Gerardo Caceres of ClosingCorp on Industry Standardization
By MBA Insights Staff
July 31, 2018
Gerardo Caceres is Senior Vice President of Data Operations & Product Management with ClosingCorp, San Diego. He is responsible for determining the overall strategic direction and tactical execution for all products and further enhancing the company's data and information management strategy.
Prior to joining ClosingCorp, Caceres was senior vice president of Service Delivery and Account Management with RealEC Technologies/Black Knight Financial Services, where he was responsible for driving relationship management and strategic initiatives with top-tier clients. Before joining Black Knight, he held a series of executive positions with Bank of America, most recently as senior vice president of Title Strategy and National Title Platform.
MBA INSIGHTS: What are some of the biggest challenges lenders face overseeing third parties, particularly title and settlement service providers?
GERARDO CACERES, CLOSINGCORP: Under the TILA-RESPA Integrated Disclosure Rule, lenders must be confident that their third-party providers are quoting accurate fees. Not having reliable vendors creates greater risk of fraud, tolerance violations, un-insured losses and a negative customer experience. Adding to this challenge, borrowers can select their own service providers. So, any new title and settlement agents that fall under a lender's "umbrella of responsibility" must be identified and verified as properly licensed, which can be a lengthy, manual process.
INSIGHTS: Do you think the industry is finally ready to proceed with standardization of fee names and data exchanges? Why?
CACERES: The industry is certainly ready. The question is: when will it happen and who will drive this effort? Both lenders and service providers recognize that they must reconcile their interpretations of laws and standard practices. A centralized database with confirmed service providers, as well as standardized fee names and data, will help improve accuracy and efficiency in the mortgage process.
Because of what we do and who we work with, ClosingCorp is making progress in developing a solution to help standardize this information. Currently, our solution includes a network of more than 15,000 providers across all 50 states for Title, Settlement and Appraisal, and we deliver a standardized data set to our lender clients for all those partners. On the provider identity side, we are collaborating closely with American Land Title Association to promote the national ALTA Registry, which is a unique real estate utility created specifically for mortgage lenders, to our own network.
INSIGHTS: How would technology/automation play a role in this process?
CACERES: In many ways, the technology currently being used to originate loans is driving the urgency to solve for standardization. It allows for manual processes that give loan officers flexibility to exercise discretion and apply their industry knowledge to translate the mortgage lender vernacular with the title/settlement agents.
As our industry moves toward a truly digital mortgage experience, all parties in the process must be interconnected and work in real time. Everyone can collaborate better when there are simple, specific communication guidelines in place. But, this requires a common language that can be applied across all systems that participate in the process. The hard work is really the upfront effort to understand laws and practices and then create a TRID Rosetta Stone--which requires a deep understanding of mortgage lending and title/settlement services, as well as technology that will make that translation scalable and seamless.
INSIGHTS: What kind of push-back might lenders face from third parties regarding such efforts to standardize?
CACERES: Forcing either lenders or title and settlement agents to adopt something that goes against the standard practices that each one follows creates a lot of disconnects at both the transaction and employee level. The focus should be--as an initial step--in standardizing mapping from one set of fees to the other so that information can be easily translated with transparency and certainty.
While the industry is working through these standards, ClosingCorp supports the ability to map fees to lender or other alias references that may be suggested as standard or best practice such as MISMO-defined nomenclature or the MBA industry fee list. Both can be mapped as fee aliases for lenders who want to adopt the consumer-friendly fee references. This will help lenders create a foundation and a single set of fees that could be developed following the necessary steps to change laws and practices over time.
INSIGHTS: How are you working to solve for the service provider identification and licensing challenges that lenders face?
CACERES: ClosingCorp is working with ALTA to rollout and deploy the national ALTA Registry which is a unique real estate utility created specifically for mortgage lenders and their technology vendors. Supported by nearly every title insurance underwriter, the national ALTA Registry assigns a unique identification number, the ALTA ID, to confidently identify title agents, underwriter direct offices and real estate attorneys performing settlements.
The ALTA Registry automatically assigns a unique 7-digit number, the ALTA ID, to each new agent location entered into the database. The identifier is never changed, reassigned, or reused. This is especially helpful with title and settlement agents that have similar names.
Having this unique, universal identification number that can be used across lenders loan origination systems, title production platforms, UW agent lists, and licensing databases will ensure the service provider selected for the mortgage transaction is the one used--essential when ensuring that all data points and fees are accurate. This is just another layer of protection against wire fraud and allows mortgage lenders to have direct access to centralized information about their service providers.
As the ALTA Registry is updated by underwriters every day to ensure it is up to date and accurate, the governance process to which the data is subjected makes it an important new tool for improving third-party oversight compliance activities. Ultimately, this will benefit all industry players and consumers.
INSIGHTS: How would the inclusion of the ALTA ID help fill in gaps in jurisdictions that don't require licensing?
CACERES: I often tell folks that the ALTA Registry is comparable to the Nationwide Mortgage Licensing System, which offers a centralized portal for identification of mortgage industry and other service providers. A key difference though, is that it is designed for the industry, by the industry. Using the unique ALTA ID, the ALTA Registry will provide mortgage lenders with branch location details, accurate legal entity names, and direct contact information for underwriter authorizations and approvals. This will be important for title agents as the industry evolves to "electronic mortgages." And, because the ALTA ID is the same across the service, it really does establish a single agent identification methodology across all jurisdictions and underwriters: lenders now have a new source of information to check an agent's status with their underwriters with speed and confidence.
INSIGHTS: What kind of time frame are you looking at?
CACERES: The ALTA Registry has already launched and we are working together with ALTA to drive title and settlement service provider enrollment this year. The process to update systems and integrate partners will take place in phases over the next year.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)