles from India is worse than using local abstractors, it must also be assumed that all local abstractors are well trained and educated in their state’s real property laws. I believe that is a fallacy. Basically, there is no difference between a search completed by an unqualified local abstractor and one completed by an unqualified Indian abstractor – except the latter is cheaper, of course.
Before I continue, let me first acknowledge that there are still some very knowledgeable, local abstractors who provide very valuable services in this industry. However, I believe that has become more the exception than the rule. Many abstractors learned to abstract by trial and error, an online course, or from another searcher that doesn’t have the proper knowledge of abstracting. I believe that this started with the “equity loan,” or “current owner,” searchers. Once upon a time, they were used to provide very basic information for non-insured products. Then, they slowly began to expand into “full searches” used for issuing title insurance. I will never forget the first time I heard one of these searchers say “a full search is nothing more than a really good current owner with a chain of title.”
Soon, the title industry began embracing current owner searches for title insurance purposes. Current owners were much cheaper because these searchers, mostly out of ignorance, were taking shortcuts that a professional abstractor would never consider. As the title industry began to lower the standards for its search requirements, the unskilled searchers flourished. For better or worse, these over-simplified searches became the norm and everybody wanted them cheaper and faster. The demand for skilled, professional abstractors dropped dramatically.
Today the line between “searcher” and “abstractor” is blurred and the two terms have become interchangeable. I wonder how many abstractors are really qualified to provide reliable title evidence.
With the modern technological advance of electronic imaging, a title plant can be used to search titles from anywhere in the world. If the local abstractors are really just finding documents and copying down pertinent information on a report, without a true understanding of the impact of those documents on the title, why not have that function done in India? It is certainly cheaper… and since they can search around the clock, it is probably faster.
I do not agree with the practice of offshoring. As Pat Scott said (see comments), “The title search is the foundation of the industry. It is not a clerical task to be outsourced.” However, it would seem that the depth of knowledge of the local abstractors is not what it used to be. If the industry were to suddenly stop offshoring and begin demanding quality abstracts, there would be a lot of local abstractors out of work, just the same. The problem is that there is no way to know which ones are well qualified. Because there are very few states with any sort of meaningful licensing, anyone can call themselves an abstractor. And, many who probably believe themselves to be professional abstractors just don’t know how much they don’t know.
My basic point is that the level of skill and knowledge between the average local abstractor and the Indian abstractor are probably not as far apart as you may think. Title searching has been dumbed-down for so long that there are probably few left who care to educate themselves beyond what is necessary to copy recording information from filed documents. There being little difference between the services provided here in the USA and overseas, it is not that hard to see why so many companies are offshoring title searches. By failing to maintain a superior knowledge, the abstractors have probably made the offshoring decision much easier for those who chose to embrace it. It basically turns on an issue of costs and profits.
Again, I am not saying that there aren’t still good, local abstractors out there. I am merely pointing out that many of them have noticed that they are losing work to cheaper, untrained, incompetent competition; not just in India, but right there in there own counties.
Robert A. Franco