Why lenders should be asking for a title check at loan application
In December, HousingWire spoke to Flueid about the concept of instant title and why it is a misnomer for mortgage lenders. As a follow-up, HousingWire sat down with Peter Richter, co-founder and president at Flueid, to discuss why mortgage lenders should be asking for a quick, data-driven title check at loan application, rather than an instant title commitment, to understand and verify what’s going on with a property and consumer from the start.
HousingWire: HousingWire recently spoke to Flueid about the concept of instant title and why it’s a misnomer for mortgage lenders. How is the idea of a “title check” different and what value does it provide to lenders?
Peter Richter: The concept of “instant title” means delivering a title commitment “instantly” upon ordering title insurance. We’ve seen this shorten the transaction timeline by only about a day.
Unfortunately, that “instant” title commitment itself does not inherently equate to a faster close, as my colleague Matt Regan outlined in his recent article. What’s more important than the title commitment turn time is ensuring the relevant and timely title datapoints are available at the very beginning of a transaction to fuel a more seamless process.
That requires what we’ve coined as a title check to spotlight our different approach.
A title check is a key workflow step that provides instant awareness on the condition of title — based on title underwriter guidelines — andvalidateskey details about the property and consumer through an easy-to-understand data result at the start of the loan origination process. Unlike title commitment turn time — what some in the market are referring to as “instant title” — a title check’s insights can take days or even weeks off the transaction timeline.
The key takeaway here is that the title check happens before title is ordered — specifically at loan application, within moments of prequalifying a borrower. Think of it somewhat like the concept of a verification service for employment or income — now, for the first time, for title specifically.
The title check provides crucial data a loan processor needs so they fully understand what’s going on with the borrower and property while reviewing the loan application. This eliminates surprises and prevents the lender from having to go back to the borrower, repeat steps, change up timelines or even modify loan terms. That’s far more meaningful to all parties involved, and particularly the consumer, than title commitment turn time.
Just as important, it saves our title partners time and money when critical issues are discovered upfront resulting in loans that may never close. This decreases cancellation ratios and focuses resources on opportunities that will close for additional volume capacity.
And all of this helps create a more integrated (and more importantly, streamlined) lender-title workflow that empowers the collective to achieve the all-elusive 5-day close for home equity or 10-day close for refinance. It’s one of the reasons why we believe the term “instant title” is counterproductive, somewhat misleading and should be eliminated from our industry terminology.
HW: Almost every area of housing is focused on improving the consumer experience. As we continue into 2023, what role do title data and workflow insights play in doing this?
PR: Well, the vision for a “title check” fueled by our Flueid Decision platform is so much greater than just getting a faster title commitment: It’s all about empowering lenders with the right data at the right time so they can engineer a more streamlined workflow to achieve a 5-day close for home equity and a 10-day close for refinance.
By bringing title data and insights to the start of the loan life cycle, lenders know if there are issues, where they are, and how much effort and time it’s going to take to get them resolved. For example, now the lender knows and can verify:
- Who the vested and non-vested owners of the property are — even if they are left off the application
- If there are any liens against the property and/or judgments against any of the borrowers
- If there are any bankruptcies associated with any of the borrowers
- If the borrower has a second mortgage or home equity loan
- Any additional properties owned by the borrowers
And that’s just to name a few of our insights.
Now, it’s not uncommon to find these and other potential issues during the title search and curative process. But traditionally, this depth of information isn’t provided until after title is ordered and the commitment is returned. That’s much too late in the process.
So nowwith a title check,lenders have the ability at Point-of-Sale to ask questions, gather and validate information from the consumer in one step, streamlining the consumer experience.
And quickly, Matt also noted that recent research has shown that in addition to faster closings, borrowers indicated that “collecting, submitting and resubmitting information” dilutes the experience around one of life’s biggest milestones: homeownership. A title check facilitates better communication and transparency that today’s consumers have come to expect using technology, while also removing some of these pain points from the transaction.
And, although Flueid is a B2B company, the entire transaction process comes back to supporting the consumer at every critical step in the transaction — from the loan application to title to closing and servicing. That’s why we are hyper-focused on using our data and insights to compress the transaction timeline and make a better experience for everyone involved.
HW: Flueid has stated that you want to make title intelligence more accessible to partners within their core operating systems. How are you doing this?
PR: That’s a great question. To achieve our goal of fueling the entire real estate transaction with our title data, we are integrating into the core systems our clients know and use every day. This ensures our insights are available right at the start of a workflow. It is also why being an independent voice and technology partner who can integrate and support everyone was important to us when we started Flueid.
We began by integrating directly with our title partners’ core production systems. Now we are integrating into leading Point-of-Sale and Loan Origination Systems (LOS).
We recently launched an integration into FirstClose Equity — now available on Encompass by
ICE Mortgage Technology — and later this quarter we’ll announce an integration into the most widely used LOS in the market. These integrations will ensure that lenders have Flueid’s capabilities at their fingertips to do three key things:
- Understand which transactions are cleared for an accelerated closing, which are not and why
- Identify the files that will fall out, which saves about $1,500 per loan
- Push off costs on files that aren’t yet clear-to-close until those items are verified
It’s also important to note that at every stage of the transaction, our technology supports industry best practices and standards — we’re not trying to reinvent what works within the process.
The bottom line: Flueid is committed to driving efficiency for lenders (as well as their partners) to make the loan life cycle simpler, faster and more secure and help them deliver on their promise to the borrower.