The post-pandemic business landscape is totally different from what we were used to just a few years ago. As the world races towards increased digitization, mortgage professionals are striving to keep up with the demand for convenient lending solutions that allow borrowers to navigate the process from the comfort of their own homes. One of the most notable of these solutions has been the introduction of eClosings.
Black Knight, a leading provider of integrated software and data analytics solutions, is at the forefront of offering intuitive digital closings that support all forms of closing. From fully online to wet-sign and hybrid options, the end-to-end solutions Black Knight brings to the table are designed with the purpose of helping lenders select the best way to close each loan while providing a simplified closing process with lower costs and improved customer outcomes.
The eClose technology used by Black Knight solves many of the common pain points that have traditionally been associated with eClosings, allowing lenders to focus more on a smooth transactions and customer satisfaction.
“Our eClose technology leverages intelligent analytics to systematically select the best way to close each loan,” said Joe Nackashi, chief executive officer of Black Knight. “It uses client-defined rules, built-in logic and transaction data to identify factors like jurisdiction requirements, consumer preferences, settlement agent processes and investor requirements, to determine if the closing should be fully digital, paper or a hybrid of both.”
With a seamless digital close experience that connects all participants in a real estate transaction and allows them to collaborate securely online, Black Knight has set the stage for a flexible work experience for everyone involved.
Once the eClosing process is initiated, borrowers are presented with a clear overview of their documents and are assisted along the way by helpful tags that provide important information about what they are signing, assisting every customer in making an informed decision.
“As borrowers review and sign the closing documents, they are given lender-specific, detailed information on a document-by-document, line-by-line basis – insight that is typically given at the closing table,” said Kirk Larsen, president & CFO of Black Knight.
From there, documents that require notarization can be handled with Black Knight’s Remote Online Notarization (RON) solution. By connecting signers with online notaries through secure video conferencing while verifying the content of each digital document, borrowers can feel confident that they are protected against the risk of forgery, fraud or theft.
While we are no longer constrained by pandemic restrictions, the demand for digital solutions isn’t showing any sign of diminishing and Black Knight continues to listen to the desires of their borrower base.
“More than ever, borrowers look for and expect to close their loans digitally, from the initial loan application through the final review and approval of their loan package,” said Rich Gagliano, president of origination technologies at Black Knight. “By further integrating Black Knight’s eClose, eNote, eNotarization, eSign and eVault capabilities, lenders can serve their borrowers’ needs by expanding their digital ecosystem, resulting in a true eMortgage experience”.
Joe Nackashi, Chief Executive Officer
Joe Nackashi leads the company’s overall vision and direction for Black Knight to provide premier solutions and services for many of the nation’s largest lenders and servicers.
Kirk Larsen, President & CFO, Black Knight, Inc.
Kirk Larsen provides overall strategic direction to Black Knight’s operating groups to maintain a laser focus on delivering solutions to clients, as well as providing overall financial management of the company.
Rich Gagliano, President, Origination Technologies
Rich Gagliano is responsible for the overall strategy and product direction of Black Knight’s origination technologies.
The post Black Knight’s eClose technology offerings solve many of the common eClosing pain points appeared first on HousingWire.real estate pandemic
Title Talk with Rachel Luna
Rachel Luna, the self-proclaimed "Texas Title Queen," talks about her career in title and what it means to be a boutique title firm going up against the…
With over 13,000 followers on Instagram, Rachel Luna, the principal of Texas-based Patriot Title Company, is the self-proclaimed “Texas Title Queen.” Luna has worked her way through the ranks and is now among the most recognizable pros in the title industry.
“I have worked every position in the title industry, from the front desk to file clerk, to copy girl, to a notary, to an escrow officer. And now I am the principal of the largest woman-owned title company in Texas,” Luna said.
HousingWire recently caught up with Luna to discuss her career, the “boutique title experience,” and bringing title knowledge to the masses through social media.
This interview has been edited for brevity and clarity.
Brooklee Han: Can you tell me a little bit about your background and how you found your way into the title industry?
Rachel Luna: I was born and raised in Houston, and I am of Mexican-American decent. It was a very modest upbringing, and we were taught to be hard workers by my family. During school I had the opportunity to be part of a co-op program with a title company. I graduated high school quite early and I ended up being a title clerk there for a while before going to university, where I got a degree in business. I then went to work for a builder and from there I just stayed in real estate. I eventually became a salesperson for the builder and learned the sales side of things, then I worked with a title company to partner with the builder, and then I found myself transitioning back into title. And the rest as they say is history. I never left title again.
BH: A saying frequently thrown around in the world of title is that you are either born into the industry or you stumble into it. It sounds like you stumbled into title! Prior to the co-op program, did you know anything about title or had you considered a career in the world of real estate?
Luna: I definitely stumbled into it. I was originally interested in doing journalism or law. So, I had these two different interests, but I ended up in title. I like that title has a legal aspect to it, but I also like that we are able to talk to people and get to know them a bit through their transaction. Then there is the investigative piece and that was what I wanted to do with journalism — I wanted to be an investigative journalist, so I loved going to the courthouse or the town hall and looking for records. But I like that there is a balance between legal stuff and people. And I love seeing people buy their first home — it is such a moment for them, and it was infectious for me to be around that at such a young age. And then every deal is so different, so every day is different. Also, having been in sales, I like that title is right in the middle of the real estate transaction. Title sees everything and we are how it all gets done. I really enjoy and feel gratified by getting deals done because I know we have helped those people cross the finish line.
BH: You mentioned doing sales for a builder before getting back in title. What led you to leave the sales side of real estate?
Luna: I was a top salesperson and was making a lot of money, but I had no life. I was working every Saturday and Sunday, every Memorial Day weekend, Fourth of July weekend and one day I woke up and was like, “I am not giving up another Thanksgiving weekend to help people shop for houses.” I was young and I think I had bitten off a bit more than I could chew, and I felt that maybe I just wasn’t ready to give up so much. I wanted to stay in real estate because growing up I had read so much about how most self-made millionaires did it through real estate, and then my grandmother had rental properties and I saw how she was able to build wealth from that. So, I moved back into title, and I really feel like it is some sort of divine destiny for me because here we are years later and I have been able to build my business, perform with a high level of integrity, gain respect in the industry and still have time to be fabulous in between.
BH: Your fabulous side is definitely showcased on your social media platforms – you do a great job of highlighting your personality, while educating people about title insurance. How did you start using social media?
Luna: So, the whole COVID thing happened, and we had been talking about doing a podcast and I just wasn’t sure. You know, what if we couldn’t get a guest on or what if they weren’t dynamic? I just didn’t feel like a podcast was my vibe. But I am really great with crowds and with the pandemic I was looking for a way to stay in touch with my clients, so I decided to start filming some shows and posting them on social media and YouTube. The platforms are all changing right now – our main audience is Millennial homebuyers, and to connect with them you really have to use these tools to elevate your business and brand. So, I just started by showing the daily life of someone in title and showing them around the office and the different tasks we do and basically how we run a title company. I think a lot of people were curious about title, so they started watching. And I think the videos resonate because I am just being myself, there is no falseness here. But, by showcasing this to a massive audience through social, that was really the secret sauce of us elevating the brand name and who we are. I am making title popular and a lot of people in the industry are happy about that.
BH: Consumer education and understanding is typically viewed as a major hurdle by most title companies. How are you using your YouTube channel and your social media to improve consumer knowledge of title?
Luna: That is something I am a huge advocate for because the consumer needs to know what they are buying and what title insurance does because it is their insurance policy. I feel like most people just think the title company disburses funds and gives them the title to the house, but we are actually an insurance company and people don’t understand that. They don’t understand that we are actually protecting their purchase. Sometimes we get calls from clients asking about papers they get in the mail because they just don’t understand that they are purchasing an insurance policy and those papers are the physical copy of their policy.
A home is one of the largest investments a person will make in their life and it is important to protect that investment and protect everyone in the transaction. We are also working to educate lenders and real estate agents because a lot of them don’t know that if you refinance within a certain time frame you can get an extra discount on your policy. We are actually working on some content about that now that we will share soon.
BH: We are hearing a lot about real estate agents leveraging their social media to generate leads. Have you had any success with this through your social media?
Luna: After I started my social media, that was when we actually started having consumers directly reach out to ask us questions about selling their home and how much the closing costs would be to see if they really did want to sell. So, we give them a complimentary breakdown of the settlement costs and then when they are ready to sell they almost always come back to us for their title company. Sometimes we are even the ones who recommend their realtor which is kind of the opposite of how things normally work.
But our inbox is always full of questions about title from consumers and we take those engagements very seriously because that is how you develop public awareness of the industry and what we do.
BH: What have been some of the biggest challenges you have faced as you have built your business and how did you overcome them?
Luna: The biggest challenge in building the company was realizing how much I needed to invest in my frontline. I always tell people that this is a customer service business and when I started out, I did not invest as much as I should have in my frontline — my receptionist and all the people out front. I was putting more into watching my bottom line than really investing in my team and the people out front because as a new business owner you are always looking at where you can cut back and increase revenue. But I learned really quickly that the frontline is everything in the title business and you have to invest in your folks out front if you want to increase your bottom line.
Then one of the other obstacles was dealing with the big competitors in our industry because we are an independent and we are up against these big publicly traded companies like Stewart or First American. But I came at it like we are a boutique title company trying to create our own space in the market. But creating that rapport with clients and getting them to see it as they could either be a little fish in a big pond over at one of the Big Four or they could be a big fish in a smaller pond with us. As a boutique, we value their business, but we also know their kids and their dogs — they are more to us than just a file number. So, changing the perspective our client base to trust us as an independent boutique company with their business and to give them an experience was the biggest challenge.
BH: What differentiates a boutique firm like yours from the larger title companies?
Luna: What I say, is that you can shop at Gucci, or you can shop at Macy’s. At Gucci or Chanel or Versace, you are going to have an experience when you shop. You can have a glass of wine or some strawberries and champagne or a croissant and there will be flowers and beautiful music. So, for us this means making sure that the closing set up is elegant and that the homebuyers and sellers feel relaxed and a little spoiled. At Macy’s you are going to have some comfortable chairs, but that is it. Buying a home is an occasion and it should be treated as an event. We want real estate agents to look good for their clients, so we make sure they don’t have a cookie cutter closing experience.
BH: One of the biggest challenges facing the title industry is the talent crunch. Some people in the industry have termed it the “silver wave.” What are your thoughts on this and what role do you see your social media presence playing in potentially driving more people into title?
Luna: Through social media we get a lot of people reaching out saying things like, “My mom is a Realtor and I have gone to her closings, and I don’t want to be a realtor, but I am really intrigued by title,” and that is great. If you are a detail-oriented person or you love numbers title can be a great business. We have recruited people from some accounting firms and from the county clerk’s office because they saw what we do on social media. Obviously, it helps if they have some knowledge, but I tell everyone that it they are willing to put in the work, we will train them because so much in our industry is hands on learning. We put them in our incubator program and within two of three years they are licensed and are closing agents. Once they become closers, they can build their book of business and then they can grow their business as large as they want.
BH: What is your best piece of advice for someone considering a career in title?
Luna: If you want a long, stable career where you will be able to increase both your income and your knowledge and you will always be challenged, title in a great place for you. Something similar can be said for real estate agents, but there are so many of them, it is such a big pool to compete with, but in title and escrow it is a lot smaller and if you are willing to put in the work, you can become the best. If you are powerful, passionate and the best version of yourself then anything is possible.real estate pandemic
US Housing Inventory Grows At Record Pace As Buyers Slow Down; Shiller Warns Of ‘Heightened Risks’
US Housing Inventory Grows At Record Pace As Buyers Slow Down; Shiller Warns Of ‘Heightened Risks’
The number of houses sitting on the market…
The number of houses sitting on the market grew at a blistering pace last month, with the number of active listings jumping 31% vs. the same period last year - a record-high increase for a third straight month, Bloomberg reports, citing a Tuesday report from Realtor.com.
The sharp slowdown in activity suggests that the Federal Reserve's efforts to curb inflation through rate hikes have had a dramatic effect on the pandemic housing frenzy, as higher borrowing costs have sidelined many would-be buyers. Sellers, consequently, have responded by trimming prices to compete.
"With inventories increasing, buyers will have more negotiating power," according to Realtor.com chief economist, Danielle Hale. "The two years of a market heavily tipped in favor of sellers appears to be in the rearview mirror."
That said, inventories are still lower than they were pre-pandemic, while the median list price remained 17% higher in July than a year earlier.
Inventory has yet to return to pre-pandemic levels. And even as options increase, competition for homes remains strong, keeping prices elevated. The nationwide median list price in July was $449,000, up 17% from a year earlier and close to the all-time high reached in June. The affordability crunch and remote-work policies have been pushing some people to relocate to less-expensive areas.
New listings last month contracted for the first time since March, down 2.8% from a year earlier, suggesting some owners are reconsidering their plans to list with the market shift. -Bloomberg
Bloomberg also reports that homebuilders have found themselves stuck with too many houses has demand has cooled.
"There’s a bit of pressure on us," said Kevin Brown, a realtor who deals in new homes. "Builders have got to hit goals and make their profit, and they don’t like inventory just sitting on the ground."
This year’s surge in mortgage rates tossed buyers to the sidelines. The waitlists for new houses are gone. And new-home sellers such as Kevin Brown, who works just south of Houston, are on the front lines of a massive shift.
An abrupt halt to the pandemic housing boom has left builders that started construction months ago scrambling to adapt. The US supply of new homes relative to sales in June was the highest since the midst of the last crash in 2010. And by early July, buyer traffic to homebuilder websites and sales offices had plunged to the lowest level for the month since 2012, according to a survey of builder sentiment from the National Association of Home Builders.
In June, there were 824,000 single-family homes under construction in the US - more than at any time since October 2006, according to the NAHB. Unsold inventory has ballooned, partially as a result of supply-chain disruptions and labor constraints.
"It has become a very competitive market for builders where they are trying to offload any standing inventory," said Ali Wolf, chief economist for Zonda, which tracks new-home production. "We may see a period where supply may actually exceed demand for a while in some of the markets that were the most feverish over the past two years."
Shiller chimes in
According to economist Robert Shiller, who predicted the 2008 housing bubble, the US housing market is headed for trouble.
"Home prices haven’t fallen since the 2007–09 recession. Right now things look almost as bad," he said. "Existing home sales are down. Permits are down. A lot of signs that we’ll see something. It may not be catastrophic, but it’s time to consider that."
He added that a drop on home prices is more likely than not.
"The Chicago Mercantile Exchange has a futures market for home prices…That’s in backwardation now; [home] prices are expected to fall by something a little over 10% by 2024 or 2025. That’s a good estimate," he told Yahoo Finance. "The risks are heightened right now for buying a house."
Pulling Forward Growth No Longer An Option
Pulling Forward Growth No Longer An Option
Authored by Lance Roberts via RealInvestmentAdvice.com,
Pulling forward growth over the last decade…
Pulling forward growth over the last decade remains the Federal Reserve’s primary tool for keeping financial markets stable while economic growth rates and inflation remained weak. From repeated rounds of monetary and fiscal interventions, asset markets surged, increasing investor wealth and confidence, which, as Ben Bernanke stated in 2010, would support economic growth. To wit:
“This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”
That certainly seemed to be the case as each time the economy stumbled; Federal Reserve interventions kept the financial markets and economy stable. However, there is sufficient evidence that “monetary policy” leads to other problems, most notably a surge in wealth inequality without a corresponding increase in economic growth.
As noted in the previous articles, current monetary policy has its roots in Keynesian economic theory. To wit:
“A general glut would occur when aggregate demand for goods was insufficient, leading to an economic downturn resulting in losses of potential output due to unnecessarily high unemployment, which results from the defensive (or reactive) decisions of the producers.”
In such a situation, Keynesian economics states that fiscal policies could increase aggregate demand, thus expanding economic activity and reducing unemployment.
The only problem is that it didn’t work as planned because “monetary policy” is NOT expansionary.
“Since 2008, the total cumulative growth of the economy is just $4.05 trillion. In other words, for each dollar of economic growth since 2008, it required nearly $11 of monetary stimulus. Such sounds okay until you realize it came solely from debt issuance.“
The question is whether pulling forward growth through monetary policy is sustainable.
The Unsustainability Of Monetary Policy
We have previously noted an inherent problem with ongoing monetary interventions. Notably, the fiscal policies implemented post the pandemic-driven economic shutdown created a surge in demand that created an unprecedented surge in corporate earnings.
Here is the problem. As shown below, the surge in the M2 money supply is now over. Without further stimulus, earnings must eventually revert to economically sustainable levels.
While the media often states that “stocks are not the economy,” economic activity creates corporate revenues and earnings. As such, stocks can not indefinitely grow faster than the economy over long periods.
When stocks deviate from the underlying economy, the eventual resolution is lower stock prices. Over time, there is a close relationship between the economy, earnings, and asset prices. For example, the chart below compares the three from 1947 through 2021.
Since 1947, earnings per share have grown at 7.72%, while the economy has expanded by 6.35% annually. That close relationship in growth rates is logical given the significant role that consumer spending has in the GDP equation.
The slight differentials are due to periods where earnings can grow faster than the economy. Such a period occurs when the economy is emerging from a recession. However, while nominal stock prices have averaged 9.35% (including dividends), reversions to actual economic growth eventually occur. Such is because corporate earnings are a function of consumptive spending, corporate investments, imports, and exports.
The market disconnect from underlying economic activity is apparent in the chart below. Since the peak in 2007, successive rounds of monetary interventions led to a cumulative increase of 219% for the stock market. However, real economic growth grew only 28% as corporate revenue rose by just 67%. In other words, stock prices rose nearly 8x more than the economy and 3.2x corporate revenue.
There is a problem in pulling forward economic activity.
The Fed Is Investors Biggest Problem
For investors, the most significant risk remains the Fed. Many hope the Fed will “pivot” from its battle against surging inflation to support stocks. However, such is unlikely in the near term, with inflation running at the highest level in 40 years.
However, even if the Fed does give up its fight against inflation in terms of hiking interest rates, it is unlikely they will immediately return to successive rounds of monetary policy without financial instability. So far, in 2022, markets are down, but not violently so. As we discussed previously, the Fed views markets very differently from investors. To wit:
“While the market has declined this year, the market remains higher than in 2020. To reduce excess market speculations, the Fed doesn’t mind some ‘disinflation’ in asset prices. Furthermore, the market decline also contributes to its tightening monetary policy to mitigate inflationary pressures.”
Absent a disorderly meltdown; the Fed will remain focused on stocks being still above their pre-crisis peak. As BofA notes:
“Since in a typical consumption model, households react to sustained changes in prices over a period of three years or so, the Fed is convinced the wealth effect is still positive.”
As noted above, the deviation from long-term growth trends is unsustainable. Repeated financial interventions were the cause. Therefore, unless the Federal Reverse is committed to a never-ending program of zero interest rates and quantitative easing, the eventual reversion of returns to their long-term means is inevitable.
Such will solely result in profit margins and earnings returning to levels that align with actual economic activity. As Jeremy Grantham once noted:
“Profit margins are probably the most mean-reverting series in finance. And if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system, and it is not functioning properly.” – Jeremy Grantham
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