FROM THE WHITE HOUSE AND CONGRESS to multiple federal agencies, one of the top concerns is housing affordability. Consumers are worried too. About half of U.S. adults (49%) say the availability of affordable housing is a major problem where they live, up 10 percentage points from 2018. The same 2021 Pew survey reported 70% of Americans said young adults today have a harder time buying a home than their parents’ generation did.
While it’s getting more expensive to buy a home, it’s also getting pricier to originate one. According to the Mortgage Bankers Association (MBA), total loan production expenses increased to an all-time high of $9,470 per loan in the fourth quarter of 2021. This was up from $9,140 per loan in the third quarter as the market transitioned from a rate-term refinancing market to a purchase and cash-out refinancing market.
With the current cost of origination, combined with higher interest rates and low housing inventory, the MBA reports that 2022 is likely to see about a 30% decline in overall mortgage originations, as compared to 2021.
ALTA Insights: Build a Tech Stack That Improves the Bottom Line
Cost Savings
With revenue tightening and volume slowing, it is becoming increasingly important for companies to adjust costs. As a result, lenders and title companies are seeking ways to invest in and implement solutions that will further streamline operations and grow market share, helping them remain competitive and improve the borrower experience while providing increased ROI.
One avenue to reduce cost and streamline the closing process is to offer digital closings. A recent Marketwise eClose ROI study found that lenders can save nearly $450 and settlement agents up to about $100 per loan due to time eliminated, improvements in transactional quality, and costs associated with printing and mailing documents. Lenders and title agents also reported they can close more loans faster with the same or fewer people, improve overall loan quality by reducing critical errors and avoid missed signatures and unnecessary rework. Full e-closed loans also reduce funding time during post-closing to the secondary market and result in an improved, measurable overall return on investment, according to the study. A 2021 digital closing survey by the American Land Title Association (ALTA), found 52% reported closing times decreased utilizing RON due to the number of documents signed ahead of time, while 43% reported cost savings.
“Consumer expectations have shifted to digital-first, and that’s an incredible opportunity for the lender and title industries to be at the forefront of both what consumers want and what is also most financially and operationally efficient,” said Terri Davis, GM of Real Estate at Notarize. “E-closings are the final frontier of real estate, and we’re seeing the incredible ROI, both in the numbers and in consumer feedback, of those who fully embrace e-closing mortgages with online notarization.”
MISMO e-Eligibility Exchange
To help drive adoption of digital closings, ALTA partnered with the Mortgage Industry Standards Maintenance Organization (MISMO) to be the sole provider of title and settlement agent data for the MISMO e-Eligibility Exchange, powered by Snapdocs. The e-Eligibility Exchange serves as a central source of information on the criteria that impact digital closings. The data will be provided to MISMO under a contributor agreement with the ALTA Title & Settlement Agent Registry (ALTA Registry), a national database of title and settlement agents.