The rapid adoption of digital closings during COVID-19 shows what’s possible in the mortgage industry

The rapid adoption of digital closings during COVID-19 shows what’s possible in the mortgage industry
We sat down with Nancy Alley, vice president of strategic planning at Simplifile and one of HousingWire’s 2020 Women of Influence, to talk about the rapid changes in the closing process as a result of the pandemic. Will this end up being a watershed moment for the industry?

HousingWire: You’ve been focused on helping the mortgage industry get to an end-to-end digital process for many years. Where are we in that evolutionary process?

Nancy Alley: We are at a turning point in the mortgage industry’s move to digital. While the industry has made steady movement over the years, the pandemic has accelerated the process. Business simply can’t be “as usual.” The pandemic forced everyone in the industry to review processes and quickly replace manual processes with digital to provide efficiency and protect market share. 

The industry has been investing in digital for years with strong adoption of digital workflow in the application, processing, and underwriting phases. Yet, adoption by closing and post-closing operations lagged considerably.

We were seeing a lot of traction with hybrid closings in early 2020, but with the pandemic, lenders became hyper-focused on creating a socially-distant closing. We saw similar needs in post-closing as large-scanning or back-office operations were challenged in the new work-from-home environments. All parts of the mortgage value chain started creating digital momentum like we have never experienced before.

HW: Let’s talk about eClosing and the huge changes we’re seeing at closing and post-closing because of the pandemic. What do you think is going to stick when we go back to more normal circumstances?

NA: If there is a silver lining with the pandemic, it showed us that going digital is not only possible but essential to our businesses and our customers. Overnight, our industry had to automate age-old processes, or the manufacturing chain was going to grind to a halt. As I mentioned, the closing and post-closing segments had to turn on a dime.

I was impressed by the nearly-instant, industry-wide collaboration between key stakeholders and trade organizations. These groups came together and published almost daily updates regarding e-notary and e-recording acceptance as well as county closures. 

This collaboration helped clear a path through the chaos and provided lenders with the intelligence they needed to quickly shift to digital. While they may have made these changes under pressure, we are seeing lenders be very successful with digital adoption. A year ago, when most lenders were still “piloting” e-closings, settlement agents had to run bifurcated operations to accommodate the many varied pilots without achieving any economies of scale.

Today, increased e-closing volume eases the adoption curve for key stakeholders like title and settlement agents because as e-closing becomes the norm, muscle memory sets in and training burdens diminish. And the uptick hasn’t just been in hybrid e-closing, lenders are committed to making as much of the package digital as possible, driving e-note adoption and registrations by nearly 300%

In post-closing, we’ve seen record e-recording activity from March forward. Not only was face-to-face recording not “socially distant,” some counties were only open for e-recording to protect their employees and support work-from-home operations.

When the dust settles, I don’t expect lenders to go back to their old ways. No one expected or planned for COVID-19’s impact, but we are going to hold on to our collective gains and make sure we are well positioned going forward. What might have taken five to seven years with respect to digital adoption happened almost overnight.

HW: To get to a true end-to-end process, lenders need to collaborate with tech partners. In your experience, what are the hallmarks of a great partnership?

NA: In my experience, a successful partnership requires four things: transparency, collaboration, standardization and working together to achieve a common vision. 

Transparency in processes, timelines and abilities creates honest discussions for all parties to trust each other. Once that trust is created, true collaboration can happen. When true collaboration is happening, the strengths of all partners are multiplied to create something greater than anything you could do alone.

When you work to combine separate systems, workflows, processes and cultures, standard processes are key in creating a bridge between parties. This is one thing we have taken to heart. We’ve dedicated years to standardizing settlement agent collaboration and e-closing processes for all transactions. Regardless of the lender closing system, the agent title production system or closing type, settlement agents that use Simplifile navigate the mortgage transaction with the same consistent workflow as they interact with their lenders.

Finally, great partners understand each other and work to achieve a common vision. For example, our e-closing partners share our vision that adoption relies on keeping the process simple, the operational processes consistent and stakeholder workflow predictable.

HW: You’ve worked extensively as part of MISMO — how does that work benefit the larger mortgage industry?

NA: Well, talk about a common vision. Not only does MISMO promote a common data standard for our industry, but the standard is based on an open collaboration between all stakeholders. The standard represents an industry consensus of how we exchange information efficiently and securely. If you ever go to a MISMO meeting, you will witness firsthand the active exchange and dialogue to “get it right.”

Since all stakeholders have a voice in the process, the vision becomes achievable. Since we are an industry based on proprietary systems and disparate parties, the adoption of the MISMO standard will only accelerate the return on our investment in digital, by creating a digital ecosystem.

HW: As one of HousingWire’s 2020 Women of Influence, what is an attitude or habit that has led to your success over the years?

NA: The mortgage industry may seem simple at face value: a transaction of lending someone money to buy a home. However, it is a highly-regulated, complex manufacturing process with multiple inputs, outputs and handoffs between a variety of stakeholders. Until recently, most of these steps remained paper laden and manual.

The two traits that helped me most on my journey are passion and tenacity. Having worked in the mortgage industry as far back as high school, I’ve always had a passion about automating the process. When you are on the assembly line, you can see firsthand the areas ripe for automation. A spark was lit way back then.

I credit tenacity or, at times, pure stubbornness to never giving up on reaching the vision. Digital adoption has taken much longer than any of us hoped, but the dream is coming true. Seeing the gains realized keeps the fire alive in me. 

I would also be remiss if I didn’t mention that my success is really that of many individuals. I have been blessed to work with so many passionate people who believed in this journey: folks who mentored me, others who educated me and some who just kept pushing even when things looked dim. And now, I am lucky enough to lead some tremendous new talent who will take this thing to the next level.

Today, the term “influence” excites me most. I hope I can influence others to accelerate our industry’s digital trajectory.
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Realogy CEO highlights expanded virtual capabilities

Realogy CEO highlights expanded virtual capabilities
A more than 200 percent increase in refinances, combined with a more than 20 percent reduction in closed units, produced flat second-quarter net revenue for the Realogy Title Group, according to the company’s latest earnings statement.

Commercial real estate firm launches survey service

Commercial real estate firm launches survey service
The Dallas-based due diligence commercial real estate firm BBG has launched its American Land Title Association (ALTA) Survey service, the company announced. Read on to learn more.

Whatever jobless aid Congress comes up with, it’s likely to be retroactive

Whatever jobless aid Congress comes up with, it’s likely to be retroactive
If you’re unemployed in the midst of a pandemic, this isn’t going to solve your short-term need for money to pay for groceries or clothes for your kids, but it’s something: Whatever plan Congress comes up with to extend or replace the extra $600 a week in beefed-up jobless benefits is likely to be retroactive.

In other words, you won’t be getting the extra money this week, following the July 31 expiration of the enhanced payments enacted by the CARES Act, but you probably will get it eventually.

“I would expect that it will be retroactive and the state unemployment insurance agencies will have to pay people for the missed weeks,” Stephen Wandner, a senior fellow at the National Academy of Social Insurance, told CNBC. “There have been retroactive provisions before.”

State unemployment benefits typically replace about half a person’s former salary – that’s what workers get for the thousands of dollars they contribute toward the jobless insurance out of every paycheck they receive.

The extra $600 a week in the CARES Act was aimed at fully replacing salaries as COVID-19 caused unemployment to reach the highest level since the Great Depression. The House of Representatives passed the HEROES Act in May that extends the benefit through January.

The HEALS Act proposed by Senate Republicans last week that pared the extra payment down to $200 a week was widely viewed as an opening bid, not the final bill. Senate Leader Mitch McConnell admitted he didn’t have enough support from his own party to pass the bill because many Republicans don’t want to spend any more money.

“We expect that Congress will enact a partial extension through year-end that will be retroactive to the start of August,” Goldman Sachs economists said in a report last week. “We have been expecting an extension at $300 a week, and something like this still looks likely.”

While some Republicans have suggested using a formula like a 70% salary replacement, the people who run the state systems have pushed back, saying it could take as long as five months to implement a complicated scenario like that.

Whatever the final number ends up being, it may take weeks for states to get up and running after Congress passes its fourth COVID-19 relief bill. Some states still use unemployment-benefits systems with old programming languages such as Fortran and Cobol that date to the 1960s.
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[PULSE] Competence leads to confidence – Confidence leads to consistency

[PULSE] Competence leads to confidence – Confidence leads to consistency
Note: This is part four of a five-part series. Over the following weeks, Todd Duncan, sales entrepreneur and New York Times best-selling author, will showcase principles for mortgage and real estate professionals to embrace for success. Find more advice in his first, second and third pieces.

It was a particularly difficult discussion. My youngest son, Matt, just eight-years-old at the time, finished his guitar lesson. As I walked with his teacher to the front door, he turned toward me and said a couple of things.

“Matt, has great potential,” his teacher said. “The only obstacle standing in his way is his attitude. He has to understand that without practice, there is no growth, and no greatness.” 

My son had greatness in him. I believed that. But, it would never show itself if his attitude towards practicing didn’t change. I did some research and came across this piece which I felt not only spoke truth, but it also involved music.  

Later that evening, I sat with Matt and we read this together:

If you practice, you get better.

If you get better, you play with better players.

If you play with better players, you play better music.

If you play better music, you have more fun.

If you have more fun, you want to practice more.

If you practice more, you get better

Matt got it. He turned his attitude about practicing guitar from arduous and painful to exciting and fun. That afternoon I said to Matt, “competence leads to confidence; condfidence leads to consistency!” 

Today Matt is a masterful guitar player who has so much fun writing and performing music.

Choosing greatness is the key to everything –   It is the choice of all choices

This experience helped form Principle No. 4: Competence leads to confidence; condfidence leads to consistency. 

In the world of achievement, nothing is more important than doing what you do well, at the highest level of competence possible. When you do that, the confidence to execute gets stronger and stronger. When your confidence is high, you will want to do the thing as consistently as possible, because you are great at it.

Let’s look at this in a key discipline every mortgage, and real estate professional would want to practice as much as possible, to be as great as possible, to execute as consistently as possible – an initial conversation with a potential borrower (buyer/seller) who wants to buy a home and is inquiring about financing. The objective is to be unique and differentiated, and say things confidently that attract the buyer to you because of the unique value you offer.  

So let’s say you are being coached by me or one of our coaching faculty, and it becomes clear that your confidence in talking with buyers is low, you lack any sense of your unique value proposition, and you tend to “wing” it when speaking with a new prospect. 

To help, we write this script for you:

Most lenders will quote you a rate in the first three minutes of speaking with you. How I am different is I’m a Home Loan Strategist. You were referred to me from XX because they value that difference for their friends and clients. There are dozens of variables on what gives you the rate and program that is a “real” one and the best one for you and your family.

What most consumers don’t realize is the lowest rate with the wrong mortgage strategy could cost more than a slightly higher rate with the right strategy.

Our approach is to custom design a Complete Cost Analysis for you, presenting two to three options that integrate into your long and short term financial and investment goals and your payment, equity and cash flow priorities.

Here’s how we get started…

I’m sure reading this for the first time, It feels weird to you, clunky maybe, and you may have some doubt on whether or not you’d ever be able to say that to a buyer. And, that’s fair. But if you practice, you get better.

When you get better, you will work with better and more qualified people.  This script is not wrong because it’s wrong, it just feels wrong because it’s not you, yet. If you started memorizing this and making it yours, within about four hours you’d be pretty good at this. And what if, just what if, this improved your conversion rate by 10-15% every year for the next three years? You’d be in the top 1% in the industry in this most important category.  

Competence + Confidence = Consistency

So where do you need to get better? Where would a higher level of mastery impact your confidence and therefore, your consistency?  Have you ever done an honest assessment of your business practices?  If not, you can go here to download the LO Diagnostic, compliments of HousingWire.

It is not uncommon for people to improve their performance by five to 10 times in 12-calendar months when they seek the learning for where they have gaps in their performance.  

Dominic Dangora is a mortgage professional whom we have trained and coached who began his LO career in 2013. That year, he closed 20 loans for $2.6 million. Last year, in 2019, he helped 255 familes finance real estate for $51 million. And year to date through June, he’s helped 213 families for $47.5 million. One of the treasured quotes he forwarded….

“You gave me the confidence to consistently to implement the skill sets of top producers.  My life has changed drastically – personally, professionally and financially.”

That’s the goal – improvement.  And understanding that greatness doesn’t happen in a day; it happens daily, is the mindset of all high performing mortgage and real estate practices.  One thing that you must understand: Compounding.  The idea that a little bit of “forward” every day produces a whole bunch of “forward” someday.  

In High Trust Coaching, we help our members with this profound concept.  We are constantly measuring six different metrics that we believe are the most important growth areas for mortgage and real estate professionals.  Let me share a recent illustration from one student as to this focus on compounding.

When we began coaching Mike, his pre-qual conversion of conversations to applications was 22%. And, about 87% of those loans ultimately funded.  Those metrics were producing around $27,000 in commissions monthly.

We started working with Mike on how buyers were being referred to him, and what he was saying to hook borrowers into agreeing to meet with him.  We asked him to commit to improving his conversion rate by 2% a month for a year. Tweaks here, changes there, and yes, memorizing that “weird” script, and before you know it, he’s now at 46% conversion rate.  

The value of this formula, competence + confidence = consistency, is you will have a better business, more intentional and predictive growth, more revenue per minute worked, and more than likely two to four times the growth per year in your personal income. 
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Quicken Loans parent Rocket Companies reportedly slashing IPO from as high as $3.3 billion to $2 billion or less

Quicken Loans parent Rocket Companies reportedly slashing IPO from as high as .3 billion to billion or less
Rocket Companies announced post-publication that it had priced its IPO at $18 a share, and that it is selling 100 million shares. This means it is seeking to raise $1.8 billion in its offering.

Rocket Companies, parent company of Quicken Loans, is expected to price its initial public offering (IPO) at a significantly lower price than originally anticipated, according to multiple reports.

Earlier today, Crain’s Detroit Business reported that the nation’s top mortgage lender is expected to price its IPO below expectations at $18 to $20 per share, according to unnamed “people familiar with the matter.” It’s also reportedly only selling 100 million shares in its offering, lower than the 150 million it had originally planned.

With the revised numbers, that means Rocket Companies is seeking to raise about $1.8 billion to $2 billion instead of the up to $3.3 billion originally projected.

The shares are expected to begin trading on the New York Stock Exchange on August 6, under the ticker symbol “RKT.”

Rocket Companies has not responded to requests for comment on its pricing.

On July 7, we reported on the nation’s largest online mortgage lender dropping its S-1. Then on July 28, HousingWire reported that, according to its S-1A filed with the U.S. Securities and Exchange Commission, Rocket planned to offer 150 million shares of its common stock at a price of $20 to $22 per share. That means the company aimed to raise between $3 billion and $3.3 billion in its IPO.

At the time, Rocket Companies had said it was actually registering a total of 172.5 million shares, including 22.5 million shares that underwriters had the option to purchase.

According to Crain’s Detroit Business: “The reduction comes as investors pushed back on the company’s valuation, believing it should be priced as a consumer or financial company rather than a technology business.”

Founded in 1985, Quicken Loans has seen record numbers of refinance and purchase applications in recent months in the midst of the COVID-19 pandemic. But investors remain cautious.

In its S-1A, Rocket also revealed its preliminary financial results for the second quarter of 2020, which it noted are not complete and will not be available until after the completion of its offering.

For the second quarter of 2020, based on preliminary results, Rocket estimated that its total revenue, net, was between $4.93 billion and $5.13 billion and net income was between $3.35 billion and $3.55 billion.

Are you a financial services professional hungry for better fintech news and info? HW Media is proud to introduce FinLedger, a fintech media brand that will cover the critical news impacting financial services professionals — from SaaS to big data, and cybersecurity to regtech. Want to be notified when we launch? Enter your email here and follow us on Twitter.
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Fed inflation plan could end rock-bottom mortgage rates

Fed inflation plan could end rock-bottom mortgage rates
The Federal Reserve is considering abandoning its longtime strategy of using its benchmark rate to pre-emptively prevent inflation from rising above its 2% target. That could be the death knell for rock-bottom mortgage rates.

Fed Chairman Jerome Powell said at a news conference last week that the central bank was close to wrapping up a review of its policy-making strategy that began in 2019. The results will be announced “in the near future,” Powell said.

If the Fed allows inflation to rise above its current 2% target, it would put upward pressure on mortgage rates because investors who buy fixed assets use inflation as the mainstay of their calculation that determines the yield, or return, they are willing to accept.

Because higher inflation eats into bond yields, investors demand a higher return for the mortgage-backed securities and other bonds they buy in when inflation is rising. That also boosts yields on Treasuries, which are used as a benchmark for MBS investors.

Currently, the problem facing the Fed is sub-target inflation, as the COVID-19 pandemic curbs the consumer spending that accounts for about 70% of America’s GDP. In June, the so-called “core PCE,” the Fed’s preferred inflation gauge that measures consumer prices without volatile food and energy costs, rose 0.95% from a year earlier.

If there’s a change in strategy, it would only kick in when the U.S. economy is recovered enough to cause prices to rise. That’s not going to happen until the COVID-19 pandemic is brought under control, Powell said last week.

The U.S. has 4.8 million confirmed COVID-19 cases and more than 157,000 fatalities as of Wednesday, according to data from Johns Hopkins University. That means that the U.S, with 4.2% of the globe’s population, has 26% of the world’s infections and about 22% of the deaths.

“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check,” Powell said at the press conference. “Indeed, we have seen some signs in recent weeks that the increase in virus cases and the renewed measures to control it are starting to weigh on economic activity.”

The current U.S. strategy, which has state and local governments dealing with the virus in a patchwork fashion, will suppress economic growth for a year or more and lead to an increase in bankruptcies, Neal Kashkari, president of the Federal Reserve Bank of Minneapolis, said during a Sunday appearance on CBS’ Face the Nation.

“If we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it the way that it’s happening in the Northeast right now,” Kashkari said. “That’s the only way we’re really going to have a real robust economic recovery.”
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In a virtual learning world, do you still need to buy a house in a good school district?

In a virtual learning world, do you still need to buy a house in a good school district?
Living in a good school district is one of the biggest factors for homebuyers, even if they’re empty nesters.

The National Association of Realtors found in its Profile of Home Buyers and Sellers in 2019 that 26% of all homebuyers said the quality of schools was important when finding a new home. And typically, a better school district equals higher resale value.

NAR also revealed that just over half of homebuyers with kids move based on school districts alone.

Now, specific school districts as a driver of home-buying could be a thing of a past.

Nick Solis, broker and owner of One90 Realty in the Bay Area of California, told HousingWire that he’s seeing more homeowners with kids seeking homes with bigger spaces, without counting the value of the school district that might put them in.

“Typically, [homebuying] is driven through the seasonality,” Solis said. “In fact, a lot of people are even in a situation where they’re trying to get out of the East Bay into other areas, they’re just not worried about school because it’s all distance learning. It’s a really interesting paradigm because they don’t have that timing.”

In the middle of spring, COVID-19 caused schools across the country to shut down and go virtual. In a shift that feels similar to the way many people are reconsidering how close they need to be to a physical workplace, many parents are questioning how close kids need to live to their school if classes are going to be some version of online for the foreseeable future.

“In 100% of the transactions last year, every single house, whether they were 20-somethings and they want to start a family, or they were 60-somethings and [their] kids are long grown, schools came up in every single transaction,” Solis said. “Not every single conversation, obviously, but you know, within every transaction. It always came up [and] they’re not coming up at all anymore. Like, zero. People aren’t even talking about schools.”

Hudson Santana, founder of Santana Properties in Cambridge, Massachusetts, said that his clients have been gravitating to suburbs with yards and more space, also not generally thinking about the schools and district zoning.

“We’ve seen lots of people move to suburbs and giving up Cambridge in order to go to a place where they have a big yard, where they have a home office and be able to compromise more with the school,” Santana said.

Santana said that when it comes to how much home resale values will be affected by school districts in the future, it’s hard to tell since COVID-19 is so recent.

“In Massachusetts, in general, the public schools are really good schools, but we’re definitely seeing a huge trend of buyers moving and really looking at focusing on space, [whereas] before they were really focused on school districts,” Santana said.
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