Steve Ozonian of Williston Financial Group on Fraud and Security
Steve Ozonian is President and CEO of Williston Financial Group, Portland, Ore. Over the course of his career, he has engineered growth of multiple real estate related businesses. Prior to joining WFG, he was a senior executive with Chicago Title & Trust, where he headed the real estate services segment, which acquired and sold thousands of homes a year. He also served as an Executive Vice President with Coldwell Banker, where he helped build the company to 70,000 sales associates. He also served as Chairman and CEO of Prudential Real Estate and Relocation Services and expanded annual sales volume to more than $200 billion. He is perhaps best-known for his time as CEO of REALTOR.com.
MBA NEWSLINK: How is WFG Lender Services using technology to expedite closings and reduce risks at closing and post-closing?
STEVE OZONIAN: When a consumer looks at a mortgage transaction, they are not looking at separate parts of the housing industry, but at the transaction as a whole. And their expectations are that it should be a safe and efficient process. In today’s environment, housing professionals must determine how to protect consumers as they go through the home buying process. Increasingly, this is becoming the number one priority, because of the growing occurrence of fraud. Experts must also find a way to make buying a home more transparent and efficient and empower the consumer as much as possible. Those are clearly the goals for us here at WFG.
In order to help keep everything transparent and combat fraud, WFG launched MyHome, an online dashboard which provides transparency, real time updates and post-closing home information in a secure web environment to consumers and their lenders and brokers. MyHome gives a personalized experience for tracking the progress of one’s real estate transaction. This allows for quicker calls to action and keeps all communication and loan documentation is securely in one place. It’s a way for us to stand out and provide the excellent service that has distinguished us from our bigger competitors that tend to get more bogged down in bureaucracy and red tape and take a long time to get things done.
NEWSLINK: What are your top priorities as they pertain to your clients?
OZONIAN: Security is a top priority at WFG, which is why we continue to use MyHome as a secure portal for brokers, lenders and borrowers. We’re also facilitating transparency and collaboration by driving more decision making through the MyHome portal. In fact, clients that had previously stated they wouldn’t work with WFG have changed their minds after discovering we have a secure system they can trust and that creates a better experience for their customers. We have even been asked to speak about security at conferences in order to help the mortgage industry as a whole become a safer and more collaborative environment for brokers, borrowers and everyone in between.
NEWSLINK: Wire fraud has become a significant issue in the title industry as well as across all companies in the real estate chain. How do title insurance companies and the mortgage industry in general work to prevent wire fraud?
OZONIAN: Third-party service providers need to start working with the broker community and taking fraud more seriously. As an industry, we have to pay attention to this issue and get out in front of it. Every day now, the settlement services side of the industry is getting hammered with attacks that are only becoming more sophisticated. It all starts with creating awareness and an environment that values precision and the operational safeguards that keep the fraudsters at bay.
For example, one simple solution is being more vigilant about email fraud. Consumers are used to communicating with their brokers and title agents through email, but email is easy to hack. In order to avoid email fraud, all communication, payments and documents should be managed through a secure portal. This won’t eliminate 100 percent of fraud, and hackers will continue to step up their game the more we step up ours, but using a secure portal to exchange sensitive information instead of email would prevent a lot of fraud because it is much harder for a hacker to get through.
NEWSLINK: What measures are WFG National Title Insurance Co. taking to prevent wire fraud amongst its customers?
OZONIAN: One reason to trust our processes is that our entire company uses a common operating platform and we do not use email to deliver wire instructions. Every time we open a transaction with either a lender or real estate agent, we assign them a MyHome account. MyHome becomes their collaboration space and provides a secure destination where they can interact with all other parties throughout the entire process. We use MyHome to provide wire instructions, which ensures consumers receive them securely.
Additionally, we have instituted procedures to verify wire instruction before funds are sent. We will continue to build MyHome to extend further into the transaction process and add value for all the consumer’s housing needs. Consumers want transparency, they want to be empowered by being able to dictate the terms on which the experience is delivered. And that’s exactly what we should be doing with the real estate transaction.
The next step for MyHome will be to allow appraisers and inspectors to deliver their reports through MyHome and allow the consumer to have immediate access to them.
NEWSLINK: What is your outlook on home prices? Do you see prices continuing to increase until there is more housing inventory on the market? What is the impact of affordability on first-time buyers?
OZONIAN: Values have been going up for years, and they continue to rise. The increase in home prices will be driven, in part, by the low inventory of affordable housing. There is a definite need for more housing, particularly at the entry and, to a lesser degree, at the mid-level. If any end of the market has stabilized and is declining in certain areas, in terms of price appreciation, it is the upper end of the market. And I think that will continue to be the case for the rest of 2019 and into 2020.
But the need for new stock of entry level housing and even trade-up homes is still pretty massive. Because of this, we’re going to continue to see home price appreciation. Home prices won’t be rising in the double digits, but they will continue to increase at a consistent pace. It will be crucial for the entry-level housing market that interest rates stay low in order to help first-time homebuyers and other borrowers afford the ever-increasing home prices. And we need more new construction.
NEWSLINK: What needs to happen in the next year to bring more first-time homebuyers into the market and improve housing inventory?
OZONIAN: It’s a very well-known fact that homeownership creates wealth in this country. Because of this, it is vital that we help improve inventory and bring more homebuyers to the market. Industry trade groups like the National Association of Realtors and others should be lobbying to bring back tax incentives that were lost in recent tax reform legislation and lobbying for higher tax relief. In fact, with the elections coming up, The Trump administration should be jumping on the chance to bring a first-time homebuyer tax credit back into the market to increase homeownership and boost economic activity.
In order to increase housing supply, tax credits would also help incentivize home builders, who are hesitant to take on risk and build ahead of demand. Even just initiating a first-time buyer tax credit would encourage home builders to build homes more aggressively, because they know more people will be interested in buying them.
NEWSLINK: Despite the best efforts of industry participants to reduce closing times, closings seem to take just as long as they did 20 years ago. Is that a fair statement? Is this as good as it gets? What’s the biggest snag in trying to reduce closing times?
OZONIAN: If you look behind the scenes, closing times are actually better. Title searches are much quicker, desktop appraisals are growing in popularity, many things are being done in the background in order to help with closing times. However, several key snags are holding back the process. The housing industry is not unified and everyone’s systems are not integrated. The real estate industry is actually made up of several different smaller industries working together, but we continue to have problems with consolidation. The industry needs to continue to grow as one and increase integration and collaboration in order to make the process smoother and more efficient.
NEWSLINK: What are your thoughts on Artificial Intelligence, machine learning, blockchain and data tools as they pertain to the title insurance industry? How can they help in title research and underwriting?
OZONIAN: There are always ways to use new data tools to improve the title process. WFG recently released a new product, DecisionPoint, which uses a proprietary algorithm that delivers a full, detailed title report within seconds. DecisionPoint tells lenders whether the title is “clean,” meaning it can close within a matter of days, or needs some curative measure that will take longer to rectify before a title insurance policy can be issued. As a result, lenders using DecisionPoint can better manage their loan pipelines by shifting more personnel and resources to problem loans, accelerating the title process and improving efficiency.
Currently, technology like blockchain isn’t used in title, as it would require years of collaboration, research, and integrating data in order to be implemented. And while there could still be room in the future for blockchain usage in title, WFG uses the underlying principles behind blockchain technology, security and identity, and puts them to work in MyHome, which keeps the consumer and everyone involved in the mortgage process updated in real time.
While AI would be great for the underwriting process, it would also be a difficult transition and prone to errors and underwriting risk. The question, at this point, is who is willing to make those mistakes and correct those errors along the way, or pay for them later?
NEWSLINK: How do you view closings in the next decade? Will Remote Online Notarizations take off? Will the mortgage industry have eClosings on a regular basis, in all counties, by 2025 or 2030?
OZONIAN: eClosings and remote notarization are here to stay, and they will get better and better over time. But unlike automobiles and other purchases, home purchases are a much higher value and higher risk asset, and will always take longer to close. It will probably never be like an automobile, where you can walk in and walk out an hour later with your purchase.
But as we increase our technology adoption, it is important that we also increase security. The only thing that stands in the way of making sure that eClosing and eNotarization become mainstream is fraud and cyber theft. If we can secure these environments and make them ironclad, then I think we will start to see these technologies take off, and they will become routine.
(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 NewsLink 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.)