How digital shutdowns can help housing affordability

From the White House and Congress to multiple federal agencies, one of the top concerns is housing affordability. Consumers are also worried. About half of American adults (49%) say the availability of affordable housing is a major problem where they live, up 10 percentage points from 2018. The same Pew survey from 2021, 70% of Americans said said young adults today have a harder time buying one at home than their parents’ generation.

While it’s getting more and more expensive to buy a house, it’s also getting more expensive to build one as well. According to the Mortgage Bankers Association (MBA), total loan origination spending rose to a record high of $9,470 per loan in the fourth quarter of 2021. This figure was up from $9,140 per loan in the third quarter. quarter as the market moved from a rate – forward refinance market to a buy-and-pay refinance market.

With the current cost of mounting, combined with higher interest rates and a low housing stock on the horizon, the MBA reports that 2022 is expected to see a decline of around 30% in the total number of mortgages, per compared to 2021.

With revenues tightening and volumes slowing, it is becoming increasingly important for companies to adjust their costs. As a result, lenders and securities firms are looking for ways to invest and implement solutions that will further streamline operations, increase market share, stay competitive, and improve the borrower experience while delivering a return on increased investment.

One of the ways to reduce costs and streamline the closing process is to offer digital fences. A recent Marketwise eClose ROI study found that lenders can save almost $450 and settlement agents up to around $100 per loan due to lost time, improved transaction quality and costs associated with printing and mailing documents. Lenders and title agents also reported that they could close more loans faster with the same or fewer people, and improve overall loan quality by reducing critical errors, avoiding missed signatures and unnecessary rework. According to the study, loans fully closed online also reduce funding time after the secondary market closes and result in an improved and measurable overall return on investment. A 2021 Digital Closing Survey by the American Land Title Association (ALTA), found that 52% reported reduced closing times using RON due to more pre-signed documents, while 43% reported cost savings .

“Consumer expectations have shifted to digital first, and this is an incredible opportunity for the lender and securities industries to be at the forefront of both what consumers want and what is also the more financially and operationally efficient,” said Terri Davis, general manager of real estate. at notary. “eClose is the final frontier in real estate, and we’re seeing the incredible return on investment, both in numbers and in consumer feedback, from those who fully embrace eClosing mortgages with online notarization.”

To help drive adoption of digital fences, ALTA has partnered with the Mortgage Industry Standards Maintenance Organization (MISMO) to be the sole securities data provider and settlement agent for the Eligibility Exchange MISMO electronics, powered by Snapdocs. The e-Eligibility Exchange serves as a central source of information on criteria that impact digital fences. The data will be provided to MISMO under a contribution agreement with the ALTA Registry of Securities and Settlement Agents (ALTA Registry), a national database of securities and settlement agents.

The MISMO Electronic Eligibility Exchange contains information on trading partner requirements, electronic notarization regulations, county registration requirements, settlement agent readiness, and security underwriter restrictions. The platform helps real estate and finance professionals manage these factors so that every closing is as digital as possible.

The ALTA Registry is a unique real estate utility created specifically for the mortgage industry and service providers. For the first time, the ALTA Registry will provide data on individual title insurance and settlement services companies, identified by an ALTA ID. The ALTA registry identifies securities and settlement firms that can perform RON closes. This helps mortgage companies identify private companies that offer this increasingly in-demand service. The ALTA Registry is free and ALTA membership is not required.

“We are delighted to partner with MISMO and provide the e-Eligibility Exchange with the most accurate data on securities and settlement services companies available in the industry,” said Diane Tomb, CEO of ALTA. “It is critical that the title insurance industry encourages progress and innovation in the digital fence space. With 9,000 locations already listed in the ALTA Registry and 2,000 of them showing “RON readiness” status, now is the time for all title insurance companies and real estate attorneys to register. »

ALTA launched the ALTA Registry in 2017 as the first national database of title insurance and settlement services companies. In addition to contact and branch information, each listing in the ALTA Registry also includes the unique seven-digit ALTA ID of a title insurance company or real estate attorney.

The e-Eligibility Exchange is now available to all MISMO members through an online interface and APIs that can be integrated with other technology platforms.

“The MISMO e-Eligibility Exchange serves as a resource for the entire industry and its success is based on the quality and accuracy of the data provided,” said Seth Appleton, president of MISMO. “The exchange will benefit immensely from ALTA’s participation, with its timely and accurate data on title insurance and settlement services companies. The fact that a title agent can only enroll in the ALTA register after their title insurer has confirmed their information gives us continued confidence that we will have unique and up-to-date data. This precision, combined with the uniqueness of the ALTA identifier, will help make the e-Eligibility Exchange a compelling and innovative industrial resource.

The e-Eligibility Exchange builds on the respective areas of expertise of Snapdocs and MISMO, with Snapdocs providing the technology that powers the e-Eligibility Exchange, and MISMO working with industry participants such as ALTA to collect and maintain the most robust and up-to-date ones. possible numerical closing criterion date.

The number of securities and settlement firms offering digital fences increased 228% from 2019, according to ALTA’s 2021 Digital Fence Survey. The survey of 300 title professionals showed that 46% offered digital fences in 2020 during the COVID-19 pandemic. Before the health crisis, a 2019 survey showed that 14% of companies offered digital fences two years ago.

While the number of completed digital mortgage closings continues to grow, industry-wide adoption is still hampered by the complexity and lack of transparency of the factors that determine how “e” closings can be. The e-Eligibility Exchange helps maximize the digitization of closing processes, including the move to eNote and RON, and increase these benefits for every participant involved in the mortgage lifecycle.

“The volume of eClosing has grown significantly over the past two years due to growing acceptance from stakeholders such as investors, service buyers, etc., as well as the growing adoption of electronic registration. and electronic notarization at the jurisdictional level,” said Raj Penugonda. , director of product development at Freddie Mac. “However, since acceptance and adoption is not yet uniform across the ecosystem, lenders need to determine at the loan level which loan documents can be e-signed. This makes it difficult for them to evolve their eClosings. MISMO e-Eligibility Exchange helps meet this challenge. As part of our efforts to help the industry evolve towards a true digital mortgage, Freddie Mac is delighted to be working with MISMO to develop e-Eligibility Exchange.

Balancing high-tech and high-touch was a priority for businesses even before the pandemic. In a 2020 report by Forbes Insights in association with Freddie Mac, 85% of companies surveyed described their pre-COVID-19 mortgage digitization efforts as aggressive or very aggressive. During the global crisis, lenders already focused on technology capabilities were best prepared to help borrowers.

As people have grown accustomed to using smartphones to shop and apply for jobs, and expectations for technology continue to rise, companies are responding by meeting the customer where they want to be: on their screen. . According to a 2020 study by JD Power, 64% of consumers think a digital process would make buying a home or refinancing easier than a process done in person.

In an effort to enable immediate nationwide use of the RON, ALTA and other groups continue to support the SECURE Notarization Act, which now has 83 co-sponsors in the House of Representatives. The bill would create national minimum standards and provide certainty for interstate recognition of RON. At the state level, Maine joined 39 other states in allowing Remote Online Notarization (RON) after Governor Janet Mills signed the law LD 2023. The legislation will come into force on July 1, 2023.

“There is a need and a demand for this approach to notarization across the United States,” Tomb said. “The SECURE Notarization Act allows businesses and consumers to execute critical documents using two-way audio-visual communication. Current requirements for a signer to be physically in the presence of a notary are often impractical and sometimes impossible due to social distancing limits resulting from the COVID-19 pandemic, as well as other barriers to in-person signing. , such as overseas military service and time constraints.”

“Consumers expect more digitalization in the mortgage process, as they do with other experiences. From a homebuyer’s perspective, digital closings can help convey the reality of the homeownership to a wider range of consumers.For businesses, digital closures improve efficiency through reduced operational costs and increased productivity.Solutions like the MISMO e-Eligibility Exchange can help bridge the gap between housing affordability and affordability,” concluded Tomb.

Diane Tomb is Executive Director of the American Land Title Association, which represents more than 6,000 title insurance companies, title and settlement agents, independent abstractors, title searchers and real estate attorneys.

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