October Research’s 2020 “State of the Industry Special Report” begins on a positive note: the title & escrow industry is entering 2020 from a position of strength.
At the beginning of 2019, the industry was prepared for the worst. Many title & escrow companies adapted lean operational models in preparation for a dire year. Then, lowered interest rates spurred a refinancing boom, leading to unexpected revenue for many businesses.
As a result, many companies are now equipped with additional capital to invest in technology solutions that will improve efficiency, compliance, and customer experience in 2020. With financial favor in mind, October Research’s special report uncovers a few key areas of focus for the year ahead.
We’ve recapped some of the highlights from October Research’s special report. To go deeper, download the special report (linked HERE and at the bottom of this article).
Economic predictions for 2020
October Research gathered insights from the Mortgage Bankers Association (MBA), Fannie Mae, and the National Association of Realtors (NAR) to deliver a comprehensive view of 2020 economic predictions.
The MBA expects that mortgage originations will total $2.06 trillion in 2019—the highest ever since 2017. Overall, economists seem to agree that this momentum will continue through the first half of 2020. However, the second half of the year will likely look more like 2018. Experts at MBA predict that resulting 2020 mortgage originations will total $1.89 trillion while experts at Fannie Mae predict $1.87 trillion.
NAR and MBA expect housing starts for single-family and multi-family homes to be flat in 2020. Additionally, experts believe a recession is likely on the horizon. Still, Fannie Mae predicts that purchase originations will grow by 1.6% and total home sales will grow by 1.1% in 2020 due to “what’s already in the pipeline.”
Areas of focus for 2020
With somewhat favorable economic predictors in view, the industry will likely focus its investment and attention on a few key areas including: technology investment, compliance, and a few key regulatory measures.
Technology and innovation
October Research’s report gathered insights from leaders at First American, Redfin, Title Resources Group, and CertifID on the role of technology for building more efficient, safe, and convenient closing experiences for consumers.
Experts predict that this year will see growth in technology investment as evidenced by early actors in 2019 and earlier. In addition to improving the transaction through efficiencies and improved customer touchpoints, businesses are also keeping their eyes on technology solutions for the real estate wire fraud epidemic. In 2019, the American Land Title Association (ALTA) developed the Coalition to Stop Real Estate Wire Fraud, which brings together industry leaders (including Qualia) to find solutions and raise awareness about real estate wire fraud.
In the year ahead, businesses will look to improve their technology infrastructure and better educate consumers, employees and clients on the threat of cyber criminals to reduce the toll of this issue.
Innovation spurs compliance questions
As technology to improve the transaction experience accelerates (and many paper processes move to digital), there are many questions about how regulators will aim to protect consumer data. In 2020, the industry will need to navigate the murky compliance waters of remote online notarization (RON) and consumer privacy laws such as the California Consumer Privacy Act (CCPA).
RON legislation and enactment is a hazy area for the industry. For example, many industry professionals question whether lenders should have the ability to mandate which online notary platforms can be used. This would call into question how notaries could keep a sequential journal across the platforms designated by different lenders.
In addition to compliance questions spurred by technology changes, the October Research report notes that compliance as a whole will be a major area of focus in 2020. The report cites a 2019 survey which shows that concerns over compliance in the financial sector have increased year-over-year. According to an expert from the Independent Community Bankers of America (ICBA), “compliance continues to be one of the biggest costs to institutions and that’s not likely to change.”
Other areas of focus in 2020
In addition to investment in technology and compliance measures, the industry also has its eye on a few key issues. This includes: the constitutionality of the Consumer Financial Protection Bureau (CFPB), TILA-RESPA Integrated Disclosure (TRID) updates, the potential of iBuyers, and other reforms and regulations coming down the line.
- CFPB: in the coming year, the Supreme Court will review the constitutionality of the CFPB’s structure. While most experts believe the CFPB is here to stay, there are questions around how the court will address earlier decisions undertaken in an “unconstitutional” context.
- TRID: this year is the mandated TRID 5 year lookback. The CFPB is currently seeking public comment on recommendations for modifying, expanding, or eliminating TRID. October Research polled a number of different experts who all agreed that elimination isn’t likely in the cards; however, the industry is eager to see how TRID may be modified in the years to come.
- iBuyers: October Research points out that many industry professionals believed iBuyers wouldn’t actually be a part of the real estate buying and selling ecosystem; however, iBuyer sales in 2019 indicate a strong iBuyer presence in the years to come.
October Research’s special report dives into additional regulatory and reform issues to watch in 2020. To read the full report, click below to download your free copy directly from October Research.