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May 24, 2005

From the appraiser's perspective: FNC Inc. and Bill Rayburn, connecting appraisers and lenders—part oneCharlie Elliott Jr., MAI, SRABill Rayburn, FNC, appraisal technology In an attempt to address some of the technological issues that connect appraisers and lenders, who better to contact than a leader in the field? This month's column is part one of an interview with one our industry's true technological pioneers, Bill Rayburn, CEO of FNC Inc. In addition to being CEO of the company he founded, Bill holds a Ph.D. in finance and CFA (Certified Financial Analysis) and MAI (Member Appraisal Institute) designations, three of the most sought-after credentials in the finance and appraisal industries. Charlie Elliot: How did a Mississippi college professor become interested in real estate appraisal to the extent of obtaining an MAI appraisal designation? Bill Rayburn: You could say that my foundation in real estate came straight from the cradle. My father was a real estate developer and builder in southern Mississippi, so I grew up with real estate. My educational background was in finance, real estate and insurance, with my primary focus on financial institutions. I started doing work for financial institutions on the collateral side, and doing market analysis and feasibility studies on large real estate. I just plain needed the expertise, which I gained while obtaining my MAI. CE: What prompted the idea of starting a company that would become one of the premiere mortgage appraisal system companies in the country? BR: Before founding FNC and alongside our professorial careers, Dennis Tosh and I conducted seminars for major banks and state banking associations around the country on how to apply the Financial Institution Reform, Recovery and Enforcement Act (FIRREA). Around 1994-1995, one of the bankers asked us, "Can you build me one of these systems similar to the one you are talking about?" I said, "Absolutely!" We came home, and I remember Dennis saying, "Where are you going to get this? You dont know how to write software!" And I said, "No, but I have a banker who has money, and there are plenty of smart people around here. We'll figure it out." We approached two of our colleagues, also professors at the University of Mississippi. One was a management information systems professor named John Johnson, who knew technology, and the other was an economics/statistics professor named Bob Dorsey, who knew operations. So, we got together and went to work on the software. Our first two employees were Ph.D. students whom we hired part-time. One of them is now our chief technology officer and chief software architect, in charge of the design on all of our systems. We worked on this software for three years, with the University of Mississippi incubating us and Mississippi investors helping us financially. Our first big customer was Charter One Financial in Cleveland. CE: FNC has come a long way from an ambitious idea to a large national company. Would you care to expound on some of the challenges you have faced as a start-up company as well as any slam-dunks that you have experienced? BR: A couple of the challenges we faced as a startup have also been blessings. Our headquarters is in Oxford, Miss. In the past, we've received many questions about that--Oxford is way off the beaten path when you consider the traditional technology centers in this country, but Mississippi has been good to us. Our investors come from this region, and without them, we wouldn't have been able to get off the ground. Many of our talented folks are connected to Mississippi, either former staff or graduates from the University of Mississippi, or folks who used to call Mississippi home and moved away but then came back to work for FNC. And finally, Mississippi has turned out to be the perfect place to house our secondary disaster recovery facility. Our primary data center is in California, and clients used to be really glad to hear thatthey didn't want their data in Mississippi. But after 9/11, Oxford, Miss. is a good place to have data. Like I said, it's off the beaten path. Another challenge we've faced is that our sales cycle and installation/implementation cycle are long, especially during the last three years of record volumes. Mortgage originators were so covered up in application volume that it was all they could do to get the paper processed and out the door. They didn't have time to think about anything else. Both of those issues have begun to resolve themselves. Lenders have more time to be proactive about technology that will make them more efficient and risk averse. And weve developed a fast installation plan that's going strong right now with three of our new clients. Many of our challenges have turned into slam-dunks. We have systems in place or in the works at four of the top 10 mortgage originators and five of the top 10 sub-prime originators in the United States. We worked with the Appraisal Institute to develop what is now the recognized standard for communication and storage of appraisal information, "AI Ready." We have thousands of title, flood, inspection and AVM providers, appraisers and other vendors connected to our lender clients through our ports. We have absolutely fantastic people on board. We have many successes, and we're thankful. CE: Would you care to comment on the number of employees you have or the national client base you serve? BR: FNC has offices in Oxford, Miss. (the headquarters), Costa Mesa and Carlsbad, Calif., as well as onsite technical staff at several client offices and telecommuters working from home. We have 230 employees. Our clients include Allstate Appraisal, American Home Mortgage/HomeGate Settlement Services, Ameriquest Mortgage Company, AmSouth Bank, Aurora Loan Services, Bank of America, Centex, Countrywide, Frost Bank, Greenlink (the vendor management arm of Wachovia), IndyMac Bank, Just Valuation Inc., Key Bank, LMS/RBC Mortgage, Option One Mortgage Company, Quicken Loans Settlement Services, Union Bank of California, Washington Mutual, Wells Fargo and others. Charlie Elliott Jr., MAI, SRA is president of ELLIOTT & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889, [email protected] or through the company's Web site at
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