Real estate lenders are racing against the clock to process the deluge of refinancing demand, driven by record-low interest rates and intense online competition.
Susan Falsetti, managing director of origination title and close at ServiceLink, discusses the challenges that real estate lenders are facing — and how they can address them.
What particular stressors are real estate lenders facing?
We’ve seen volume surge this year, but heavy volume is only part of the equation. Market volatility, job loss and forbearance are adding even more pressure. Meanwhile, the origination process is increasingly complicated, with the regulatory environment remaining an important factor. Amid all of this, many lenders have shifted to a remote work business model, forcing team members to grapple with additional caregiving and family complications.
How have market conditions affected lenders’ abilities to meet consumer expectations for closing timelines?
Some of our clients working with other providers have reported processes as simple as obtaining payoff demands and subordinations are causing delays. They’re telling us that, in some cases, these requests have gone from 24-hour turn times to 10-day turn times. Working with an efficient settlement service provider is essential, given that 75% of recent homebuyers in a Fannie Mae survey expect that it should take a month or less to get a mortgage.
What can lenders do to immediately reduce their timelines?
One way is by selecting the right settlement service partner, which can help them get to the closing table faster without making major changes to their process or tech investment. Settlement service providers should provide a runway to close, not contribute to a bottleneck. Examining or revisiting settlement service providers is low-hanging fruit for lenders looking to immediately deduct days from closing timelines.
What characteristics should lenders look for when making a settlement service provider selection?
Communication: Lenders should examine how they’re communicating with their settlement service provider. Is their provider integrated into their loan origination system or point-of-sale platform? Can they submit orders through a secure, auditable platform, or is email the only option? Regardless of how orders are submitted, lenders should also consider whether their provider has the resources to dedicate to communication and customer service, even in a high-volume environment.
Automation and digitization: Selecting a title provider with automation and digitization built into its processes can help lenders thrive, even as their volume fluctuates. The mortgage industry is cyclical; it’s essential that settlement service providers have the capacity to scale with their client banks and grow with their business. They should help banks manage their volume, without having to make dramatic process or technology changes.
Some providers can provide almost-instantaneous insight into the complexity of particular title orders through an automatic title search. This type of workflow helps both the lender and the provider. They both can quickly funnel the simplest orders through to the closing table while employing more-experienced team members to work on more-complicated loans.
Transparency: That kind of insight gives lenders extra transparency into their customers. When originators are aware of the complexity of a title early in the process, they can let their borrower know that the title is clear. If that’s the case, the consumer can stop shopping and leave the market.
Access to virtual closing solutions: Of course, the origination process doesn’t stop once a loan is clear to close. A survey recently conducted by Javelin Strategy & Research at the request of ServiceLink found that one of consumers’ chief complaints about the mortgage process was the number of physical forms that must be signed at closing. The survey also found that 79% expressed interest in using e-signatures specifically for mortgage applications. This interest in e-signings has evolved into genuine demand for virtual closings.
The right settlement service provider should help lenders to operate more efficiently and profitably. The key is identifying a partner with solutions to help banks thrive in today’s high-volume environment.