Less than a decade ago, vendor management companies (VMC) were the chief
middle man in the industry — the guys that bridged the gap from the
lender to the settlement service providers across the country. VMCs had
their detractors, but they filled a significant need in the industry at a
time of booming growth.
“As I knew VMCs, they were usually in the form of managed networks of independent agents,” said Vincent Danzi,
general counsel at Equity Settlement Services. He said VMCs allowed his
company to obtain title exam and closing services in places where they
had not previously done much business. “I would almost describe them
more as vendor roster companies, rather than vendor management
companies.”
And then the mortgage world turned upside down. Companies
were bought and sold or disappeared altogether. The term VMC, as many
had come to know it, took on a different meaning, as market demands
altered the range and scope of the VMC work product.
All good things must come to an end
Those in the industry point to the middle ’90s to early
2000s as the heyday of the VMC concept. Lenders started to grow bigger,
consolidated and centralized their operations, and likewise, the title
industry needed to adapt. Companies like ServiceLink, LSI and ATM
started working with lenders to manage booming volumes of work and
placing those orders with thousands of agents and abstractors in the
field.
“I think there was enough business that everyone was served by [the VMC model] 10 to 12 years ago,” said Ed Krug,
manager and general counsel at Commercial Loan Services, and the
current president of the Title/Appraisal Vendor Management Association
(TAVMA). “There was so much work that a lending institution would have
to go beyond the typical four or five VMCs and maybe have 10 or 11
providers for that much volume.”
Then the economy tanked, taking several VMCs with it. Those
that remained were largely gobbled up by bigger players looking for
economies of scale. The biggest players in the VMC world now are those
owned by lending institutions or underwriters.