Tech, Triumphant

Tech, Triumphant

Digital is disrupting the traditional mortgage and real estate business model.

BY LEW SICHELMAN | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

By now, most lenders know the Federal Housing Administration has moved out of the Mortgage Dark Ages and into the 21st Century with its new Catalyst platform that streamlines the process for accepting and processing both insurance coverage and claims.

In case you haven’t heard, the technology, years in the making, allows lenders to submit case binders and supplemental claims in the single-family forward mortgage insurance program.

Multi-family lenders also can electronically submit insurance applications in a simplified, streamlined and secure manner.

This initial phase of Catalyst is said to be the first of many that will support a transformed and fully automated FHA mortgage origination process. In the coming months, plans include a fully automated origination process, third-party verifications, validations for social security numbers and property addresses and the elimination of paper documents and ‘wet” signatures.

Now, the agency has implemented additional functionality to its claims module, achieving full digital submission capabilities for all single-family forward mortgage claims. The switch eliminates laborintensive manual, paper-based submissions for services.

Catalyst is FHA’s multi-year technology modernization initiative and is supported by a $40 million appropriation from Congress. Reading the details, it all seems pretty complicated to me. But I am but a humble scribe who early on found that he was good – okay, acceptable – at putting words together that not only form sentences but also make some sense.

NEW DIGITAL WORLD

In this space in December, I wrote about the advances being made in technology. But I did so generally. Other than a quick reference to FHA’s announcement, I failed to mention any specific applications. So this month, I am going to remedy that miscarriage with briefs on a handful of technology breakthroughs that seem the most interesting.

Some apply directly to lenders. Some you may not like because they infringe on your business. Some apply just to ancillary players in the buying and selling process. But if one or two in the latter group tickle your fancy but don’t fit your MO, perhaps you can suggest them to a favorite real estate agent or broker with whom you work. Or maybe you can figure a way to join in.

BRIDGES OVER TROUBLED

WATERS – People who need to sell their house before they can buy another or are hesitant to even start looking for a new place until the old one is sold now have an alternative to a bridge loan from a conventional lender. Knock Home Swap (www.knock.com) allows buyers to make a non-contingent bid on a home without worrying about selling the one they’re in.

Offered exclusively through agents, the program allows buyers, armed with financing directly through Knock, to purchase their next house, close and move in before selling the current one. The program includes a fully integrated and competitive mortgage, an interest-free bridge loan to cover the downpayment as well as the mortgage on the new home and up to $25,000 for home prep and repairs on the old house so it can sell for the highest price possible.

Similarly, Orchard (https:// orchard.com/), previously known as Perch, has launched a mortgage division to serve folks buying and selling houses at the same time. Under its program, Orchard will give buyers up to 90 percent of their home’s value up front to put toward their next house. Instant equity! When the house sells, the company gets its money back plus a 6 percent commission. If it doesn’t sell within the allotted time frame, the company gets the house and the buyers keeps the advanced equity.

Knock provides access to a network of approved contractors and manages their payments. It claims that 90 percent of the homes in its program sell within 90 days or less. But just in case, it also makes a backup offer on the old house if it fails to sell within six months.

The platform provides “more certainty and more buying power when selling and buying a home at the same time,” says Mark Stark of Berkshire Hathaway HomeServices Arizona Properties.

Orchard, on the other hand, will make the current house list-ready when the seller/buyer moves out with a complimentary cleaning, taking professional-grade photos and creating a 3D tour. When the house sells, the seller/buyer will receive any additional proceeds above the original equity payment. The company says more than 95 percent of its listing sell with 120 days.

LENDER LISTINGS – Bank of America made news last Spring when the giant lender said it would give its borrowers grants of up to 3 percent of the purchase price up to $10,000, whichever is less. They also may be eligible to receive up to $7,500 in grants to cover non-recurring closing costs or buy-down interest rates. Now, BofA is identifying on its website properties that are eligible for the grants.

The Bank of America Real Estate Center links to a network of 320 realty brokerages nationwide. Visitors to the site (https://realestatecenter. bankofamerica.com/) can get prequalified for a mortgage and search for properties wherever they like. They can browse through a group of featured listings or, after selecting a state, be taken to a list of brokers in that state.

By clicking on a broker in the area in which they are looking, listings will pop up that qualify for BoA’s grants. Participating brokers, more of whom are being added every week, feature their listings as well as those on their local multiple listing services. There are no referral fees either to the brokers or to BofA.

For a lender looking for business, that’s quite an advantage, and all through the magic of technology. Participating brokers are recommended by the bank’s local loan officers. “It’s a win for our home buyers to find the right house and a win for Bank of America when they get their mortgage from us,” Mike Toner, senior vice president of consumer lending digital sales, told me.

NEW MLS – Gabriels Technology Solution, a developer of property search software for individual brokers worldwide, has taken its technology up a notch with a new listing service for New York City. Called Homes.NYC (www.homes.nyc), the site delivers an improved search experience showing, among other novelties, aerial, neighborhood and building videos, photos and virtual tours.

The service, which covers all five NYC boroughs, has more listings than any other in the region, says Gabriels, which powers real estate and media companies in 76 countries and 47 states. And it ensures that shoppers gain immediate access to listing agents as opposed to advertising sites that redirect consumers to paying agents who probably have never seen the property in question.

Devoid of any advertising, Homes. NYC offers 20 different languages and metric conversion. Consumers can search through 9,265 buildings, filtered by cost, neighborhood, bedrooms and baths, and square footage. And it has a specialized client relationship management tool that supports ongoing consumer-agent communications.

The company is working on bringing the same technology to nine other “international” U.S. markets, including Los Angeles, Miami and Chicago. Also in its cross-hairs are London and Paris. Mortgage companies and brokers need to find a way to get in on the action.

HELP, HELP ME RONda – Remote online notarizations, aka RON, leaped 547 percent last year, according to an American Land Title Association vendor survey. A big deal, to be sure. But Notarize (www.notarize.com), one of several certified by MISMO, says its volume skyrocketed by 825 percent in 2020 in the title and lender space alone.

Obviously, part of the increase can be traced to the pandemic. People closing on their new houses just don’t want to touch paper, pens or other people unless they absolutely, positively have to. “Much of this massive growth from 2019 to 2020 can be attributed to the pandemic-induced digitization of this traditionally offline process when in-person was no longer an option,” Notarize CEO Pat Kinsel told me in an e-mail.

“Microsoft CEO Satya Nadella recently said that the world experienced two years of innovation in two months, and we’ve seen it with our own eyes here at Notarize,” Kinsal said. “We’ve watched the real estate industry move quickly to ensure critical transactions were finally digitized. The digital future has arrived and it’s even better than we imagined - we aren’t going back.”

But just as important as consumer demand, if not more so, ALTA now counts 29 states that have passed permanent laws authorizing the use of remote notarizations. It was only a decade ago that Virginia became the first state to enact such a law. But that begs the question, what are the other 31 states waiting for?

TO NO AVAIL – Here’s one for your investor clients: A single platform that allows Mom and Pop landlords to scale up to a professional level.

Avail (www.avail.co) is an endto-end program that lets landlords advertise their properties for rent, screen would-be tenants and request background, credit and eviction checks. It also creates lease agreements and collects rents, all online. Recently purchased by Move, the Murdoch-owned company which operates realtor.com on behalf of the National Association of Realtors, Avail also permits tenants to submit maintenance requests.

Subscriptions are on a tiered basis, with roughly 90 percent of the 177,000 landlords using Avail taking the free option. At $5 per month, the second level allows for, among other things, customization and website creation.

A similar platform, Nestegg (www. nestegg.rent), pays the landlord on the first of the month whether or not the tenant has paid or not. And landlords can enroll as many properties as they like, either single-family, multifmaily or a combination of both.

IN BETWEEN – After the sales contract has been signed but before the deal goes to settlement, Preclose (www.preclose.go) manages the process to make sure all the necessary documents and inspections come together so everything goes smoothly and there are no last minute glitches. This chat-based support program uploads the contract and asks a series of questions about, among other things, financing, warranties and the status of the required inspections.

MA NATURE – Buyers worried about the climate where they’re looking for a new residence can plug in the address of the places they are considering and let ClimateCheck (www.climatecheck. com) do it’s thing.

The site will produce an extensive report telling you, among other things, the risk for storms, higher temperatures, drought, flood and fire. It will also give you an overall risk score.

According to the 34-page report I received, the overall risk score on my house is just 28. But my place is at a very high risk for storms -- a small EF-1 tornado recently touched down about 500 feet away from me -- and high risk for rising temperatures. The report is free, at least for now.

Speaking of floods, buyers of houses in a flood prone places are usually unaware lenders will require flood insurance. So’s its probably an added expense they hadn’t expected. And at the last minute, they will be searching for the necessary coverage. With CartoFront (www.cartofront.com), which is offered only through brokers, agents and multiple listing services, you can instantly obtain flood quotes from private and public insurers.

PAINT POINT – A “re-imagined closing experience” is the promise held out by Endpoint (www. endpointclosing.com), a mobile-first title and escrow company. Through its app, buyers and sellers have 24/7 access to all their title and escrow information.

The goal is to keep everyone informed through the entire process, from start to finish. Once a sales contract is signed and uploaded, buyers can even send their earnest money through the app to any of a long list of participating lenders. That helps eliminate wire fraud, a problem that doesn’t seem to be going away. And it also eliminates the opportunity for the buyer to have second thoughts when he sits down to write a physical check.

REAL ESTATE MD – In what T3 Sixty (www.t3intel.com) calls the ‘WebMD of real estate, T3 Intel allows subscribers digital access to the company’s library or research and reports. Among the categories are the consulting and analytics firm’s quarterly real estate funding reports as well a brokerage rankings, technology vendors and “deep dives” into trends shaping the sector.

“The vault of information released at launch includes nearly 3,000 pages of high-quality research, which will grow on a monthly basis as T3 continually adds its latest research and analysis to the platform,” according to Executive Editor Paul Hagey.

Finally, let me close with this comment from Zillow CEO Rich Barton on how technology has quickly become an expected part of the consumer real estate experience,

“Across every industry, there has been a COVID-catalyzed and dramatic increase and reliance upon and adoption of technology,” Barton said during his company’s third quarter earnings call. “The concrete is setting on new digital habits for life and work, and it is highly unlikely that we go back to the old analog ways.”

Pat Kinsel, CEO of Notarize.com, said much of the massive growth from 2019 to 2020 can be attributed to pandemic-induced digitization.

Lew Sichelman has been covering the housing and mortgage sectors for 52 years. His syndicated column appears in major newspapers throughout the country. He also has been the real estate editor at two major Washington, D.C., dailies and spent 30 years on the staff of National Mortgage News, formerly National Thrift News.