Phillip Petrie is Vice President of Product Development at Service Link, the leading national provider of digital mortgage services for the mortgage and finance industries. In this role, Petrie is responsible for overseeing securities product development, strategy and research, in addition to informing the rollout and implementation of new EXOS products and services in the securities space for lending clients. . Speaking to MReport, Petrie discusses the future of the stock, the trends and innovations he thinks will dominate for the rest of 2021, cyber threats and emerging innovations.
What trends in title/closing space do you expect to dominate in the second half?
Petrie: Increasing automation and technology in the title/closing process, as a stepping stone to increasing production volume, will continue to be a priority for lenders for the remainder of 2021. This is the direction what the industry is taking, and there will be no slowdown. momentum. As COVID-19 and its emerging variants continue to shape consumer behaviors and the way we do business, it is only natural that consumers’ desire for digital experiences will continue to grow and they will seek lenders able to offer these experiences.
Lenders have also turned to their title partners to provide instant digital title offerings to help them generate even more volume and accelerate the time it takes to get the borrower to the closing table – that’s a another emerging trend that I think will be here to stay. Finally, lenders are looking for partners who can provide additional data to help inform the lending decision. For example, it is not uncommon for a lender to request raw data from its title partner in addition to clear documentation at closing. They seek to leverage these data points to inform other processes/decisions upstream of the real estate process. And, with GSEs allowing appraisal waivers for certain types of loans, this data and the ability to create property profiles has become increasingly important to informing a quick loan decision.
Fraud is a growing concern in the title/closing process. What common types of fraud have you noticed? What advice do you have for lenders who might be worried about fraud?
Petrie: The threat of cybercriminals infiltrating any point of a mortgage transaction is very real and only becoming more prevalent; especially today as the industry strives to digitize key stages throughout the mortgage lifecycle. Data shows the COVID-19 pandemic has accelerated internet fraud, with the FBI’s Internet Crime Complaint Center (IC3) reporting a 69% increase in cybercrime complaints from 2019 to 2020, according to the FBI, with an adjusted loss of approximately $1.8 billion. Email communication using insecure email accounts can make buyers, title companies and anyone interacting in the mortgage process vulnerable to fraud, as digital thieves can silently listen in on conversations regarding a real estate transaction and can strike at the right time to engage in a scheme to get the buyer to wire them money.
Title deed fraud, while not as common historically, also continues to become widespread. As all title records are public data, there is always a possibility for bad actors to get hold of them. A savvy fraudster could simply go online, do a title search on a property (as long as they meet registration requirements), determine the owner, file a deed, transfer it into their name, refinance the property, and collect the funds, all under the nose of an unsuspecting owner. Another thing we’ve seen is how lack of estate planning can lead to “tangled titles”, meaning the deed doesn’t bear the name of the person actually residing in the house. Unclear ownership can lead to a host of problems down the line, including deed theft.
My advice to lenders who may be concerned about fraud is to remain vigilant, continue to do your research to understand threats during the title and closing process (existing and emerging), ensure your staff are prepared and know how to beware of fraud (and that you have a business continuity plan in case of fraud), and make sure your data is secure and protected by your title providers. Knowing the warning signs can help you mitigate the risk of fraud and hopefully avoid it altogether.