May 2016 - Rise and Fall

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22 | TH E M R EP O RT FEATURE delays in the closing and funding of new loans. There is a considerable amount of confusion on the TRID and CDF data, and its accuracy. New regulatory requirements are also causing title and escrow companies to continually update their procedures and workflows as lenders work to become compliant with TRID and the changes that it has brought to the loan origination process. "As standards for TRID com - pliance are more established and widely agreed upon, we should have a new 'business as usual' and that impact should decrease," said Chad Mosley, COO of MCS Solutions. "The most lingering ef- fect of TRID has centered on the lender preparation of the closing disclosure, and the operational changes that it has mandated." Navigating the Muddy Sloughs of TRID Upkeep K eeping up with TRID has not only posed closing chal- lenges at title and escrow com- panies but has cut into opera- tions, costing more time, labor, and resources, which could result in cuts in revenue, according to Steven J. Melmet, Esq., CEO of Vendor Connect, LLC. "The industry is experiencing a lack of consistency in compli- ance requirements from one lender/investor to the next. There is significantly more scrutiny and paperwork required," Melmet said. "Obtaining lender pre-approvals while gaining an appreciation for individual lender requirements is time-and resource-consuming which requires new disciplines for title and closing specialists". While the industry has been able to absorb the battery of regu - latory changes, TRID has com- pletely changed the name of the game. Cristy Ward, Chief Strategy Officer focused on consumer ex- perience at Mortgage Connect, LP, explained that TRID upkeep and operational maintenance continues to be the center of focus for lend- ers and their associated title and closing partners. "TRID has been tough on the industry as a whole. Many lenders are still struggling with technol- ogy platforms and forced to create manual workarounds to process their transactions," Ward said. "The title and closing companies that were committed to training their employees, used technology as a tool and not the solution, and focused more on TRID knowledge, education, and timelines did well." Looking For Transparent Direction A ccording to Mark Myers, CEO of Meridian Title Corp., and Laura Levi Francesconi, SVP/Director of Meridian's Corporate Development, the title industry's very nature is to protect the public and the consumers it is serving. "Because our industry takes that seriously, it's been a challenge to work with height - ened regulations that do not provide transparent direction to the industry on how to comply," both said in an interview. Regardless of TRID obstacles and operational challenges, title and closing companies remain focused on one common goal: Get closings done in a timely and compliant manner. Prior to the housing crisis, the title and closing landscape experienced a more competitive environment, more products were being launched by the underwrit - ers, and technology was largely well received and leveraged in or- der to keep swimming. Since the crisis, there has been a retrench- ing of innovative products and technology, as well as companies becoming hyper focused on creat- ing processes to comply with the CFPB's regulatory guidelines. "The future is promising for those who choose to innovate in the title and closing space," Ward said. "The lending process as a whole is overly regulated and that regulation has caused disruption to innovation. Those who will flour - ish in the industry must embrace innovation to meet the demands of growing demographic segments." The title industry was more segregated prior to new regula- tions, Mosley added. Moving forward, we see the most success occurring when partnerships with lenders are solidified to provide customers with the highest level of service on their transactions," he said. "That supports the ultimate goal of TRID, which was to create more transparency and a better customer experience. Ultimately, that will help the industry." Weeding Out Bad Actors Makes For a Better Customer Experience P ost-crisis, title and closing companies who always oper- ated "above board" will contin- ue to operate and strengthen the industry, albeit with operational adjustments to their labor costs and profit margins. "There is a sense in our industry that the heightened oversight could put some longstanding, smaller entities out of business due to the additional burdens, but it's still too soon to tell," Myers and Francesconi explained. "Those who knowingly succumbed to the less-than-ethical schemes pre-crisis have hopefully been weeded out of the industry, and we're confident with the new regulations, will be more quickly identifiable moving forward." The success of the title and closing industry will be highly dependent on building solid relationships, effective communi - cation, technology innovation, and regulatory compliance. Vendor Connect's Melmet says that the title and closing specialists have no alternative but to embrace changes brought about by the new regulations. "Companies need to be proactive in ensuring for success in our new regulatory environment," he said. "Invest in personnel and IT resources to stay one step ahead of the ever changing regulatory demands of our industry." Small companies rarely have the technological or regulatory knowledge or resources necessary to effectively compete in rapidly changing real estate markets. "The result of these challenges is that the trend towards title and settlement company consolida - tion will escalate," Ruokis noted. "Economics will drive the trend but service flexibility will be im- proved through the process. Mid to large companies will simply have greater resources to meet the ever increasing technological and process requirements of their customer groups." Communication is still of utmost importance among all the players to the transaction. Looking ahead, progressive thinking and planning will be key in helping title and closing compa - nies comply with both state and federal regulations at the most affordable level. "Knowing the expectations of your lenders is key in this new regulatory era, then finding ways to meet the lenders' expectations will be another key factor to success," Myers and Francesconi said. "As millennials emerge as homeowners, it's important that they understand the importance of having title insurance from a reputable, financially stable title company." Ward added that title and clos - ing companies will be successful in the future if they innovate in their service offerings by devel- oping unique solutions through technology, process flow flexibility, and creativity in how they can enhance the consumer experience. "I believe there is a tremendous amount of opportunity in this space to make a difference," he said. XHEVRIJE WEST is the editor of and is based in Dallas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her bachelor's at Alcorn State University and went on to complete her master's at Syracuse University. 3MReport.indd

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