The title process is one of the most critical – and complex – steps in the end-to-end mortgage value chain. It is documentation, data, and labor-intensive, while being concerned with mortgage regulatory compliance. Workflow efficiency in the title process can significantly speed up the origination lifecycle; conversely, the inability to optimize any inefficiency can be detrimental to your bottom line.
Title companies are responsible for ensuring proper legal authorization for a property transaction, insuring buyers and lenders against conflicts like title claims. Greater workflow efficiency can help title companies speed up settlement and prevent any errors in title search activities. However, given the complex nature of the process, it can be difficult to properly identify and address these inefficiencies.
That is why title companies need to look out for the following red flags:
1. Miscommunication between different stakeholders around title documents
The title process involves several documents, whether it is a verification of property taxes or a title commitment with a 24-month chain of title. All of these are handled by different stakeholders, such as the title company, the closing agent, the lender, and the bank attorney.
Miscommunication between these stakeholders is a tell-tale sign of inefficiencies in your workflow. Watch for frequent meetings or calls, endless email trails, frequent verbal communication, and other indicators of lack of alignment in the document collection process.
How to address this and achieve workflow efficiency: Digitizing communication and adopting a collaboration platform can go a long way in addressing this inefficiency. Such platforms come with document collection and versioning tools that help build a single source of truth for all stakeholders.
2. Higher than expected payout from title claims
It is the title company’s job to provide insurance against title conflicts such as unknown liens associated with the property. However, if title claims exceed a certain threshold per year, it could mean that your company is overlooking property issues that could keep a home from legally being sold. The lack of workflow efficiency is a common cause of human error, which could lead to an incomplete title search or overlooked property issues.
How to address this and achieve workflow efficiency: There are two ways to address this – by outsourcing title search, or by incorporating automation into your in-house processes.
A reliable outsourcing partner can offer an additional perspective on your title search results and bring neglected issues to the forefront. Automation ensures that every data source, form, and document is carefully analyzed for any discrepancy or possible error.
3. Protracted closing timelines despite timely approval
Title insurance is mandatory when obtaining a mortgage to buy a property in most states of the US. Therefore, the closing and settlement timeline will depend on the workflow efficiency of the title process. Even if the loan application is submitted on time, the underwriting process is seamless, and the lender approves the loan through a digitally-enabled lending app, title companies could potentially hold back settlement.
How to address this and achieve workflow efficiency: If you see the settlement process getting regularly delayed, it may be time to conduct an end-to-end process audit for your title firm. At the end of the day, delayed settlement can negatively impact the borrower’s experience and discourage lenders from partnering with your title company.
Leverage process audits to identify the most common efficiency roadblocks such as missing data sources, difficult-to-trace documents, a weak partner network, and so on. A collaboration platform could accelerate the closing and settlement process by bringing stakeholders together on the same page, after loan approvals.
4. Overreliance on paper documents and manual effort
The title process has traditionally been one of the most documentation-intensive processes in the entire mortgage lifecycle. Not only does it rely on the frequent exchange of information among the lender, the borrower, and the title company, but it also requires a rigorous search of publicly available information, which is often stored in paper-based formats.
Since new property inventory in the US is seeing a decline, title companies are under the pump to minimize the potential amount of conflict arising from the sale of old properties. This inevitably involves the collection and analysis of paper documents as well as costly manual efforts.
How to address this and achieve workflow efficiency: A good way to reduce the need for paper documentation is through artificial intelligence technologies like Optical Character Recognition (OCR), which can read and understand printed characters from documents, photographs, screenshots, and scanned files. You can then combine the OCR-transformed data with a collaboration platform to facilitate a digital workflow.
5. Inability to scale up or down
Due to the current economic volatility, title companies may need to scale up or down with equal ease. For example, regulatory pressures might make it necessary to scale up the intensity of your title search process. On the other hand, inflation and a decrease in origination volumes could lead to lower effort requirements.
The inability to scale up or down – when you either have overburdened FTEs or idle resources – signals a critical inefficiency in your workflows.
How to address this and achieve workflow efficiency: Co-owning title processes with an outsourcing partner is a great way to reduce the need to scale up or down your internal team.
In today’s economy, fluctuating origination volumes have become the norm. Therefore, to maintain workflow efficiency, you need to reduce your exposure to the risks arising from high-capex permanent resources. And, you can always maintain a close line of communication and transparency with your outsourcing partner through purpose-built collaboration platforms for the tilt industry.
The title process can be long and complex. But when optimized, title companies can prove to be invaluable assets protecting both the lender and the buyer. Greater workflow efficiency for title companies could significantly improve the entire mortgage experience for all the stakeholders involved and positively influence the industry.
Learn more about achieving title workflow efficiency by speaking with Nexval’s experts.