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Since the new Real Estate Settlement Procedures Act (RESPA) changes took effect at the beginning of the year, a number of title firms have rolled out their own rate calculators to help lenders compute the Good Faith Estimate (GFE) for HUD transactions.
[IMAGE]The GFE gives customers an estimate of their settlement charges and a summary of loan terms. In the RESPA reform, title fees fall within a tolerance level group that cannot vary more than 10 percent in aggregate, making it crucial that the estimates received by the lender customer from their title agency are accurate.
While improved technology is a key factor to providing the type of title work that aligns with new RESPA compliance, one Maryland-based title company warns that ""not all technology is good technology.""
""Advantage Title Company"":http://www.advantitle.com says providing automated GFE calculators, for instance, may appear to be an enticing venture that conveniently gives lenders the numbers they need with just a few mouse clicks, but the firm cautions that GFE calculators are ""exactly what the industry needs to avoid.""
Steve Potler, Advantage Title's EVP, makes the argument that title work involves processing complicated fee structures and regulations. He says the Good Faith Estimate now has zero tolerance for misquoted transfer taxes, and with just a 10 percent threshold for title work and recordation taxes, Potler warns that the automated calculator significantly increases the chances of stepping outside the new perimeters.
""With little room for inaccuracies, it is a dangerous move to jeopardize shifting fees onto the lenders for the sake of progress,"" Potler said.
He says human discernment is required to successfully navigate the laws, requirements, and costs that vary widely in jurisdictions at the county and state level.
[COLUMN_BREAK]For example, Potler points to his home state of Maryland, which calculates taxes at different rates in each county, and applies separate guidelines for adding or removing a vested interest. Make a jump into Florida, and he says the endorsement factor can easily throw the GFE out of tolerance when determining if Alta 9 is needed. In bordering Georgia, intangible taxes are altered depending on the parties involved.
Nationwide, recordation rates can change in a jurisdiction on any given day, and according to Potler, simply no software can be updated quickly enough. He says any title company working at the national level needs the capabilities of experienced processors to correctly navigate through county and state fees and regulations when providing pre-HUDs.
Potler says he's a strong advocate of title technology, and with a BS in mass communication, he's always looking for the most effective ways to streamline and automate the national title business.
Advantage Title Company now offers an online pipeline to view the status of a file, a propriety dashboard program developed to ensure all work is completed timely, and an online ordering system with the ability to request pre-HUDs, title work, and closings.
Yet Potler has simultaneously made a strong stand against an automated GFE calculator. He says, ""Having a calculator handle pre-HUD requests would certainly make our job easier, but it would put our clients in a vulnerable position as the bank would be liable for any fees that exceed the tolerances.""
Advantage Title is convinced that it can serve clients more accurately and as promptly with a double-edged guarantee: First, providing pre-HUD estimations quickly by guaranteeing a response within an hour of the order; and second, standing by the pre-HUD quote by guaranteeing its accuracy.
In short, ""Advantage Title Company"":http://www.advantitle.com says it has developed technology to handle straightforward transactions and business processes, while leaving the complicated and sometimes convoluted work to the discernment of skilled processors.
""Improvements in technology that smooth communication and increase the efficiency of the work need to be implemented,"" said Potler. ""Likewise, technology that raises the risk of errors must be discarded. The automated GFE calculator should be rejected as it unnecessarily exposes lenders to additional fees and threatens the high standards of excellence required to succeed in the national title business.""
