Summary: What are the players at the heart of real estate saying about the overall strength of the market? Read the survey results in this article to find out!
Each month Zelman and Assoc. conducts a Title Agent Survey that asks a variety of questions concerning month over month deal flow!
This deal flow covers new commercial and residential orders that entered the pipeline, commercial and residential closings conducted as well as answers to specific and timely questions concerning issues specific to the closing process (this month the questions concerns TRID).
As Hallmark Abstract Service is one of the firms that has been asked by Zelman and Associates to participate, it is our pleasure to share the results here…
December 2015 Zelman Title Agent Survey Preliminary Results
– Residential Purchase Orders: Agent Closed Orders Increase 11% in December, Outperforming First American After Lagging in November
o Agent closed purchase orders increased 11% year over year in December versus a 6% increase for First American, the only publicly-traded title insurer that discloses intra-quarter monthly order flow.
o Agent opened orders increased 10% year over year versus a 7% decline for First American.
– Residential Refinance Orders: Agent Closings Decrease 18% Year Over Year
o Year-over-year refinance performance
§ Agent closed orders decreased 18% year over year in December versus a 6% decline for First American.
§ Agent opened orders increased 26% year over year versus flat performance for First American.
o Sequential refinance performance
§ Agent closed orders increased 39% sequentially versus a 25% increase for First American.
§ Agent opened orders increased 14% sequentially versus a 9% increase for First American.
– Purchase Closings on TRID Forms Mostly Taking 5-10 Days Longer, Some Estimate 15 Days
o For the most part, survey participants noted similar issues as previous months, with communication bottlenecks, lack of knowledge of the rules and process and technology bugs topping the list of issues.
o Survey participants continue to expect that TRID will, on average, lengthen purchase closing times by about nine days, unchanged from last month. A small number of participants increased their estimate of delays relative to last month’s responses, but a roughly equal number decreased their estimates.
o Survey participant commentary on TRID-related issues:
§ With respect to ongoing TRID-related issues, “[n]o change yet. Some lenders, a minority, have their act together. Considerable confusion for others. A lot of back and forth for time consuming minor changes.”
§ “Last minute changes that borrowers make, due to misinformation or inability to make a decision, have cost several files to lose their transaction dates, which in turn costs more in interest payments and higher pro-rations for taxes.”
§ “Each lender completing the forms differently. Also, realizing little [form changes] cause re-disclosure, so they are back to sending it and documents at the last minute.“
§ “Title industry software still needs some revision to overcome glitches and incompatible issues with transactional details (we have to ‘trick’ the system to issue two different checks to real estate companies with the same name, but that are different offices). Also, the software thinks it is an error to disclose title insurance rates under TRID/CFPB requirements because it is not consistent with state rate structure.“
§ “Mostly, the new forms are just very difficult for consumers and Realtors to understand and analyze.”
§ “Lenders who are preparing and delivering the CDs, for the most part, are not getting our fees in advance and in some cases not telling us they delivered until their borrower is about to arrive in our office. Getting our fees and collecting the correct amount for our fees is a fight, and balancing to fund even worse. More than once the CD we closed with an hour earlier isn’t the ‘Final’ CD.“
§ “Lack of uniform in naming fees” remains an issue.
§ “Getting ALL lenders up to speed both large and small. Not exactly uniform practices throughout industry but since liability is on the lender, their call. Grossly inefficient.“
§ “TRID is the biggest challenge in our industry. The lenders and title agents don’t understand all the rules. The realtors, lenders and clients continue to push for quick turn time. Training people in the title business to understand all the rules and explain them to lenders is very difficult as most closers do not have that level of expertise. Even our most seasoned attorneys and compliance experts struggle to find answers on more complex files.“
§ “No regional nor local lenders are using collaborative software interfaces. Most transactions involving exchanging information and keying it into each parties system. Highly inefficient.“
§ “The lenders are still confused on the process.”
§ “We are not experiencing any issues.”
o Survey participant commentary on primary causes of longer open order times:
§ “Unfamiliarity with process and forms” is still causing longer close times.
§ “Underwriting issues, software issues, last minute changes, lack of complete information or collaboration…we have seen a miniscule improvement in open order times, but there is only so much that can be done as a settlement agent“
§ “The primary cause for longer open order times is that the required timelines and system/process ‘safeguards’ (lender-specific to ensure compliance) do not adapt well to ordinary change of circumstance matters that come up during the process. To the extent that we have seen an ‘improvement’ in order to close times, it is because more lenders are sending the CD long before final numbers are known so that they don’t have to worry about the 3-day rule when the transaction is really ready to close. It is resulting in more bogus-feeling initial CDs that are much higher, but don’t very closely resemble the final CDs.“
§ “There has been no tolerance from lenders and realtors for increase in turn time. This results in closers and Closing Disclosure examiners working 18 hour days, skipping holidays and burning out. Almost every person I know involved in TRID has considered quitting over the stress. Every single female I work with on TRID has been in tears at points. It is the biggest shake up in our industry in my 20 years. The delays are brought on by lack of understanding of the rules, the software, the flow of information, and the skill level of the people involved to be able to learn so many changes combined with the fear of failure and draconian penalties.“
§ “Larger sample showing longer times. I suspect as TRID volume increased more deals were being processed and closed by less experienced lender personnel. Early on, the TRID deals were probably handled by the best people. There is still a lot of inconsistent interpretation of the rule, especially the title insurance disclosure.“
§ “Not sure if it relates to TRID or underwriting. Also, loan officers are still clueless on how it all works still.“
§ Closing timelines are longer “because the lenders are still not fully operational on the process. “
§ “TRID refinances are easier than purchase transactions unless construction is involved. The process is going better now that everyone is getting more used to the forms and programs. Lenders and agents are still struggling with the rules on prepaids and other areas. “
§ “The issue was working out the details of making sure everyone was in receipt of the appropriate documentation. It improved towards the end of December as Lenders, Realtors, and Attorneys had a better understanding of the rules and regulations, allowing for smoother closings.”
o Survey participant commentary on Black Knight’s Closing Insight indicates lenders’ pace of adoption has not improved significantly. In addition, users indicate some bugs remain and issues with a cumbersome interface remain.
§ “Many lenders still refuse to change and are actively seeking get-arounds. Adoption has only marginally improved since October.”
§ “Adoption of Closing Insight has been difficult and the customer service has been extremely poor. Some lenders have stopped using it and send orders ‘the old way’ to avoid the technical hassles. To our experience, we are only using manual workarounds and not fully using the software.”
§ Lender adoption of Closing Insight has improved since October “[s]lightly, but not significantly.”
§ “Most are still using manual workarounds. It has not improved” since October.
§ “We found trying to sign up with Closing Insight to be challenging. I don’t know of anyone using it right now in our market.”
§ “We’ve only done about half a dozen so far. Only one has gone smoothly. That was pretty cool and encouraging. The software integration is a work in progress. Zero adoption among small and regional lenders.”
§ “We are still seeing lenders do it the old way by email communications.”
§ “Still seeing a huge delay in closings. We have started using the RealEC platform, very cumbersome to navigate through.“
§ “Uploading figures is still an issue.”
Michael Haltman is President of Hallmark Abstract Service in New York. He can be reached at mhaltman@hallmarkabstractllc.com
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