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FORT WORTH — Not long ago, mortgage companies had to wait weeks for income confirmation from the IRS, meaning that a buyer could land a home loan with less documentation than it took to get a library card.
That led Jay Meadows, a stock broker, and Ray Petta, a restaurateur, to found Rapid Reporting Verification Co. Running the company from a converted laundry room in the back of an apartment building, they specialized in quickly verifying Social Security numbers, income and employment and speeding the information from government databanks to lenders in a day or two. The laundry room long ago gave way to sleek quarters with a view of downtown Fort Worth, but the pair is still cleaning up: Rapid Reporting announced Nov. 2 that it had been sold to consumer credit reporting giant Equifax in a $72 million, all-cash deal. Rapid Reporting will continue to be based in Fort Worth as a division of Equifax’s Talx Corp., headquartered in St. Louis. Meadows and Petta were pioneers in getting verification to lenders quickly and consistently enough to allow them to use it on the front end of the mortgage process, said Mark Fogarty, an editor at Mortgage Technology magazine."It took us a lot of evangelizing to get people to believe we could get this done in 24 hours and do it on a consistent basis," said Petta, 56, chief operating officer and a Paschal High School graduate. "It hadn’t been available in volume." But doing that enabled customers to use IRS tax return transcripts as fraud-prevention tools instead of simply post-qualification quality control measures. It also helped transform Rapid Reply from a back-room business into an operation with about 140 employees and revenue of about $40 million a year. Quite an achievement for a company that traces its origin to a conversation in a bar after a round of golf."It’s like we’re in a different realm now. It’s kind of cool," said Meadows, the CEO. In the early days, he said, "I was more worried about that fire marshal" inspecting the venture’s offices than anything else, he said.A fragmented industryThe verification business was a mom-and-pop game when Meadows and Petta got into it. Local operators cut deals with regional Social Security administrators for access. If a contact got sick or a bureaucrat moved to a new job, the information could stop, Petta said.The highly fragmented industry, Meadows said, was similar to the early video rental industry — made up of small independents in each market. It reminded him of Blockbuster Entertainment’s rise, which he studied in business school. "I always loved case studies," said Meadows, a former third baseman for Texas Christian University who jokes that he was a "magna cum lucky" business graduate in 1985.Like Blockbuster, Meadows and Petta quickly went nationwide."Within six weeks we were in the black. By the end of ’99 we were in the largest in the country," Meadows said.He laughed recalling that in the early days, Rapid Reporting’s man in Alaska drove a snowmobile to his Social Security center for information.
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