Bucking the trend
Mortgage meltdown sends Rapid Reporting soaring
In fact, the verification company saw such a quick, sharp rise in business at the end of 2008 that firm founders did the only thing they could – rented a three-bedroom apartment on Bryant Irvin Road for the sales department and sent all office furniture to storage to make way for 22, eight-foot, plastic tables that could be lined up as workstations at the company’s then headquarters in Mira Vista. And aside from being worried about the fire marshal busting in on the firm’s apartment-turned-sales headquarters, Rapid Reporting CEO Jay Meadows said the strategy worked.
“It was crazy,” Meadows, 46, said. “We didn’t have an office. There wasn’t an executive in an office anywhere. I’ve never seen anything grow like that. We saw 1,600 percent growth.”
Founded in 1998 by Meadows and COO Ray Petta, 56, Rapid Reporting is a privately held verification company with nationwide clients that include
85 percent of the top U.S. mortgage companies.
During the housing boom of the last few years, Meadows said his firm saw steady growth. The firm built an 8,000-square-foot office building in Fort Worth’s Mira Vista and in early 2008 had less than 35 employees.
But when the housing bubble burst and the financial market took a subsequent tumble in fall 2008, the future was unsure for Rapid Response. The firm lost six of its biggest clients – all of which went out of business within 14 hours of each other – and Meadows was worried.
“But the sub-prime implosion was like somebody firing a shot at a track meet for us,” he said. “… Because all of a sudden, what a concept, mortgage companies finally understood that they needed to verify income, [identification]. It was a paradigm shift. It was no longer, ‘can you trust people we do business with?’ You had to now be able to trust the process by which we evaluate people.”
Today, Rapid Response has 142 employees and Meadows said the company performed more verification checks in a day in January 2009 than in the entire month of January 2008.
And this, Meadows points out, is in a stricken market.
“While we’ve been growing at such a rapid pace, the mortgage industry has been cited to be down anywhere from 40 to 60 percent in volume, so can you imagine if we get back in another positive market?” he said. “… It’s been like trying to paint a car while it’s going down the road at 300 mph,” Meadows said.
And as far as office space goes, Meadows said the employees are more than comfortable in two towers at 4100 International Plaza in Fort Worth.
Rapid Reporting offers several types of verification products including IncomeChek, which is used to verify income through information obtained from the Internal Revenue Service; DirectChek, which meets U.S. Patriot Act compliance and verifies identity via a direct comparison of the social security number to the Social Security Administration database as well as public and private database searches for identity fraud and abuse; and EmploymentChek, the company’s newest offering, combines live, person-to-person telephone contact and comprehensive database research to verify borrower employment.
Meadows said much of his company’s success has been thanks to its access to government agencies such as the IRS and the Social Security Administration, which are both used to gather electronic data for verification purposes and access that data. To set up those avenues for research, Rapid Reporting’s executive team lobbied to secure the continuation of the enumeration verification system with the SSA database – something Meadows described as groundbreaking for his industry.
“We’ve kind of been pioneers in this market,” he said. “We were the first company to ever hit the social security database, the general revenue service, and offer employment checking service.”
In fact, the company has been so successful as of late, that rumors of a buyout are flying. Meadows confirmed those rumors – saying some days he gets as many as 10 calls from interested parties – and added that a larger company coming along and buying Rapid Response makes sense on many levels.
“I think there are a lot of great candidates out there; at some point it makes sense for us to move to a larger company that can take what we do as a piece of the mortgage process,” Meadows said. “The push in the industry is toward an e-mortgage, a black box mortgage transaction, and no matter what they do, our process will be a part of that”
Meadows compared his company being bought out by a larger company to General Motors purchasing a seat manufacturer.
“It’s probably not too far off, us being gobbled up by a larger player that needs our service,” he said. “That’s a positive thing. That’s what they taught me at TCU. Build something and sell it.”
In the coming months, Meadows said he and Petta will be keeping a close eye on the housing bill due out that might require the use of income verifications, which would “bring on another wave of growth for us,” he said.
And that, he added, could introduce an interesting situation with Christmas approaching.
Since the company’s start, Rapid Reporting employees have posed in a group photo dressed in “old timey Cowboy” clothes for the company Christmas picture, which is sent out to clients and potential clients. Last year Meadows said he and Petta had to bring in a photographer skilled in large group shots since the number of employees had increased by leaps and bounds. This year, he said, “I don’t know if we’ll all be able to fit in the picture.”
“For Ray and I to come from such drastically different areas (Ray owned all of the Mama’s Pizzas in Dallas and Meadows worked in the stock and bond industry) and have this success, it’s the American D\ream,” Meadows said. “We took a small idea, we built and I keep waiting for somebody to pinch me.”
And as for the rumors of a buy-out in the works, Meadows said if that were to happen, the company would keep its roots in Fort Worth.
“I love this city and I wouldn’t live anywhere else,” Meadows said. “I assure you if we do get bought out, we won’t be going anywhere.”
