There are quite a few reasons that title agencies are furiously racing to automate their processes right now. The dawning purchase market and reality of 5+ percent mortgages mean agents will be competing for market share, and putting more effort (and cost) into purchase orders as refinance volume starts to recede. We’ve also talked here, more than once, about the impact of The Great Resignation and growing difficulty finding qualified bodies to man the battle stations. These alone are great reasons for title businesses to revisit just about every manual process still within their workflows, and ask if they can be digitized.
However, we’re just hitting the tip of the iceberg. There are so many additional reasons to automate, whether selectively or on a wide scale. And there are numerous other businesses in the greater real estate industry that should be preparing now as well.
Things about to change for REO/default/foreclosure providers.
Even though few, if any, are predicting anything close to the REO/default/foreclosure surge we experienced through the Great Recession years of 2007 – 2009, it’s highly likely that the phase out of COVID-era relief, in combination with inflation, consumer confidence, the potential for recession and other factors, will stimulate a significant increase in REO and default activity. This, in turn, will spur the asset management and servicing sectors, where many businesses have seen relatively low volume over the past few years, but especially during 2020 and 2021.
Although some one-time or artificial factors were involved (such as foreclosure moratoriums), it remains true that in January, 2022, we saw a 58% year-over-year increase in foreclosure filings. In February, we saw an 11% increase over January 2022. While more than a few are, at the moment, suggesting we’ll only get back to pre-pandemic foreclosure levels, we’re still facing a number of economic wild cards that we weren’t in 2019 (inflation, war, supply chain shocks, falling consumer confidence indicators).
Again, there are several alternative options now available that didn’t exist during the last REO surge. But the fact remains that companies in the asset management and servicing sectors are about to see more volume than they’ve seen in some time. That means an increased need to increase the capacity to produce anything from simple title searches to supporting customer service functions. And they’ll be trying to do this at a time when adding employees is a challenge, to say the least.
Now is the time to prepare.
Servicers, asset management companies and their supporting service providers traditionally operate on the same, paper-thin margins lenders and title companies do. They’ve also been operating in a low volume market, which means the overall capacity throughout the space is relatively low. Which is exactly why now, before the flood of service requirements arrives, these businesses should be making selective, qualified investments in advance of the rise of order volume. This won’t just prepare these businesses to meet client needs, but it will also provide a competitive advantage as lenders and other entities seeking support in the REO and default sector begin to plan ahead as well.
The benefits of RPA technology aren’t limited to traditional title agencies serving purchase or refinance markets. The same processes needed for workflow for those orders, in many ways, are needed throughout the REO/default/foreclosure industries. The benefits are the same: the ability to selectively invest in the biggest pain points in one’s workflow; the ability to redeploy precious human capital to more challenging, complex and rewarding tasks and, of course, the overall trend toward time and cost savings. So let’s not overlook the need to digitize in sectors beyond the traditional origination and title industries. It’s been a while since we’ve seen a true “counter-cycle,” but then again, it had been awhile since we saw purchase mortgage volume like we’re expected to as well.
Contact us at firstname.lastname@example.org for information to learn about our process automation services for the real estate industry.