As we enter Fall, a big theme is change. Change is happening in nature, but also throughout our industry. For our realtor friends, we see changes with how real estate is sold, changes with how brokerages operate, business is developed, etc. The same is true for those in the mortgage industry. Mortgage professionals, like realtors, are seeing changes in the way they market, deliver services etc. Mortgage professionals also deal with Federal laws which regulate much of their industry (real estate agents, while also affected by Federal laws, are governed by State law). Changes adopted to TRID in 2018 go into effect October 1st. Check in with your favorite mortgage professional to find out what’s new on a regulatory basis. Like the real estate and mortgage professionals there are changes going on in the closing industry.
Change is happening much faster in 2018 largely because of technology. We are all on technology overload, and we have to sift through what is needed and can help us, and what is just “noise.”
Sometimes we change to solve a problem and create a new one. Years ago, funds in excess of $5,000 were not required to be delivered by wire. The “Great Recession” changed that. Georgia decided wires were the safer alternative.
Today we know wires are risky business. With wires, the industry attracted cybercriminals intent on redirecting funds. In past articles we have addressed this industry risk and how to mitigate. If you have questions, ask your favorite S&D attorney to share our tips to protect yourself.
However, some innovations and changes are for the best. Ten years ago, we did monthly bank account reconciliations manually. Some firms did them internally, and some firms through outside auditors. Issues likely were not be caught for 30 days (if the auditor or staff was paying attention). Today, most firms, including ours use automated daily 3 way reconciliations to ensure the accuracy of their accounts.
Also, 10 years ago, fraudulent checks could be cashed at a branch and became major headaches for firms. Today our firm uses a bank product called Positive Pay to block fraudulent checks; only checks we pre-authorize to the bank (by a daily data upload) will be paid. Finally, 10 years ago, wires for payoffs and proceeds were much rarer and had to be called in. Today, we initiate wires from our computer on-line at time of closing. If the Seller doesn’t receive their funds within an hour after closing, we might get a call, wondering what is taking so long.
Technology leads to “faster”, and creates expectations to do, respond, address, download, upload etc. faster. When people are moving fast on computers they make potentially big mistakes. So when dealing with those critical processes, slow down, and have a process to avoid costly mistakes.
Here are a couple of big changes in the not too distant future of closings –
E-closings. Years ago our firm worked with one pioneer lender to do closings partially on-line. There is major movement in this direction. Our firm is exploring this and preparing for the future. Some states will transition to this new technology faster. Remember: real estate (unlike mortgages) is governed by state law. But before too long like everything else expect to see some “closings in the cloud.”
Blockchain & Cryptocurrency in real estate transactions. Though likely not as imminent as e-closings, the buzz right now is to expect to see this relatively soon. At least a few people have asked if we accept bitcoins. It seems cryptocurrency is presently for speculators and criminals (since they in theory allow for anonymity) but real applications for both cryptocurrency and blockchain are expected.
One thing that will never change is our commitment to you and your clients. Our pledge to care, to improve and to serve, we hope will allow us to be successful regardless of changes within our industry!