Closinglock adds automated payoff ordering to combat fraud

“Earlier this year, he and I were talking about some of the shared vision we had for the future of the industry, trying to implement AI in a thoughtful manner,” White said. “Sure, you can go bolt on ChatGPT to title company data and see if it does anything for you. I don’t think that would be a very high value-add product, but there are thoughtful ways we can introduce AI into the title industry.”

Payoff retrieval emerged from these discussions as a prime opportunity.

“We said ordering payoffs would be kind of cool thing to use AI for — it’s a lot of tedious, complex work,” White said. “There are emails, phones, faxes, web portals, data from the seller, and then you’ve got to get that over to the lender. That seems like something AI could really help us improve.”

Automation cuts the process down from roughly 75 minutes to seconds, White added.

Payoff statements are automatically verified through Closinglock’s tool, with each transaction insured for up to $2.5 million.

Use across lender systems, outdated rails

Customers have already been piloting the tool for months. White said one of the toughest challenges was making it work across thousands of lender systems.

“Designing a system that works for any of those interfaces is complex and challenging,” he said. “There are 5,000 lenders out there, and they all have a different flavor of their phone system or fax system. Designing a system flexible enough for all types of lenders was a big technical challenge that we’ve been able to overcome.”

White connected the acquisition to Closinglock’s broader vision for modernizing how money moves in real estate.

“All money in real estate is moved via check and wire transfer — almost exclusively,” he said. “There’s $2 trillion in residential real estate that moves every year in the U.S., and the information we’re using for those checks and wires is all shared via email, phone and fax.

“The modern Fedwire system we’re using to move this $2 trillion is over 40 years old. It was pretty obvious to me when I started in the industry that we need to update that. It’s also not surprising there’s so much fraud because you’ve combined all those systems with so many parties in the transaction.”

From deposits to disbursements

Closinglock has already protected more than $2 billion in deposits through SecurePay, developed with JP Morgan. White said payoff retrieval is the next step toward automating disbursements.

“Now we can automatically order these payoffs,” he said. “We can automatically verify them through our system and then, in the near future, we can automatically pay that lender directly as one of the steps in the disbursements process.”

The payoff process, he said, takes title professionals away from higher-value work.

“I am excited about how this can free up title professionals’ time so they can focus on the more important aspects of the job,” White said. “This is a very tedious part of the job.”

A Closinglock survey found that title and settlement professionals invest more than nine hours per transaction gathering and validating information, reentering data and reconciling records across fragmented systems.

Industry response

Early users of automated payoff ordering say it addresses a key pain point.

“Reviewing payoff statements and sending mortgage payoff wires are among the riskiest steps in a closing,” said Michele Green, senior vice president at Fidelity National Financial. “It doesn’t take much for a simple error or a fraudulent request to cause serious issues for the transaction. That’s why it’s so important for title companies to have the strongest of safeguards in place to protect this part of the process.”

The new tool will be publicly available in October — with additional disbursement automation slated to follow.