In order to know where you’re going, you need to examine where you’ve been and understand how you got to where you are now.
2018 has been an exciting year for the title industry. Making waves and standing out among the crowd were some of the themes at national and regional title association shows this year. Perhaps, the biggest question of the year is “What’s next?” What will the closing of the future look like? We reached out to four experts in the title industry to get their perspective on how this year fared compared to others and what they are looking forward to in 2019.
Ted Berg from Old Republic Title, Danielle Kaiser from North American Title Insurance Company, John Obzud of Fidelity National Title Group, and Alliant National Title Insurance Company’s Jeff Stein shared their insights with me. Here are some of the words of wisdom and inspiration they had for settlement agents.
What are your biggest takeaways from 2018 for title agents?
“What we saw in 2018 and maybe part of 2017 was how quickly technology and then the laws to make that technology work has really moved. The last 18 months we’ve seen the technology change more quickly than in maybe the last 10 years,” says NATIC’s Danielle Kaiser.
John Obzud of Fidelity draws the connection between one of the biggest issues in the industry with the increase in technology solutions, “The increase in financial technology companies over the years is being driven by the financial fraud and data security issues affecting our industry. Our industry has changed over the past 100 years but not that dramatically overall. But now the technology is moving much faster than ever before into all aspects of the real estate transaction.”
He continues, “We have been kind of a sleepy and obscure industry at least from a pure title insurance perspective. I have heard for 30 years and I am sure it has been said longer that people do not understand what we do including federal and state regulators . But now the fraud issue has increased scrutiny on the entire real estate transaction process and put all the industry players under a microscope to address those issues. To paraphrase an old quote when a need truly arises, the solutions will appear. Hence the impetus for CertifID and Safe Escrow.”
Both Danielle and John highlighted how technology has grown exponentially in the last year or so compared to previous years. Much of these advancements and their continued success will depend on how they are implemented through state regulations and continued best practices to ensure security.
“2018 was a stellar year, as it was even better than 2017, which was a great year,” exclaims Ted Berg from Old Republic Title.
He goes on to explain the successful numbers in the Florida market, “Old Republic’s agents, collectively, were very busy and worked extremely hard in closing a record number of transactions. People keep flocking to Florida for many good reasons. And with more and more baby boomers retiring, we can expect Florida to continue being a main destination point for them. With the historically-low interest rates, it was not surprising to see that purchase mortgages continued its upward trend, while refinance loans continue their downward trend, in 2018 compared to 2017. Builders have been on a tear this year, but not many of the homes are starter homes. Florida homes have increased in value around 7%, which may have scared away or outpriced potential buyers.”
While Alliant’s Jeff Stein touched on how the tone of regulatory enforcement has changed, “ We have observed that the focus for the industry has moved from enforcement to education. We see that both ALTA and state associations are moving towards a renewed and enhanced effort to provide education on the many issues facing our industry.”
How will the adoption of eClosings impact title companies and real estate law firms?
While some states have completed fully digital closings, not everyone in the title industry is making the leap just yet. “I think a lot of agents are getting into what I would call “hybrid closing”, where they are signing part of the documents electronically and then some of the documents are still signed with pen and paper,” explains Danielle.
The choice to move to an eClosing solution is hampered by incongruent state laws, various lenders’ demands and needs, and financial ability to invest in the technology that make eClosings possible.
“It’s all about difficult choices, there are no simple solutions. You pick and choose your fintech company you feel is embracing your process and procedures and what fits best with your workflow,” John advises.
eClosings don’t change the ALTA best practices a title agent should be following but they do “present a new set of challenges in maintaining data security, integrity of documents, and the process,” Jeff insists, “Balancing risk and convenience surrounding digital information and closings will be an ongoing challenge for title agents and the industry.”
In addition to maintaining a high standard of security when making the switch to eClosings or any technology solution, title agents need to be cognizant of what the lenders they work with want and expect. It’s important to evaluate their sentiment before making any huge overhauls to your company’s process.
Ted mentions how the demand from lenders is lacking in Florida at the moment. “In my opinion, certain types of eClosings are more talked about than being implemented. Lenders haven’t really pushed too hard for eClosing. Perhaps in 2020 eClosing will take off.”
Predicting the future of title insurance and the closing experience
From mortgage rates to lenders’ needs to state and federal regulations, there are many factors that influence the stability and success of a title company or real estate law firm. There’s no hard and fast way of predicting what will be the next big thing. Mostly because the industry is in an experimental phase with eClosings solutions and blockchain technology. Right now, the industry implementation and state approval is fragmented, which means that some of the biggest issues related to security, communication, and lack of consumer education are only magnified instead of being resolved.
John suggests that whoever finds a way to integrate all the constituents involved in the closing process into one solution will be the one to dominate the title industry in the future, “Everyone has talked about quicker, better, cheaper in the past . What we do not have yet is a total solution that incorporates these plus security, safety and flexibility to handle greater volumes in shorter periods of time and still enhance the consumer experience.”
Not sure if you should invest in eClosing? Wondering how to market your services in a changing market? Download more insights for title company growth in 2019 to read the rest of the experts' words of wisdom.