Phillip Petrie is VP of Product Development at ServiceLink, the nation’s premier provider of digital mortgage services to the mortgage and finance industries. In this role, Petrie is responsible for overseeing title product development, strategy, and research in addition to informing the rollout and implementation of new EXOS products and services in the title space to lender clients. Speaking with MReport, Petrie discusses the future of title, what trends and innovations he thinks will dominate for the remainder of 2021, cyberthreats, and emerging innovations.
What trends in the title/close space do you foresee dominating in the second half of the year?
Petrie: Increasing automation and technology in the title/close process, as a springboard for ramping up production volume, will continue to be top of mind for lenders for the remainder of 2021. It’s the way the industry is headed, and there will be no slowing that momentum. As COVID-19 and its emerging variants continue to shape consumer behaviors and the way we conduct business, it’s only natural that consumers’ desire for digital experiences will continue to grow and that they seek out lenders who can deliver these experiences.
Lenders have also been looking to their title partners to provide them with instant, digital title offerings to help them turn even more volume and speed up the time it takes to get the borrower to the closing table—this is another emerging trend I think will be here to stay. Lastly, lenders are looking for partners who can provide additional data to help inform loan decisioning. For example, it’s not uncommon for a lender to ask for the raw data from their title partner in addition to the clear-to-close documentation. They’re looking to leverage these data points to inform other processes/decisioning in the front end of the real estate process. And, with the GSEs authorizing appraisal waivers for certain loan types, this data and the ability to build property profiles has become increasingly important to inform speedy loan decisioning.
Fraud has been a growing concern in the title/close process. What are some common types of fraud you’ve noticed? What advice do you have for lenders who may be worried about fraud?
Petrie: The threat of cybercriminals infiltrating any point of a mortgage transaction is very real and is only becoming more prevalent; especially today, as the industry works to digitize key milestones throughout the mortgage lifecycle. The data shows that the COVID-19 pandemic accelerated internet fraud, with the FBI’s Internet Crime Complaint Center (IC3) reporting a 69% increase in cybercrime complaints from 2019 to 2020. Business email compromise (BCE) schemes were the costliest type of cybercrime in 2020, according to the FBI, with an adjusted loss of approximately $1.8 billion. Email communication using unsecure email accounts can leave buyers, title companies—and anyone interacting in the mortgage process—vulnerable to fraud as digital thieves can silently listen in on conversations regarding a real estate transaction and can strike at just the right moment to engage in a ploy to get the buyer to wire money to them.
Home title fraud, while not as common historically, is also continuing to become more widespread. As all title records are public data, there is always an opportunity for bad actors to prey on that. A savvy fraudster could simply go on the internet, do a title search on a property (as long as they met the requirements for recordation), determine the property owner, file a deed, transfer it into their name, refinance the property, and collect the funds—all under the nose of an unsuspecting homeowner. Another thing we’ve seen is how lack of estate planning can lead to “tangled titles,” meaning the deed does not bear the name of the person actually residing in the home on it. Unclear ownership can lead to a slew of problems down the line including deed theft.
My advice for lenders who may be concerned about fraud is to stay vigilant, continue to do your research to understand threats during the title and close process (both existing and emerging), ensure your staff is prepared and knows how to watch out for fraud (and that you have a business continuity plan in place, should you fall victim to fraud), and make sure that your data is secure and protected by your title providers. Knowing the warning signs can help you mitigate the risk of fraud and, hopefully, avoid it altogether.