With the onset of COVID-19, the already-siloed communication channels between mortgage lenders, real estate agents, 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 the struggles of maintaining clear lines of communication, consumer safety became a major concern in real estate technology as the risk wire and title fraud also began to climb as loan volumes increased.
“When offices shifted to remote operations earlier this year some bad actors saw it as an opportunity to increase their efforts at fraud,” said Joel Gottsegen, Qualia Co-founder and CTO. “Offices that were not already set up for secure electronic communications with their mortgage and title partners were at a heightened risk.”
However, lenders and agents who communicated with their title partners on a shared and secure communication portal were able to better safeguard their client’s funds, according to Gottsegan.
Qualia, a digital real estate closing technology company that provides the infrastructure to streamline the home closing experience, was selected as one of last year’s Tech100 Real Estate winners. In its 2nd year, the Tech100 Real Estate Award recognizes the 100 technology companies that are changing the home sales process forever.
HousingWire sat down with Gottsegen to hear how new technology infrastructure helped businesses safely manage record loan volume during COVID and how the industry can continue to benefit from new efficiencies beyond the pandemic.
HousingWire: Looking back at a year with record purchase and refi volume, how did title insurance companies manage the influx in volume?
Joel Gottsegen: One thing is consistent in real estate: volumes will always fluctuate in response to market changes and seasonality. This year, companies were forced to address loan volume fluctuations differently due to the pandemic which challenged traditional paper-based processes and opened up new coordination challenges.
Some companies still tried to manage the influx in a traditional way by hiring rapidly. These companies faced challenges with finding top talent in a competitive environment and onboarding them in a short timeframe. Ultimately, adding headcount to meet demand puts their businesses and their new employees at risk for the future when loan volume will inevitably decrease.
The difference we saw this year was that an overwhelming number of companies invested in their technology infrastructure as a way to be more efficient and provide consistency and stability for their teams during the pandemic. Title companies leveraged cloud-based technology like Qualia, often referred to as a digital closing platform, so they could work remotely and enable contactless closings. They also leaned into tools for automation so they could increase their efficiency to meet increased demand.
Those companies that invested in their technology infrastructure found long-term solutions that will benefit their businesses beyond the refi boom and the pandemic. For instance, one company that uses Qualia told us that the digital closing platform enabled them to speed up their timeline to go paperless when contactless closings and remote work became a necessity. Their original plan was to migrate to paperless processes over the next 3 years. With Qualia, they were able to expedite this timeline to 2 weeks. These kinds of long-term strategies give title companies consistency and stability through uncertain times whether loan volumes are spiking up or down.
HW: Collaboration between real estate agents, title companies, lenders and consumers has been a topic of much conversation for many years. Collaboration and communication channels were greatly impacted from COVID-19. How have the best agents and lenders maintained communication flow with their title partners and consumers?
JG: Collaboration has been working well for agents and lenders who connect on a shared platform with their title partners. Shared platforms, which often include communication portals, address both the efficiency and security challenges that were posed even before the pandemic. Lenders and agents that connected with their title partners through a true digital closing platform, and not a patchwork of point solutions, experienced a continuity of service missed out on by others who still relied on calls, emails and on-prem software to store their work.
With respect to efficiency, the primary collaboration challenge has historically been how to connect the siloed systems that mortgage lenders, real estate agents, title agents, and underwriters use for their core workflows. When systems are not connected, there’s quite a bit of redundancy in the form of rekeying information and tracking down updates via phone calls and emails. This challenge was exacerbated by the pandemic when many traditionally in-office operations became remote.
When offices shifted to remote operations earlier this year some bad actors saw it as an opportunity to increase their efforts at fraud. Offices that were not already set up for secure electronic communications with their mortgage and title partners were at a heightened risk. One of the most common wire fraud schemes is business email compromise (BEC) where a cybercriminal replicates a legitimate business email account to pose as a trusted party in the transaction. Lenders and real estate agents using email to communicate on files are particularly exposed to the threat of BEC scams which can ultimately result in homebuyers losing their life savings. Lenders and agents who communicated with their title partners on a shared communication portal, particularly if they enabled two-factor authentication, were also able to better safeguard their client’s funds.
HW: Time to close on purchase and refi transactions has been ticking upward all year. How can technology play a role in improving these timelines?
JG: Technology plays a crucial role in expediting closing times, and with the rise in transaction volume, cloud-based applications are more important than ever. Qualia’s digital closing platform, for instance, reduces the amount of time it takes everyone working on the transaction to complete their tasks by providing a single platform to streamline workflow and eliminate rekeying—automating some of the more mundane or repeatable tasks required.
You can have the best-qualified people working on a mortgage and title closing, but if they don’t have the technology to support them, it’s just going to take longer. For example, agents using Qualia’s closing platform, which includes comprehensive workflow, accounting, and reporting suites have reported a 75% reduction in the amount of time and effort it takes them to complete their day-to-day tasks. Similarly, lenders working with title partners through Qualia have been able to automate much of their work.
Despite efficiencies gained through automation, some components of the closing (i.e. inspection) just take time and cannot be further expedited through automation or improved workflows. Consumer research also indicates that time-to-close may not always be the most important factor for homebuyers. Recent independent research commissioned by Qualia indicates that clear expectations of the closing process and documents tend to be more important to future borrowers than a faster timeline alone.
Transparency is a factor that shouldn’t be overlooked by lenders when selecting title partners to work with. We designed Qualia Connect to include an account for the borrowers so that they have more visibility into the closing timeline and key records. The borrower can track the closing timeline in real-time, ask questions of their entire closing team, and access important records on-demand. Because Connect is integrated with the core system of record, 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 responding to questions.
In short, the fundamental change powering lenders and real estate agents to work more efficiently with their title partners has been the introduction of a comprehensive shared platform of record.
HousingWire’s Tech100 recognizes the most innovative and impactful companies in the real estate and mortgage industries. Tech100 nominations for 2021 run through December 18, 2020.
Justin Malonson is the Founder of LyfeLoop a 16+ year tech innovator, investigative media researcher and host of the Freedom Not Control Podcast live on Voice America. Justin is a highly sought-after tech entrepreneur, industry speaker and winner of the coveted Business Achievement Awards “Top Digital Marketer” award. With 16+ years of demanding experience, Justin has worked with over 3,000 businesses including amazing clients such as Blue Cross Blue Shield Association, Sotheby’s International Realty, Duke University, White House Black Market,Tiffin Motorhomes, Bass Pro Shops and Beazer Homes USA.