United Wholesale Mortgage (UWM) CEO Mat Ishbia announced three initiatives for brokers at AIME Fuse on Saturday. The most impactful may be an alternative to the traditional lender title process, called TRAC. Ishbia said his company has hired attorneys to review title and closing docs, make sure the title is clear and then help facilitate the closing process.
Ishbia said brokers leveraging attorney opinion letters (AOLs) through TRAC could save borrowers up to $1,100 on purchase loans and about $800 on refis.
Ishbia also announced the roll out of UClose 3.0, an enhanced version of UWM’s UClose 2.0 platform, which was launched in 2018. The new platform will allow brokers to choose from three closing options: in-person, hybrid or a virtual close. Ishbia said it will now take only minutes to move from clear to close to final closing using the new version.
“UClose 3.0 and TRAC are changing the way we do closings,” Ishbia said in a press release. “These exclusive offerings will allow for a faster, cheaper and more efficient experience for all parties involved. Brokers now have access to a more streamlined platform that will guide them through the closing process step-by-step with more transparency, smarter technology and increased control.”
Ishbia also announced Safe Check, which will allow borrowers to get an appraisal waiver pre-check before submitting their loan. This is a soft-pull credit check that will help them move ahead in the process without initiating trigger leads to brokers’ competitors.
In April, Fannie Mae announced that it would be accepting written opinion letters from an attorney in lieu of a title insurance policy “in limited circumstances.”
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According to the announcement, lenders “must ensure the loan is covered by either a title policy issued by an acceptable insurer (including any required endorsements) or a title opinion letter issued by an attorney.”
Fannie’s conditions for using an AOL are that it comes from an attorney who is properly licensed and has malpractice insurance covering title opinions “in an amount commonly prevailing in the jurisdiction.”
In addition, AOLs must be addressed to the lender and all successors-in-interest, be commonly accepted in the property’s jurisdiction, provide gap coverage for the duration between closing and recordation, and include certain other information.
Diane Tomb, CEO at the American Land Title Association (ALTA), responded to UWM’s announcement. “Title insurance protects against hidden risks that are not discoverable during searches of public records, unlike alternatives. For example, one core protection of title insurance is that it protects against fraud or forgery related to the property rights purchased by the buyer. This is not covered by alternative products, and is just one of many coverage gaps that should be of great concern to consumers.
“The title industry plays a critical role in the ability of American households to build wealth through homeownership by ensuring the proper transfer of real estate from seller to buyer, securing property rights and facilitating the growth of the secondary mortgage market. Lower protection alternatives to title insurance will make homeownership less sustainable and increase unnecessary risk, particularly for first time homebuyers and low- and moderate-income consumers who need it most,” Tomb continued.
Addressing the potential cost savings of using alternative products like AOLs, Tomb said any initial cost savings “are highly speculative. Consumers will pay more in the long run by taking on additional risk and losing the legal defense obligation of the title company in a title dispute. Taking shortcuts to possibly save a small amount of money now serves only to undermine homeownership opportunity nationwide.”
This story was updated on Oct. 2 to add comments from ALTA CEO Diane Tomb.
The real estate industry is wise to provide an alternative to the title insurance monopoly…by providing “CONSUMER CHOICE Fannie Mae and Freddie Mac, both of whom have authorized safe and reliable ALTERNATIVES TO TITLE INSURANCE, are to be congratulated for providing consumer choice…which will lead to lower Borrower closing costs and more efficient closing processes.
Naturally the title insurance trade association, fully controlled by the title insurance monopoly, will repeat their tired party line of how valuable they believe title insurance to be.
But the fact is that a monopoly of four corporate conglomerates (including their extensive agency network) control nearly 90% of the “closing market”…which was $26 BILLION REVENUE IN 2021. Incredibly, they paid an incredibly low 3% in claims.
The American economy should always be based on consumer choice and alternatives…and should never be controlled by a monopoly. Innovators, crafting alternative closing programs authorized by the GSEs, should be recognized for providing Consumer Choice delivered by Fannie Mae and Freddie Mac.