Mortgage

Is your real estate process transparent or more like the Big Muddy?

With all of the processes involved with mortgages, consumers get lost

There’s an absolute beauty in transparency, right? In my personal life, this has manifested in terms of water. In my professional life, the waters are a little murkier, but transparency should be the goal for which we strive.

Growing up in the Midwest, I heard rumors of people going swimming in the Missouri River — the Big Muddy — and never coming back because an enormous catfish swallowed them. Of course, such stories were embellished, but as a child it did make me wary of murky water.

At the same time, I’ve loved being on or in water for as long as I can remember. However, it wasn’t until my first scuba diving experience that I truly appreciated the phrase “crystal clear” water.

The Pacific Ocean near the Galapagos Islands was so clear that even when the sea floor extended 60 to 70 feet below me, I could see the bottom and sea life clearly. The scenery and amount of life were incredible. Ever since then, I’ve been awestruck by the transparent ocean.

And we are back to that beautiful transparency. Professionally, “transparency” is the latest buzzword in the financial industry, especially in the real estate and mortgage space. Many companies claim to be transparent, but sometimes this term is misused, misunderstood or diluted until it has lost its meaning.

To clear things up, below are a few of the Merriam-Webster definitions of the word:

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  1. Easily seen through; having the property of transmitting light without appreciable scattering so that bodies lying beyond are seen clearly.
  2. Readily understood.
  3. Characterized by visibility or accessibility of information.

Let’s take it one point at a time.

Easily seen through  

The Consumer Financial Protection Bureau (CFPB) has a shining flashlight in its logo. It and other regulators have made it clear that all mortgage documents, processes and procedures need to be above board.

This isn’t just about following the letter of the law; it’s about knowing the reason behind the formation of the law. Are your mortgage processes and procedures transparent in the sense that you could scour through them and not find a single thing that would lift a regulatory eyebrow? Or is there “scattering” in the light transmission, resulting in a murky appearance?

Readily understood

Buyers and sellers are often fairly new to the complicated world of real estate and might not understand the step-by-step process that needs to occur to close a mortgage. The industry has evolved so much over the past five years that even many repeat customers need hand-holding.

With the RESPA-TILA rules that go into effect this August, the entire process will become more complicated. As an agent or loan officer, how much time do you currently spend trying to keep the buyer and seller informed of what needs to happen to get it the closing approved?

Characterized by visibility or accessibility of information

This goes hand-in-hand with the above point but digs deeper into the issue. The mortgage process itself is not a good model for visibility or accessible information. Take a look at the process below of a typical real estate transaction.

current process graphic.001

That looks pretty muddy to me.

How is your real estate team trumping this complicated structure so that all individuals and organizations with appropriate levels have access and visibility to the significant financial documents and data? Please continue the conversation in the comments section below.

Wes Miller is the CEO and co-founder of ATS Secured, a new technology category for the real estate closing industry.

Email Wes Miller.