States Title is on a mission to develop and deploy an instant closing experience for residential mortgage consumers – homebuyers and homeowners – across the U.S. With an industry that is change-averse, our endeavor is something few companies have even attempted, and we know we have some way to go. We started with title and escrow, which in and of itself is a complex process that involves multiple parties, numerous touchpoints, and a plethora of documents that need to be filled in, cross-checked, and completed.
Data analytics, machine learning, and machine intelligence are essential tools in our tool kit, which is why we have both a robust engineering department and an established data science team. In 2020, we added six new people to the team, and we’ll add at least four more in 2021. But the credit for the patents we have already received goes to the team members we hired before the turn of the decade. We estimate that for a data scientist to drive meaningful change – especially to the point of submitting and receiving a successful patent application – takes two years, due to the difficulty of developing such solutions.
Title insurance, like any insurance, revolves around risk. Specifically, whether another party has a stronger claim to the title of a property, wholesale, or a claim that clouds the title, such as a lien or trust-based claim. In April 2019, States Title received its first patent for “Machine Learning Using Multiple Data Types” from the U.S. Patent and Trademark Office. That first patent protects our revolutionary solution that applies machine intelligence and predictive analytics to the complex process of title and escrow. In December 2019, we received our second patent, for “Predictive Machine Learning Models,” an invention that optimizes the point of maximum value in our Instant Underwriting model.
This week, we shared a press release about a third patent, a continuation of the patent for “Predictive Machine Learning Models,” issued by the U.S. Patent Office on August 25, 2020. Patent number 10,755,184 protects the part of the Instant Underwriting algorithm that was not protected by the first two patents and a solution that evaluates the mortgage aspect of Instant Underwriting. Whenever a resale or refinance occurs, any prior mortgages have to be ‘cleared out’ before a lender will issue a new mortgage on a given property. In the traditional process, this requires pulling a list of all mortgages that have not been fully paid off and figuring out what needs to happen with those outstanding mortgages. This can mean paying them off in full, or treating them in some other way if, say, they were paid off but not registered as such in the public record (which happens far more often than one would think).
The traditional approach uses human instinct to assess the status of old mortgages, the likelihood of them actually having been paid off, the value of investigating further, and what needs to be done about the outstanding mortgages. In practice, it’s impractical to try to go after every old mortgage and spend days or weeks investigating their status, and doing so would create a massive backlog in an industry already known for significant delays.
Whereas our first two patents respectively involved a brand new approach to non-mortgage risk prediction and a novel application of galactic mathematics, this time we had to replicate the wheel, rather than reinvent it. In other words, our new mortgage model recreates how a human treats the assessment of old mortgages almost exactly how a human would – by instinct and intuition – but this time, our algorithm assesses all the different rules and signposts for a decision to be made. Whereas our first two patents increase accuracy over the traditional way, our algorithm is approximately as accurate as an experienced professional would be.
Automated open mortgage detection is an essential part of generating title commitments in minutes. By integrating this technology into States Title’s suite of Instant Underwriting solutions, we’re approaching the process of establishing title on a property in a way nobody else has – resulting in a more affordable and efficient experience for everyone involved.
With the team we have and the mission we’re committed to, we would not be surprised if we secure a triple-digit number of patents in the decade to come. We already have four applications pending, with another eight in the pipeline. We are particularly excited by the patent we have filed for our latest innovation – Instant Closing Disclosure – which leverages machine intelligence to return a completed settlement statement to lenders in under a minute, and is the next step in our journey towards an instant closing experience.