Last week, hundreds of title, escrow, mortgage, and other real estate professionals from across 40 states joined us in Austin, Texas for Qualia’s 2022 Future of Real Estate Summit (FORES22)— an exciting 3 days of engaging roundtables, presentations, hands-on training, and entertainment.
We all took away a lot from FORES22, but one of the biggest takeaways is that the mortgage and real estate industry is actively reinventing itself to head towards a more connected future—one that will eliminate silos and unlock a more simple, secure, and enjoyable homebuying experience. Below are 5 observations from FORES22 on what’s ahead for real estate.
Standardized and coordinated operations will enable businesses to handle volume fluctuations for stabilized operations in boom and down cycles
Several speakers discussed the power of technology to stabilize operations—even in the face of boom and bust cycles. Over the past 2 years, a virtually unprecedented wave of purchase and refinance activity forced lenders and title companies to rely largely on grit to handle volume at the sacrifice of innovating or implementing efficiency-producing technology. The result was record profitability; however, operating costs per loan rose dramatically to all time highs.
“Now, the question is who is going to invest in [technology] in the down cycle,” Rick Hill, VP of Industry Technology at the Mortgage Bankers Association said. “Those who invest will be the ones who can deal with the next refinance boom or whatever comes next.” In particular, Hill stressed the importance of standardization and collaborative platforms to drive consistent operations both within and outside of a lender or title company’s walls.
Aaron Kanter, Chief Legal Officer, Real Estate Services at Acrisure, echoed these sentiments in his panel discussion about M&A trends. “In the next five to ten years, business models moving from fixed to variable cost will be a trend…[to avoid] getting caught in the cycle of waves, ” he said.
Alternative real estate transaction models and one-stop shops are no longer ‘futuristic’, they are upon us
Several leaders took the stage to represent and discuss alternative real estate transaction models. Adena Hefets, CEO and Founder of Divvy Homes, a PropTech company that offers a rent-to-own model for prospective homebuyers, urged attendees to “get educated” about new offerings available on the market. “There are a lot of us. [Divvy] is representative of a much broader wave that’s happening in PropTech… it’s been building for 5 years,” she said.
Single-service providers such as title companies and mortgage lenders, should consider how they can partner with alternative transaction models out there and how these new models may impact borrower expectations. During his session about alternative transaction models, Ben Rubenstein, founder of Setpoint and formerly CRO at Realtor.com, discussed how many new models promise to make the transaction easier by collapsing several services under one roof for a “one-stop shop” experience for the consumer.
Rubenstein explained that single product providers (such as title companies and mortgage lenders) should be thinking about how they can seamlessly connect with other players to simulate a one-stop shop. “The consumer doesn’t really care if it’s one company [a one-stop shop] but it needs to feel like one company,” Rubenstein explained. The path forward is better integrations that simulate end-to-end experiences.
Email as a default tool for collaboration is limiting the industry and exposing security risk
One of the most common refrains from FORES22 was just how often businesses rely on risky tools such as email to exchange highly-sensitive information with other transaction participants. During her session about lender-title operations, Jennifer Fortier, Principal at STRATMOR Group explained that email is by far the most prevalent tool for collaboration between lenders and title companies.
According to data collected by STRATMOR in a study commissioned by Qualia, lenders primarily rely on email to collaborate on tasks with title partners. In fact, 1 in 4 lenders is exchanging upwards of 30 emails and phone calls per loan. Taken at scale, this is an operational nightmare. The STRATMOR study also found that 1 in 4 lenders work with on average more than 100 different title companies in a given month.
During his session about cybersecurity trends in 2022, Chris Hendricks, Head of Incident Response at Coalition, discussed why avoiding technology adoption and defaulting to email is “a technology choice too” and one that opens up businesses to risk not just now but in the future. He explained that bad actors can often wait years to monetize old victims. “A client of mine had 60 GB of email from the past 20 years [exposed to a cyber attacker]. He didn’t realize someone had his full mailbox and could work through it at any time,” Hendricks said.
Housing supply and affordability issues require proactive solutions from many parties
The industry and government are generally in a reactive stance when it comes to the swings of the housing market. For example, when the global financial crisis happened a decade ago, homebuilders pulled back dramatically. Ten years later, the country is facing a major inventory issue and homebuilders are racing to construct more affordable housing.
Several speakers spoke to the need for more proactive solutions to ensure a greater share of people have access to homeownership now and in the future. Senator Kirk Watson, former Austin Mayor and Texas State Senator who’s running for Austin Mayor again this November, discussed his vision for building up more opportunities for Austinites to gain access to homeownership through greater financial stability. His vision includes greater access to free training so individuals can gain the certifications necessary for skilled labor positions. ALTA CEO, Diane Tomb, echoed these sentiments as it relates to career development when she discussed the opportunities for people without college degrees to find careers in the title industry. ALTA is actively exploring avenues to bring more people into the industry through education programs.
Alex Lofton, CEO of Landed, a PropTech company that helps essential professionals buy homes, reminded attendees that while long-term solutions (like Watson’s plan) are on the horizon, the industry can’t wait to take action in the midst of an urgent demand for affordable housing. “Homeownership access continues to get narrower… there needs to be [real-time] solutions to democratize that.”
The industry has proven its resilience and ability to reinvent itself
Tomb shone a light on the pandemic’s impact on the title and broader real estate and mortgage industries. When the pandemic began two years ago, the industry came together quickly to advance necessary legislation, identify workarounds for in-person transactions, and find solutions for uncommon challenges and scenarios. “Our industry is so amazing… we must make sure we elevate that and remind [ourselves] how important it is to collaborate,” Tomb said.
George Foreman, two-time World Heavyweight Champion and globally recognized entrepreneur, closed out FORES22 with an important reminder for the entire industry: if you’ve fought and won once, you can do it again. After nearly a decade away from the sport, Foreman came back to boxing in 1994 and became the oldest heavyweight champion of all time. Foreman reminded attendees that resilience is a trait that can enable businesses to reinvent themselves in order to win time and time again when times change. The title and mortgage industry has proven that resilience and capacity for reinvention are in their DNA.