5 Ways Mortgage Service Providers are Changing the Way they do Business

As the regulatory and compliance burden weighs heavy on the mortgage industry, changes must be made and companies must adapt. Nationwide Title Clearing CEO, John Hillman, discusses with MReport how research and document service providers and third-party providers are adjusting their business practices to meet the needs of mortgage companies.

MReport: What role does technology play in the Research and Document Services business?

Hillman: It’s been said that every business is really a technology business. We’re in the service business, but even here, we rely on technology every day to make it easy for our customers to get exactly what they need. Today, our customers need compliant services and good technology is the only way to deliver that. They also need affordable support in a time when margins are tight and compliance costs are high. The fact that we’re hitting within a hair’s breadth of 100 percent compliance on every document we touch for our clients and still keeping our services extremely affordable is a testament to the power of the technology we use. When you look at Nationwide Title Clearing (NTC), you’ll see best-of-breed technology in every department, operations, reporting, security, client interaction, and recording. It’s what makes a service company like ours run so well.

MReport: How have regulatory changes affected your business practices? How can third-party service providers stay compliant?

Hillman: Regulatory compliance has changed everything for third-party service providers, because it has changed the game for our customers. You won’t find a single department within NTC that hasn’t experienced significant changes—and the nature or our work has always demanded a high level of compliance. The compliance requirements in our industry today have driven us to, in effect, launch a new line of business internally, focused entirely on ensuring compliance in our operation. We’ve added staff, implemented even more training programs and installed technology that allows us to not only be fully compliant, but also demonstrate to our clients and their regulators that we are compliant. Building a fully compliant operation is not the most challenging part of this, it’s establishing internal audits and quality assurance methodologies that give our customers a high degree of confidence that will pass any regulator’s audit easily. Any third-party vendor that hopes to build a business in this industry must do exactly that.

MReport: What do you expect will be the biggest issue affecting the mortgage industry this year and beyond?

Hillman: I suspect that most people will tell you that compliance will top the list, but in our minds compliance is a symptom of a larger issue: an industry undergoing the stress of accelerating change. Change management will be the biggest issue affecting our industry this year and companies that do not manage change well will suffer. We’re likely to see rising interest rates, a continued exodus from the mortgage business on the part of the nation’s largest lenders and, of course, a new political administration all coming at us this year. And this is to say nothing of the many new rules the Consumer Financial Protection Bureau still has to write for us. Our future is less about home finance and more about being agile enough to stay in business as the landscape shifts beneath us. While many will become discouraged and we expect M&A activity to be robust this year as many exit the business, we are excited about applying the expert team of service-oriented professionals we have attracted to NTC to this challenge. It’s going to be a very exciting year.

MReport: Compared to where the title industry used to be (pre-crisis) what does the picture look like now (post-crisis)? Beyond?

Hillman: The title industry, in our opinion, has been a shining example of effective self-management through a strong trade association and an established set of best practices. In the post-crisis industry, no one is self-managed. The heavy burden of federal regulation was a disruptive force in this industry, but one we think the title industry has managed well. In the future, we expect to see an evening effect on the volume of those regulations, and perhaps some changes that may serve to swing the pendulum back toward the center, with compliance guidelines that better fit the issues at hand instead of painting too broad a stroke.

MReport: Economists have predicted slow growth for the housing market in 2016, will this affect the mortgage industry? How can those in the title industry overcome the forecasted slow growth and prosper?

Hillman: Growth is expected to be slow and steady this year, but over the course of the next decade the MBA projects a housing boom the likes of which we have not seen since the 1970s. That’s good, but to succeed in 2016, title companies won’t be able to count on that. Instead, they are going to have to focus on the fundamentals that have always built strong business, in any kind of market. This will mean a laser focus on customer service, complete dedication to compliance and the flexibility and willingness to add the kinds of products that the industry needs today. The days of sitting back and waiting for business to come to you are over. Now, title companies—like every company in our industry—must earn the business every single day.