TheMReport — News and strategies for the evolving mortgage marketplace.
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42 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION The Future of Online Closings What's happening to innovation in the world of real estate closings? By Kosta Ligris T he current movement and excitement sur- rounding online real estate closings is not a new trend. In fact, capturing digital signatures had started gaining traction before the big housing crisis of 2007-2008. As housing came crashing down and foreclosures reached record highs, lenders shifted from one extreme to another. The last housing crisis undoubt- edly crippled innovation in real estate transactions and the title/ settlement process. So now, 10 years after the cri- sis—and amid speculation about when the next housing bubble will burst—what has happened to innovation in the archaic and fragmented world of real estate closings? I would say not enough innovation, disruption, or mean- ingful movement into a digital platform has occurred over this period. The real estate industry constantly lives in a state of perpetual fear that we are buying at an all-time high, that the next crisis is just around the corner, that if we push innovation and our fears come true, people will challenge mortgage and contract obligations to protect their homes and investments. Ultimately, this is the heart of the problem—housing is intimate. It isn't some position in a stock. Most people don't think of real estate as an asset. In their mind, it is their home. Our instinct is always to protect ourselves, our loved ones, and our homes. If you spend time talking to consumers about what they re- ally want and expect, they will tell you "a better closing experi- ence." That doesn't always mean a fully digital remote eClosing. Sometimes they want to sit next to a trusted professional who ex- plains documents to them—after all, this is often the largest invest- ment of their life. Buying or sell- ing a home can be emotional, and engineers, entrepreneurs, bankers, and the title industry sometimes lose sight of that. Despite these concerns, I am a firm believer that the future of online platforms to manage and conduct real estate closings is promising. However, I also think that the industry, despite the exciting momentum, needs to really stop and take the time to understand what consumers and users want. We need to work together to collaborate towards getting the involvement of all the necessary stakeholders. The uncertainty we face today is perpetuated by the fragmenta- tion and silos that we operate in. For instance, banks look at ways to improve mortgage process- ing but don't invite their title and settlement vendors into the room. Federal, state, and local government involved in financing and recording real estate transactions consider and implement changes without always leveraging the vast experience of the private sector. I meet with en- trepreneurs in the technology space all the time that want to ask me a question or two, because they are building the next great real estate, mortgage, or title solution. All too often, when I ask them what their prospective customers say, they look at me blankly. Government, start-ups, venture capital, title insurance, real estate professionals, and lenders need to work together to identify their respective risks and concerns. We need to look at the opportunities that exist (based on what our customers and clients want) and work to create solutions that take an archaic and fragmented indus- try into the twenty-first century. Kosta Ligris is an experienced entrepreneur and CEO and founder of the Ligris Companies, a collection of professional services, real estate, consulting, and tech companies. Ligris has represented and consulted for some of the nation's largest banks and real estate companies. He also mentors, advises, and invests in startups in fintech, proptech, and blockchain, disrupting the real estate and title insurance ver- ticals. Ligris is a mentor for MIT's Center for Entrepreneurship and the MIT Innovation Initiative.