Anyone involved in the home finance industry knows that originating mortgage loans is a complex business. Servicing borrowers requires the best efforts of a number of different parties, including the sellers, the agents, appraisal companies, data verification firms, credit reporting agencies, title and closing companies, and the lender’s own staff. For most lenders, the process also includes secondary market investors, warehouse lenders and due diligence firms.
At a minimum, these relationships are built around the process of placing an order, paying a fee and then receiving a product or service. However, this process can quickly become more complex. The pandemic may be the best recent example of this, but complications arise often and can include volume spikes, changing interest rates or additional compliance requirements.
For instance, the federal government has recently turned its attention to the problem of affordable housing.[1] According to a Fact Sheet released by the White House staff:
The large and long-standing gap between the supply and demand of affordable homes for both renters and homeowners makes it harder for families to buy their first home and drives up the cost of rent. Higher housing costs also crowd out other investments families can and should make to improve their lives, such as investments in education.
How the industry will respond to this problem is not yet clear, but it will almost certainly add complexity to an already complicated process. And then extends up and down the value chain, impacting title agents and all of their clients:
- ●Mortgage lenders
- ●Home buyers
- ●Home sellers
- ●Real estate agents (on both sides)
- ●Attorneys (in many states)
- ●Title company staff and contractors
All of these stakeholders are sending data and information into the transaction and expecting clarity to come out. That’s a lot to ask. In this paper, we will focus primarily on the title company’s relationship with the lender and the value it can provide this important partner.
While lenders rely on all of their origination partners to deal with issues like this, there is no stronger partnership than the one that exists between the lender and the title/closing agent. More information must flow seamlessly between these partners than between any others. TRID compliance[2] requires both parties to get that data exactly right.
Together, mortgage lenders and title insurance companies perform a multitude of tasks required to close mortgage loans and finance homes in a hectic market. As you might expect, these partners are always working to improve their own workflow efficiencies to better manage their relationship and to ensure business growth for all parties.
The complexities of the industry only add to the frenzy that lenders and title companies face as they strive to meet market expectations. While a number of technologies exist to make this process easier, it has traditionally been difficult to gain the adoption required. This can be a difficult challenge to overcome when the average age of the professional working in the title industry is now 60 years old[3] and lower volumes are driving company earnings down.[4]
Preparing for the future when engaged in a complex and fast-changing business is always a challenge, but for the title companies operating in today’s market, their very survival depends upon their ability to plan ahead.
In this white paper, we’ll talk about the challenges these firms are currently dealing with and look at what a perfect solution to these problems would look like for title companies intent on surviving and thriving in the future mortgage market.
The challenges the title industry faces today
When you consider the borrower (and agent) touchpoints in the mortgage origination process, the vast majority fall to the lender and the title company. Any inefficiencies or friction-related problems between these partners will almost certainly impact the borrower. That will reduce borrower satisfaction, at a minimum. It will also likely slow down the process, costing everyone more.
So, what’s standing in the way of a smoother process? First, a real estate market that has been on fire for the past two years.
When COVID struck in the spring of 2020, many thought it would mean the end of real estate sales, at least until a vaccine could be developed. That’s not what happened. Instead, fueled by low interest rates and limited housing inventory in desired areas, the market exploded.
The Mortgage Bankers Association’s Mortgage Finance Forecast[5] predicted falling volume when it came out that spring. In hindsight, we can see that overall loan volumes for 2020 reached $3.8 trillion that year and then rose again in 2021 to over $4 trillion.
While some see the market cooling, it will take a long time to return to anything close to normal. In the meantime, lenders and their title industry partners will continue to sling data back and forth rapidly in an attempt to keep up with the volume.
While uncertainty about future loan volume levels is causing some to hesitate, there are many indicators in the market to suggest that this is the right time for the title company to make required changes to its technology stack.
In fact, the risk of lower loan volumes in the future is one good reason to act now as the right software will allow title companies to do more with fewer people should they find the need to reduce their workforce. It will also make it easier to ramp back up when volumes return.
But a rapidly changing real estate market is just one of the challenges these partners face. The nature of the homebuyer is changing, too.
The digitally connected millennials and Gen Z borrowers who now dominate the marketplace expect a new level of technological expertise from those who serve them. They want hyper-personalization and faster closings and they have little patience for errors. This is forcing companies to update their software and configure it with borrower satisfaction in mind.
But that’s not easy when the title company isn’t in control of the functionality in the software. This can happen if the tool is closely affiliated with or controlled by one of the industry’s large underwriters. While these firms consistently bring a lot of value to the market, the title company should be in control when it comes to their software.
Industry consolidation is putting more software applications into the portfolios of these big firms, making it harder for the title company to find a technology that will allow them to create their own workflows.
But the biggest challenge title companies face today is the friction caused by having to juggle a multitude of tasks, dealing with various vendors and handling the ensuing sluggish turnaround times in a manner that satisfies both their lender partners and the borrowers they both serve.
A study conducted across title agents showed that 69% of respondents said they are personally involved in up to 25% of closings in a month. That’s not efficient and it tells us they are not using automation effectively.
If the title company’s staff is having to manually place orders, track them and make phone calls to keep them on track and then check the results for accuracy when they are received, there is no way they can be efficient. On the contrary, they have little hope of meeting the expectations of either their lender partners or the borrower.
This problem makes the other challenges we mention in this paper more significant and damaging to the reputation and potential growth of any title company. And while the problems may start with their lender relationship, if not solved they will impact every other relationship the title agent has in the transaction.
If title companies don’t have an efficient system that can help them streamline the entire title production process, they will be unable to reduce the friction and incapable of meeting the requirements of either the lender or the borrower.
To prepare for the future, title industry participants need a structure that can enable them to improve operational efficiency, quality and productivity while empowering their employees to work smarter and position for future growth.
But what exactly would such a solution have to include to solve this problem for the title agency. Let’s take a closer look.
In search of a better solution for the Title Industry
As title companies and lenders seek future-proof solutions, they will have to be ready to modernize processes and embrace intelligent automation. Technology will continue to play an integral role in helping lenders and title companies become future-ready. But what, exactly, should these tools offer?
After a careful analysis of discussions we’ve had with both lenders and title agents, we have come up with the following list of minimum requirements.
Requirement 1: A system based in the Cloud
The days of software installed onsite, behind a company’s firewall and maintained by its own staff are over. Today’s software and the compliance requirements it must meet makes this unworkable. Today, software must be deployed by developers to the cloud where they can meet and work with their users virtually.
Title companies, like lenders, need to embrace cloud-based tech tools that allow for a more efficient closing process and offer the ability to provide a better experience for their client base. In fact, our analysis indicates that title companies and their agents should have their entire title production system hosted in the cloud.
Moreover, if title companies wish to operate in a secured environment, which they must to remain in full compliance, they will need a strong infrastructure that includes an entire Citrix setup with constant monitoring. It’s the only way to ensure that they keep their operations running.
To do this on their own would require a significant annual investment, which can be avoided by operating within a cloud environment. A cloud-based system allows the title company to set up a virtual office through which it can offer flexibility and always on connections to its business partners.
This is even more important today, when it seems likely that remote working will remain the norm for the foreseeable future.
Requirement 2: Easy integration internally and externally
Title companies generally work across multiple divisions, in multiple states. In their work, they interface with multiple vendor partners to keep up with the flow of refinance transactions and new home sales. Every closing involves a number of moving pieces, each played by a partner involved in the transaction.
Each vendor comes with certain specialized service expertise, specialized technology and proficiency in their particular field. Each connection is different and changes as the vendor partner evolves and the relationship changes. We see this most often when compliance requirements change, requiring adjustments from multiple partners.
Keeping up with all of these changing connections can be overwhelming, so leading title companies seek out a transaction management platform that includes a powerful vendor ecosystem to increase operational efficiency.
A title production platform with a robust integration framework allows easy connections with multiple systems and partners. Further, as there will be a huge amount of data flowing between the systems, the platform must be capable of seamlessly accepting different data formats.
Needless to say, accuracy is paramount throughout the entire process.
Requirement 3: Vendor performance tracking and reporting
As both title companies and mortgage lenders rely heavily on vendors for third party services, vendor due diligence and management is a common challenge for all of them. It could be a big time-saver for companies if they could decide whether to work with a particular vendor based on their past performance.
This is why it is necessary for the title production platform to have strong vendor management modules that can provide title companies with the ability to rate vendors based on their past performance and commitments. For efficiency, the platform must have the ability to auto-allocate orders based on both vendor performance and availability.
The primary goal of such systems is to monitor and manage vendor performance. This allows title companies to measure vendor performance and efficiency over time, which can make the workflow easier while processing the next set of orders. Such systems help in vendor evaluation and enable title companies to get maximum ROI from vendors with minimum risk.
Strong vendor management modules can also help title agents to digitally connect with vendors and avoid unnecessary emails, paperwork and overhead costs. As a result, they can save hours by not having to deal with inconsistent offline orders. In addition, issues related to fulfillment tracking, record keeping and accounting can be more easily resolved.
Requirement 4: Better control of a robust UI/UX environment
The success of any technology depends upon adoption. Regardless of how many state-of-the-art features are built into the title production system, it won’t work if title agents find it difficult to use.
In fact, the more features the software offers, the more difficult it can be to provide a good user experience. Of course, archaic and boring systems don’t get adopted either. This means the title production system should offer a smart UI/UX, to facilitate easy user adoption.
Fortunately, smart UI/UX comes out of the box with most applications today. The problem comes when the title company wants to alter it to fit its own needs. Many applications won’t allow modifications. When they do, they often require IT support that doesn’t come with the package. A better solution includes some level of IT support.
Requirement 5: Comprehensive workflows built into the system
Since title companies have very expansive workflows, it is necessary that the system they work with is able to cover all the different title and settlement related elements, including title production, funding and disbursement, post-closing, scheduling and closing.
The solution cannot be one that focuses on only a few functionalities in isolation and does not deliver on the rest. Title companies should look for a robust end-to-end-solution that covers all aspects of the title workflow. A system that comes with a combination of value, ease of use, adaptability, and performance is an ideal choice for title businesses of any size.
Very few existing technologies meet all of these requirements, but finding one is the surest way for title companies to prepare for a future that hasn’t come into focus yet.
Leveraging advanced technologies matched with automation efficiencies during title production can enable title companies to focus on quality control while improving turn-time, accuracy and customer service. This is what it will take to succeed in the future.
How AtClose is helping address title industry challenges
Visionet is a global technology company with 25 years of industry experience. We have been studying this industry for many years, providing software solutions that are used by companies all across the space. The challenges and requirements highlighted in this white paper prompted us to develop our industry leading solution AtClose.
For the past 12 years, AtClose has been in operation as a vendor exchange and has, over that time, perfected its order processing technology such that it now offers every advantage discussed in this white paper. We have removed the friction that has been denying our clients efficiency for so long.
We have had great success helping title agents overcome some major challenges that have held them back from a more efficient workflow process through these solutions. We are underwriter agnostic and offer various levels of IT support to help title companies make the software their own.
AtClose offers a complete solution.
Offering effective technology
AtClose helps vendors and title agents become future ready by offering them a cloud-based, configurable workflow solution. AtClose’s scalable solutions enable faster closings and data driven insights for better communication and shorter cycle time.
Offering a strong cloud system
As a cloud application, AtClose users can access their Title & Settlement information from any browser anywhere, anytime, and from any device. Since no special hardware or software installation is required, AtClose on the cloud yields excellent ROI.
Offering strong vendor management
AtClose includes a robust vendor management module that includes scorecards, reporting dashboards, and assignment decisions that can be configured to meet the needs of title companies. Rules by product, location, price, quality, and service levels are all taken into consideration to route orders in the most efficient manner possible.
Offering effective UI/UX
AtClose’s navigation is intuitive with enhanced menus. Product bloat has been avoided to offer a more focused and efficient experience for title agents. A user friendly interface design and intuitive navigation leads to faster user adoption.
Offering optimized workflows
Powered by X1 Analytics to automate title decisions, title companies are empowered to deliver title commitments faster, helping lenders close more loans more quickly, and reduce the costs associated with title production and title curative. In addition, the system can mirror existing workflows and streamline interactions with legacy systems without requiring the user to leave the application.
If you operate a title company and are responsible for preparing your enterprise for the future of mortgage lending, we want to introduce you to AtClose.
If you’re looking for great client support, an all-in-one system that is underwriter agnostic, with built-in workflows, the power to customize with IT support and the ability to white label the system with your own branding, you owe it to yourself to find out more about the AtClose technology described in this white paper. Fortunately, it’s very easy to do.
See the system for yourself by scheduling a demo at your convenience by visiting us online at https://www.atclose.com/request-a-demo/.
About Visionet Systems
Visionet Systems is a full-service IT consulting and services company serving global brands. For over 25 years, it has delivered digital solutions and services that help enterprises increase agility, reduce costs, and minimize business risk. In July 2021, the company was named a finalist of the 2021 Microsoft Dynamics 365 Commerce Partner of the Year Award. In August 2021, Arshad Masood, CEO & Managing Director, Visionet, was named the winner of the EY Entrepreneur Of The Year® 2021 New Jersey Award.