It's Not Too Early to Start
Getting Ready for Refinances
by Jerome Jelinek, Chairman
Remember refinances? How about the crazy hectic days of 2021 and early 2022? A recent trade publication article suggests those days might be just around the corner again. The article, which interviewed several prominent industry lenders, said that “A likely refinance boom is on the horizon. If rates drop much below, say, 6%, something like $4 trillion worth of mortgages will be refi-able. The question is, will you be ready for the onslaught?”
Certainly an “onslaught” or even a healthy uptick in refinance volume would be welcome. But when it comes, will our industry handle it the way it has dealt with past cycles? Perhaps not. Respondents in recent industry surveys said that they’ll likely resist the traditional approach of staffing up to manage the next major mortgage cycle. Instead, they will rely more on technology, smarter workflows and strategic partnerships to better manage both volume and their businesses.
One workflow change that we have seen produce significant benefits is the centralization of refinance closings. By that we mean greatly reducing your title and closing vendors to a small, select group and requiring your LOs to select from that managed group (absent borrower choice otherwise). In this three-part blog series, we will look at how centralized closings can significantly enhance vendor management, drive service standards, improve compliance, reduce risk and boost the customer experience.
In today’s purchase environment, the selection of a title and closing agent is left up to the borrower, or more realistically to the loan officer or real estate agent. As the market mix begins to shift to a more traditionally balanced refinance/purchase level, lenders will have the opportunity to take control of this decision.
Many will opt to leave the decision to their LOs. But recently we have seen some regional players choose to follow the example of the nation’s largest lenders and centralize their refinance closings with a core set of preferred title agents.
More Effective Vendor Management
By shifting from closings that involve hundreds of small title companies to a much smaller — and more manageable — group, lenders gain control and enhance the ability to manage their title vendor relationships the same way they manage other critical relationships.
Using a more streamlined title vendor model, these lenders are able to set and enforce meaningful service standards for commitment turn times, which improve the customer experience they can deliver to consumers. To further improve efficiencies, by knowing the capabilities of their title partners, these lenders can now offer more modern closing options, such as hybrid and even RON closings.
From an operational perspective, scheduling closings is simplified. Post-closing, all necessary documentation is delivered back to the lender in a timely and uniform fashion. Final title policies no longer have to be tracked down by staffers in order to close files and sell loans. They arrive in a tight time period. For example, one lender we work with has a 30- to 45-day window for final policies; we are currently delivering them within seven days of closing, on average.
Pricing & TRID Compliance
A fair-sized regional or national lender could end up working with hundreds of local title agencies, but managing such a large vendor pool is challenging if not, in fact, impossible. Consider the logistics alone: What are the phone numbers and emails, the fees, the turn times?
When working with a new title vendor, how can you be sure that the fees they are quoting for the initial disclosures are, in fact, the final fees they are charging at closing? Often there are variances that result in TRID tolerance violations and require the lender to make the borrowers whole. Depending on the size of the lender, their tolerance violations can add up and significantly reduce margins.
As the market prepares for the next wave of refinances and the return of the purchase market, there’s a strong case to be made for centralizing closing activity with fewer title vendors. By centralizing refinance closings, lenders have greater control and transparency into pricing and can significantly eliminate TRID pricing issues, not to mention the benefits of more efficient closings that save both time and money, and improve the customer experience.
In our next blog, we will look at cybersecurity and risk.
Jerome founded Corporate Settlement Solutions (CSS) in 1992 and served as CEO and Founder until transitioning into the Chairman role.
Jerome assists with the strategic direction of the company and leverages 30+ of industry experience to lead revenue strategy and execution. He also oversees the legal and regulatory functions of the company.
Corporate Settlement Solutions is a single-source provider of real estate title, closing, valuation, flood and recording solutions.
Our team is highly engaged in delivering results that make our customers more efficient, effective and profitable.
Contact sales@visitcss.com to get started!
