FNC, Inc and Bill Rayburn are Busy Connecting Appraisers and Lenders (Part One)
By Charlie Elliott, Jr., MAI, SRA

In an attempt to address some of the technological issues within our industry connecting appraisers and lenders, who better to contact than one of the industry’s leaders in the field? This month’s column, as well as that of next month, will be devoted to an interview with one our industry’s true technological pioneers Bill Rayburn, CEO of FNC, Inc. In addition to being the CEO of the company he founded, Bill holds a Ph.D. in finance and the CFA (Certified Financial Analysis) and MAI (Member Appraisal Institute) designations, three of the most sought after credentials in the finance and appraisal industries.

I first met Bill when he did an appraisal seminar in Charlotte. He made one of the most dynamic presentations I have ever heard, and that is saying something when the subject matter is as dry as that of real estate appraisal.            

Bill, how did a Mississippi college professor get interested in real estate appraisal to the extent that he went all the way to obtaining a MAI appraisal designation?

You could say my foundation in real estate came straight from the cradle. My daddy 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 being 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 that I gained while obtaining my MAI.

What prompted the idea of starting a company that would become one of the premiere mortgage-appraisal-system companies in the country?

Before founding FNC and alongside our professorial careers, Dennis Tosh and I did 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 1994/95, one of the bankers asked us, “Can you build me one of these systems like 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 don’t know how to write software!” And I said, “No, but I have a banker who has money and there are a lot of smart people around here. We will figure it out.”

We approached two of our colleagues, also professors at Ole Miss. One was an MIS (Management Information Systems) professor named John Johnson who knew technology, and one was an economics/statistics professor named Bob Dorsey who knew operations. So we got together.

We 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 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, Ohio. 

FNC has come a long way from what must have been just an ambitious idea, to a large national company. Would you care to expound a bit on some of the challenges you have faced as a start-up company as well as any slam dunks which you have experienced?

A couple of the challenges we faced as a startup have also been blessings. Our headquarters is in Oxford, Mississippi. In the past, we’ve gotten a lot of questions about that – Oxford is way, way off the beaten path when you consider the traditionally thought of 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. A lot of our talented folks are connected to Mississippi – either former staff or graduates from the University of Mississippi or folks who used to call this 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 that – they didn’t want their data in Mississippi. But after 9/11, Oxford, Mississippi 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 our installation/implementation cycle are long, and were especially so 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 in the door, 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 we’ve developed a fast-installation plan that’s going strong right now with three of our new clients.

Our challenges have turned into slam dunks, a lot of them. And we have a lot of 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 appraisers and title providers and flood providers and inspection providers and AVM providers and other vendors connected to our lender clients through our ports. We have absolutely fantastic people on board. We have a lot of successes and we’re thankful.

Would you care to comment on the number of employees that you have or the national client base that you serve?

FNC has offices in Oxford, Miss. (the headquarters); Costa Mesa and Carlsbad, Calif., as well as onsite technical staff at several clients and telecommuters working from home offices. We have 230 employees.

Our clients include Allstate Appraisal, 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.

The report of my interview with Bill Rayburn concludes with next month’s column.