Settlement Service Provider COVID-19 Roundtable
2020 05-20 | NFM TV
Despite COVID-19 and stay-at-home orders across the country, the housing market trudges on. There has been a revolution of sorts for Settlement Service Providers who have had to modify their workflows and implement new systems to ensure home buying remains safe, from open house to closing. In this NFM TV roundtable discussion with Richard Leonard of Fox Mountain Property Inspections, Steven Lenet from Advantage Title Company and John Liberatore, Chief Appraiser with NFM Lending, we learn how the stages of buying a home have evolved, and how some of those changes may be here to stay.
Full Transcript is Below:
- Welcome into NFM TV, I'm your host Greg Sher. Providing mortgage financing during these times has been interesting to say the least. We thought we'd take a moment to have a roundtable right now, with three major cogs in the financing wheel. Joining us now is John Liberatore, he is the Chief Appraiser for NFM Lending, Richard Leonard, the President of Fox Mountain Property Inspections, and Steven Lenet, the Vice President, Director of Operations for Advantage Title Company. Gentlemen, thank you so much for being with us on NFM TV.
- Thank you.
- Thank you.
- We really appreciate having you. We know your worlds have changed drastically, but accommodations have been made across the board. Richard, I wanna start with you in the world of property inspections. What accommodations have been made? Are you still going into people's homes? Tell us what your world looks like.
- In our world has changed considerably, our business is off about 25%, and we were trending about 30% growth at the first of April or end of March. So, in most cases, initially, we asked people not to attend their inspection. But that didn't work out so well, real estate agents weren't necessarily so happy about that. Fortunately, about two and a half months ago, I had enough foresight to see this coming, and we ordered a significant amount of PPEs, or personal protective equipment, face masks, gloves, hand wipes, all kinds of disinfectant material. So, we're well supplied from a protection standpoint. And people, in some cases, do decide to attend their inspection, sometimes they don't. We kinda prefer they come at the end. It's funny that people don't really have a good sense of what is social distancing. And we have supplies for them, if need be, at the inspection. But following the inspection, we are formally disinfecting anything we laid our hands on in that property, prior to actually leaving the property. So, that's doorknobs, light switches, electrical panels, HVAC equipment, basically anything we touch gets cleaned before we leave the house.
- You're still having to go in on purchases 100% of the time to inspect properties, though?
- Absolutely 100% of the time. There's really not a way, you're not sending a robot in there to somehow inspect a property. That's a hands-on process.
- Right. Of course.
- So, it's just what we have to do.
- Yeah, it is what it is. John Liberatore, Chief Appraiser. Tell us how the pandemic has affected your world and what accommodations have been made in the appraisal landscape?
- Sure. Well, basically, the process is the same for the NFM appraisal desk, okay. We get the order, we sign the order, we receive it, review it, send it to the branch. What has changed is the way the individual staff appraisers are doing their appraisals. Some are able to do interior inspections, some are not due to various reasons, some appraisers are older and have health concerns of their own, in some cases the borrower has a concern, in some cases the state has regulation not allowing that, like in Pennsylvania right now. And we also are seeing more exterior inspections being allowed. Now, the appraiser's job is to develop a credible report. So, they have to use whatever resources are available to do that. In some cases, they're calling the agents, they're verifying interior information, they're using MLS, they're using whatever sources they can to confirm the information they need to know about the inside of the property in order to develop a credible report. That's a USPAP standard, so they have to do it. But as far as which ones are allowable and which ones are not, it really depends on the loan type, LTV. We see more purchases being allowed that way as exteriors, versus refis. Refis, I believe, cash-out refis, for example, are not allowed. There's a few others that are not allowed. But it really does depend on the loan type and the details on that loan.
- Ah, we appreciate you getting into the details. Steven Lenet, Vice President of Advantage Title Company. I know you've worked really, really painstakingly hard to offer things like curbside closings. Tell us about your world and what you've done to accommodate these challenging times.
- We're still accommodating in-person settlements. But working with a much more limited pool of closures, for one. And we are still able to provide that in-person settlement. We obviously have to adhere to the recommended precautions. We're going in with copy packages, sitting at least six feet away, we're not bringing pens. Obviously, now going in with masks. Those settlements that are occurring in our office were obviously wiping down the area. We're not inviting any realtors into the settlement, only required people at the table, no family, et cetera.
- Yeah. Richard, I'm wondering, first of all, how long have you been in the inspection game, and also, it's been said that in the realm of real estate that technology has been adapted later on than many industries. Do you sense that this moment in time has helped pushed that forward, to get the industry more lined up with technology?
- First question's how long I've been in business. 2012, I launched Fox Mountain Property Inspections. And my other company was Fox Mountain Properties, and was a builder under that name. And I launched Fox Mountain Property Inspections with the intent of being a multi-inspector firm, not for myself to be an inspector. Although, I do still inspect houses personally on a weekly basis. So, our maturity as a company and technology has always been on the forefront. So, the way we communicate that we're going to be at the inspection, we have specially automated systems for communicating to the client, both with an electronic inspection agreement, 24 hour reminders, five day follow-ups, 30 day follow-ups, and that's all automated from day one for me, when I launched the company. So, we're a little bit different than maybe other home inspection companies in that regard, because when I launched, I was thinking forward at that time, and I do collaborate with about 50 other large home inspection companies throughout the country, and through that collaboration we're always on the front end of technology. We can embed video in our home inspection reports. Our reports are extremely picture intensive. And the ability to embed video right now, given the environment, is highly valuable, because now when someone clicks on something, rather than just showing a picture with a caption, the ability to actually be explaining what you're seeing is hugely advantageous.
- John, I'm wondering, from a different perspective, if you think once we come out of this and the world normalizes, if drive-by appraisals will be more in vogue or do you expect for those policies to be rolled back to full appraisals? What's your best guess?
- Well, I would imagine that those policies are going to be rolled back. Now, drive-bys have been in existence for a long time, but they were used for unique situations, low LTVs, home equity lines of credit, things like that. When it comes to purchase and refis, specially through the GSEs Frannie, Freddy, FHA, I imagine they're gonna roll that back to having full interiors again.
- And then on the title side, Steven, and the things you're doing in advantage. Originators have long wanted the entire closing to be, and some borrowers, digital, so you don't have to go there in person. And so, I'm wondering if you think this moment in time pushes that timeline up and gets us closer to being able to facilitate every closing, or almost every closing, digitally in the near future?
- This industry has been moving towards the e-closing very slowly virtually, because, again, every state has their own interpretation. And there's so many different technologies out there. But yes, this was the push towards that movement, and I believe, I firmly believe that when we come out of this, which is hopefully sooner than later, this 100% will be the direction of the settlement industry. And not just, we've always had the iPens, and those were the in-person electronic closings, which obviously defeat the purpose right now because you're still on top of each other. But it's specifically the remote online notarization, the full experience, where both the signer and the closer are performing the signing via video conference, and the signing and the notarization itself is also electronic.
- I know you've been working hard to make loan closings a lot more streamlined and respectful of people's personal space. Why don't you go into what's now available for NFM clients.
- Since we all know that an electronically signed note isn't accepted by all investors currently, we are providing a hybrid option. My team has been working very hard on developing and implementing this specifically for NFM. Whereas all of the documents that require notarization will be done as we're coining a curbside closing. All of the documents that don't require notarization are going to be electronically signed. Now, granted, there's still some face-to-face, but it's still gonna minimize the risk, it's going to accelerate the closing time and the closing experience. And this is a good step towards what we hope to be at a full remote online notarization experience sooner than later.
- Really appreciate everybody's time. Of course, John Liberatore, Chief Appraiser, Richard Leonard from Fox Mountain Property Inspections, and Steven Lenet, who you just heard from, from Advantage Title Company. Stay safe, everybody. We appreciate your time very much, and maybe we'll check back in in a couple of months and see how things have changed more or less.
- Great, thanks for having us, appreciate it.
- All right, take care. All right, we'll see you next time on NFM TV.