SAN FRANCISCO–Mortgage brokers have resisted the concept of “bundled services” because it was presented to them as something that would be forced upon them by regulators.
“What it essentially did was give them something to fight against,” said Joe Tyrrell, SVP of settlement service partner relationships with Ellie Mae.
Tyrrell’s comments were part of a Thursday afternoon panel on “Bundled services: Working with lenders, data providers, title companies and Realtors,” at Inman News‘ Real Estate Connect 2004. Tyrrell said his views – representing those of mortgage brokers – came from discussions Ellie Mae has had with its clients. Ellie Mae is a technology company that provides tools to mortgage brokers.
Bundled services, or combining fees for services such as credit reports, title reports and other items needed to close a mortgage, can reduce the cost of a loan to consumer and streamline the process, the panelists said. At least one lender is having success with such a model, but other factors need to be in place before bundled services become more common.
The idea of bundling fees was never presented to brokers and bankers as something that could be positive, he said. Instead, a recent controversial proposed change to the Real Estate Settlement Procedures Act galvanized them into fearing some companies would be left out in the cold if the changes were passed.
The proposed changes, which drew criticism from throughout the real estate industry, would have changed the disclosure requirements for mortgage broker fees, simplified the good faith estimate form and permitted the sale of guaranteed-price bundled packages of mortgages and mortgage-related services. The U.S. Department of Housing and Urban Development withdrew the proposed rule in March, but Secretary Alphonso Jackson has promised RESPA reform will come up again.
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But for bundled services to become more accepted, Tyrrell said certain conditions need to be in place. First, he said, third-party originators must have multiple options when it comes to bundling services. That means they need to be able to choose whether they want services provided all by one vendor or have different vendors provide different ones. They also need to have the option of ordering and paying for services as they’re needed, as well as ordering and paying for everything at one time.
Bundled services also need to be product-specific, Tyrrell said. There need to be different packages according to the type of loan – purchase, refinance, home equity and affordable housing.
And, most importantly, Realtors must be involved in the process, he said. That means they should have access to real-time updates on the process, including the various documentation. From there, Realtors could allow consumers to view some of their information, whether during the process or afterwards. For example, he said, consumers could go back to the Realtor’s Web site after closing to view such documents as their appraisal or home warranty.
“There’s some interesting opportunities that go beyond bundled services,” Tyrrell said.
Bill Rayburn, president and CEO of FNC, gave his thoughts on bundling from the perspective of a technology provider. He said bundled services can’t become more of a reality until there is some sort of consistent way of providing data. In the title arena, for example, there is no standardized form to use in providing that information.
Inefficiencies such as that must be taken care of before bundled services are effective, he said.
Bob Sullivan, the third member of the panel, said ABN AMRO’s OneFee service, which bundles all the costs a consumer might face at closing and guarantees it, has been very well received. Since its launch three years ago, the company has sold more than 200,000 OneFee loans, or about $30 billion. Sullivan is first VP of OneFee Services
ABN AMRO is now extending the product to third-party originators, and also believes Realtors are open to the idea, Sullivan said. Realtors don’t want lenders to call up the consumer and tell them three days before closing that the interest rate and fees at closing have changed.
“Essentially what you’ve done is put that entire transaction at risk,” Sullivan said.
And consumers are concerned about closing fees because they’re not experts and must place their trust in someone, he said. They want simplicity, guarantees and customer choice, which is what a bundled service such as OneFee gives them.
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