PERSON OF THE WEEK: Bob Jennings is CEO of ClosingCorp, a provider of residential real estate closing cost data and technology. MortgageOrb recently interviewed Jennings to learn more about where mortgage compliance is headed in 2017 and how automation is the only logical and cost-effective way to deal with ever-increasing regulatory complexity.
Q: As CEO of ClosingCorp, what do you see as the highest-priority need among your clients?
Jennings: Our clients rely on us to manage their third-party provider rates and fees. This information is critical to prepare and deliver compliant loan estimates (LEs) and other disclosures. Without it, they are in danger of providing inaccurate estimates that under or overstate closing costs and creating situations where there could be costly variance issues post-closing. Ultimately, inaccurate information can lead to everything from costs that have to be absorbed, to fines and penalties, to poor borrower experiences.
In addition to collecting and vetting cost data, delivering it in a fashion that lenders and loan officers can consume is also critical – which is why we have been very active in integrating with industry-leading loan origination systems.
Recently, we received the Lenders’ Choice Award for Best Service Provider from Ellie Mae because we’ve made it our priority to deliver – and improve upon – what we’ve promised our clients: accurate, reliable, guaranteed closing cost information.
For the foreseeable future, we’re focusing on not only our core offerings and service, but also making the borrower experience more robust and convenient as more of our clients begin to implement point-of-sale solutions.
Q: Why is technology so essential in helping the various players in the real estate ecosystem deal with compliance?
Jennings: Going forward, technology and connectivity will be the price of entry for all of the players in the real estate ecosystem. It’s already the primary way the largest lenders connect with the tens of thousands of vendors that they deal with every day to originate loans.
In order to compete, small and midsize lenders will have to up their game as far as technology is concerned. And smaller vendors – independent appraisers, title agents, home inspectors, etc. – will have to do the same, or they will fall off the radar.
Automated compliance is the only safe way to keep track of all of the moving parts that go into a mortgage and all of the various federal, state and local rules (which can be in the hundreds in some parts of the country) that can trigger a regulatory violation.
The parts of the origination cycle that we focus on – loan estimates and closing costs – are particularly well suited for technology solutions because, at the most basic level, they are data exchanges. The challenge comes in making sure that accurate data is being sourced and delivered in a timely, usable fashion so that lenders can meet their disclosure and compliance responsibilities.
Unlike others in the industry, our firm provides actual data, straight from a proprietary database of thousands of real estate service providers – not estimates, guesstimates, averages or approximations, but real-time data. This requires a huge investment in systems to connect with vendors (currently, we are connected to 20,000 nationwide) and to continually vet their pricing structures to make sure they are up to date. Hundreds of thousands of new loan applications are opened daily that query from over 75,000 provider rate cards.
The only way we can do this is through disciplined data management and technology – and our confidence in our data and technology is the reason that we are the only closing cost provider that offers a guarantee of accuracy.
Q: Is this level of automation just for the big lenders, or are there viable options for smaller lenders?
Jennings: There’s no question that the largest lenders have been at the forefront of this effort, and many, including some of the very largest, have been early adopters of our firm’s solutions. However, the TILA-RESPA Integrated Disclosures (TRID) rule and other rules apply across the board, whether you’re originating 150 loans a month or 15,000. Compliance risks and costs don’t take into account the size of the lender.
So, we are seeing strong interest from lenders of all sizes. Also, we have developed a selection of pre-set packages for smaller to midsize lenders that range from transfer tax and recording fees only to full access to all of our firm’s provider fees (with or without our guarantee). These packages provide reduced rates to lenders that close 500 loans or fewer each month and are using one of the enhanced integrations with our closing cost data solutions or Web service.
Q: Where do you see your company focusing its effort moving forward, and what will the role of technology play?
Jennings: As I mentioned, our game plan going forward is to focus on our core offering – SmartFees and expanding the scope of the products that will be supported by SmartFees. We will also be focused on the overall borrower experience, such as point-of-sale solutions, mortgage coaching and education. We are known for our data and technology, so 2017 will be focused on streamlining the customer experience when applying for loans and delivering actual data and other insight to facilitate interactions with less friction. We will also be adding more loan types and enhancing our existing logic to reduce possible uncertainty for loan originators.
Q: ClosingCorp announced it has rebranded its LE and good-faith estimate (GFE) solutions as SmartFees – what was the reason for this rebranding?
Jennings: The residential mortgage industry is continuing to evolve. But the one thing that hasn’t is lenders’ need for efficient and effective solutions that help improve revenue potential while mitigating the risk of costly tolerance violations.
We combined and rebranded SmartGFE and SmartLE into SmartFees to focus less on forms and more on delivering real-time, accurate closing cost data to populate the appropriate disclosures. SmartFees integrates loan file information, transfer tax and recording data, service provider fees from more than 75,000 rate cards, and lender business rules and requirements into a single, seamless process and platform – allowing our clients to originate mortgages confidently and compliantly.
Q: What do you see as being the two most cumbersome sticking points for lenders dealing with TRID one year later? How can those be solved?
Jennings: Most mortgage industry professionals agree that the proposed changes to the TRID rule are a step in the right direction in that they adequately address certain previous ambiguities. That said, two challenges continue to concern lenders. The first is data standardization and universal fee naming. As those in the title industry know all too well, supporting the U.S. Department of Housing and Urban Development , GFE, and TIL forms requires seamless functionality. Under TRID, it’s even more important for fee terminology to be consistent between the LE and closing disclosure. Quality data inputs, uniform fee sets and understanding the “new math” of how title policies are presented to the consumer don’t need to be as cumbersome or far from reach as they may seem.
The second challenge is simultaneous issue rates – the premium for an owner’s title insurance policy for which a special rate may be available based on the simultaneous issuance of a lender’s and an owner’s policy. Under TRID, consumers in many states are not receiving an accurate disclosure of their title insurance premiums because lenders can’t disclose this rate. TRID also directly conflicts with many states’ laws on how these fees must be displayed, so the only way lenders can comply with both TRID and state law is to provide two disclosures with entirely different fees. It’s very confusing to the consumer. The industry as a whole needs to come together to improve how these exchanges take place.