Securities partners need solutions for fluctuating loan volumes
With the onset of COVID-19, the already siled communication channels between mortgage lenders, realtors, title agents and underwriters became even more strained, as standard methods of in-person communication were no longer an option. for many. In addition to struggles to maintain clear lines of communication, consumer safety has become a major concern in real estate technology as risk thread and title fraud also started to climb as loan volumes increased.
“When offices moved to remote operations earlier this year, some bad actors saw it as an opportunity to step up their anti-fraud efforts,” said Joel Gottsegen, co-founder and CTO of Qualia. “Offices that were not already configured for secure electronic communications with their mortgage partners and landlords were at increased risk. ”
However, lenders and agents who communicated with their title partners on a shared and secure communication portal were able to better protect their clients’ funds, according to Gottsegen.
Qualia, a digital property closure technology company that provides the infrastructure to streamline the home closure experience, was selected as one of the companies last year Tech100 Immobilier winners. In its 2nd year, the Tech100 real estate prices recognizes the 100 tech companies that are forever changing the home selling process.
HousingWire spoke with Gottsegen to find out how the new technological infrastructure has helped businesses safely manage record lending volumes during COVID and how the industry can continue to benefit from new efficiencies beyond the pandemic.
HousingWire: Looking at a year with record buy and refi volume, how did title insurance companies handle the volume surge?
Joel gottsegen: One thing is constant in real estate: volumes always fluctuate according to market changes and seasonality. This year, companies have been forced to deal with fluctuations in loan volumes differently due to the pandemic which has challenged traditional paper-based processes and opened up new coordination challenges.
Some companies were still trying to manage the influx in the traditional way by hiring quickly. These companies have struggled to find the best talent in a competitive environment and onboard them in a short period of time. Ultimately, increasing the workforce to meet demand puts their businesses and new employees at risk for the future when loan volumes inevitably decline.
The difference we’ve seen this year is that an overwhelming number of companies have invested in their technology infrastructure in order to be more efficient and to ensure consistency and stability for their teams during the pandemic. Securities companies have taken advantage of cloud-based technology like Qualia, often referred to as a digital locking platform, so that they can work remotely and enable contactless closings. They also looked at automation tools to increase their efficiency to meet increased demand.
Companies that have invested in their technology infrastructure have found long-term solutions that will benefit their businesses beyond the refi boom and pandemic. For example, a company that uses Qualia told us that the digital locking platform allowed it to speed up its schedule to go paperless when contactless closings and remote working became a necessity. Their original plan was to migrate to paperless processes within the next 3 years. With Qualia, they were able to accelerate this period to 2 weeks. These types of long-term strategies give securities firms consistency and stability in times of uncertainty, whether loan volumes rise or fall.
HW: The collaboration between realtors, securities companies, lenders and consumers has been the subject of much conversation for many years. Collaboration and communication channels have been heavily impacted by COVID-19. How did the best agents and lenders keep the flow of communication flowing with their title partners and consumers?
JG: The collaboration has worked well for agents and lenders who log into a shared platform with their title partners. Shared platforms, which often include communication portals, address both efficiency and security challenges that arose even before the pandemic. Lenders and agents who connected with their title partners via a true digital closing platform, and not a patchwork of one-off solutions, experienced a continuity of service missed by others who still relied on calls, email and onsite software to store their work.
When it comes to efficiency, the biggest challenge in collaboration has always been how to connect the siled systems that mortgage lenders, realtors, title agents, and underwriters use for their primary workflows. When the systems are not connected, there is quite a bit of redundancy in the form of re-entering information and following up for updates via phone calls and emails. This challenge was exacerbated by the pandemic when many operations traditionally in the office became distant.
When offices moved to remote operations earlier this year, some bad actors saw it as an opportunity to step up their anti-fraud efforts. Offices that were not already configured for secure electronic communications with their mortgage partners and landlords were at increased risk. One of the most common electronic fraud schemes is Business Email Compromise (BEC) where a cybercriminal replicates a legitimate business email account to impersonate a relying party in the transaction. Lenders and realtors using email to communicate over files are particularly vulnerable to the threat of BEC scams which can ultimately cost homebuyers their savings. Lenders and agents who communicated with their title partners on a shared communication portal, especially if they allowed two-factor authentication, were also able to better protect their clients’ funds.
HW: The closing time for buy and refi transactions has increased throughout the year. How can technology play a role in improving these times?
JG: Technology plays a crucial role in accelerating off-hours, and as the volume of transactions increases, cloud-based applications are more important than ever. Qualia’s digital closing platform, for example, reduces the time it takes for everyone working on the transaction to complete their tasks by providing a single platform to streamline workflow and eliminate re-entries, automating some most mundane or repeatable tasks required.
You can have the most qualified people working on a mortgage and closing a title, but if they don’t have the technology to back them up, it’s just going to take longer. For example, agents using Qualia’s closing platform, which includes complete workflow, accounting and reporting suites, reported a 75% reduction in the time and effort required to complete their daily tasks. Likewise, lenders working with title partners through Qualia have been able to automate a large part of their work.
Despite the efficiency gains through automation, some fence components (i.e. inspection) only take time and cannot be accelerated further through automation or flows improved working conditions. Consumer research also indicates that time to close is not always the most important factor for homebuyers. A recent independent study commissioned by Qualia indicates that clear expectations about the process and closing documents tend to be more important to prospective borrowers than a faster timeline alone.
Transparency is a factor that should not be overlooked by lenders when selecting title partners to work with. We designed Qualia Connect to include an account for borrowers so that they have more visibility into the closing schedule and key records. The borrower can follow the closing schedule in real time, ask questions of their entire closing team, and access important files on demand. Because Connect is integrated with the basic registration system, everything is automated and can be made immediately available to the borrower. Borrowers can now get the visibility they need, and lenders and real estate agents can spend less time answering questions.
In short, the fundamental change to allow lenders and real estate agents to work more effectively with their incumbent partners has been the introduction of a comprehensive shared registration platform.
HousingWire Tech100 recognizes the most innovative and impactful companies in the real estate and mortgage industries. Tech100 appointments for 2021 until December 18, 2020.