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Modernizing the real estate transaction process abstract

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  • 1. Modernizing The Real Estate Transaction Process ReengineeringThe Consumer Experience Travis Wright
  • 2. POSITIONING STATEMENT AND PURPOSEFor years, the consumer experience in real estate transactions has been the consequence of a collage ofdisconnected service providers, product vendors and regulatory agencies. Each of these entities inserts theirrequirements and demands into the transaction process, often to the apprehension of the consumer and theother participating service providers. Individually, many service providers make efforts to improve their ‘slice’ ofthe consumer experience which falls within their control, but most often these improvements areuncoordinated with efforts made by service providers in other sectors.Now, a volunteer group of industry stakeholders seeks to enhance the consumer experience by approachingthe issue from another perspective. We believe that by galvanizing industry trade groups, data standardsbodies, private-sector industry market leaders, regulatory agencies and consumer advocate groups into acollaborative voice with shared interests, that together we can design and promote the Modernization of theReal Estate Transaction Process.By re-architecting the transaction process, we believe the consumer will benefit from increased transparency,process simplicity, and reduction of costs. Simultaneously, we envision transaction service providersbenefitting from improved operating efficiencies, regulatory compliance and risk reduction while serving theconsumer in the new process.Transparent property rights are an essential component for prosperity and economic growth in the UnitedStates. Given that, we acknowledge that there exists a number of standards organizations and tradeassociations working to improve the real estate transaction experience, but that no single organization has thescope or resources available to reengineer and modernize the entire real estate transaction process.What needs to come about is a framework and unifying structure to provide common linkage among leadingstandards organizations, trade organizations, and public and private sector leaders. This, then, becomes oneof the chief goals of this Modernization group.
  • 3. STAKEHOLDERS IN MODERNIZED REAL ESTATE TRANSACTION PROCESS TE C TE R H C ME S N NAR MBA ALTA AI PRIA O VO U LO A D NS 1,000,000 3,600 300,000 150,000 24,000 G Realtors; O Practitioners Practitioners Appraisers County IS 900 MLS’s C Recorders TS A Trade Associations of Transaction Service Providers Data & Transport Property Listings RESO Standards for TRANSACTION TRADING PLATFORM Standards Bodies Regulatory Bodies § 5 Million Home Sales Consumer Protection § 8 Million Consumers Dodd-Frank CFPB § 2 Million Service Providers Document Standards Appraiser, Recorder Mortgage, Title, MISMO § $1 Trillion Gross Sales Value § $100+ Billion in Service Fees, Premiums, Commissions Private Sector Providers N IL O TR C TI U IZA PL NG A D REAL ESTATE TITLE PROPERTY MORTGAGE A PA C RN I MERS TF R N BROKERAGE INSURANCE INSURANCE E FUNDING O T D O R NE O M M R S © Wright | Strategy | Advisors
  • 4. THE PRIVATE SECTOR CARES: $100+ BILLION RESIDENTIAL REAL ESTATE INDUSTRYRealtor Commissions $50,000,000,000Incremental Value of Loan Originations: 5% $40,000,000,000Title Insurance $10,000,000,000Appraisal Fees $2,000,000,000MBS Trading Fees $3,000,000,000Recording Fees $350,000,000Transfer Taxes TOTAL ESTIMATED FEES $105,350,000,000
  • 5. AND THE CONSUMER CARES THE 5 Million NEW HOMES AMERICAN Home & RESALES DREAM Sales $60B GROSS ANNUAL $1 Spent SALES VOLUME Trillion After Move-In $13B 77M 2 BILLION MINUTES: Spent for Monthly REAL ESTATE IS LIKE A CABLE TV CHANNEL! Online Internet Ads Viewers
  • 6. Report Buyer Seller Sign Report Property Documents Information $$$ Reports Report Listing Disclosures Selling Agent Report Agent Buyer’s Additional Pest Seller’s $$$ Lawyer Attorney Inspections Inspector Inspector $$$ Appraiser Roof Copies Home Inspector Inspection of Loan Inspection Warranty Documents Plan Property Purchase &Sale Insurance House Contract Agent Inspector Other Disclosure Other Search, Exam Agent Packet Client Agent Hazard Copies of Prelim Contract Insurance $$$ Client PolicyDisclosure ? Other Agent Title Search Title Packet Lender Recordable Commitment Property Client Documents Loan Title Information Documents Insurance County Title Recorder Policy Company © WRIGHT | STRATEGY | ADVISORS THE PROCESS NEEDS SUPPLY CHAIN TRADING PARTNERS
  • 7. WHAT IS SUPPLY CHAIN MANAGEMENT?Supply Chain Management is management of anetwork of interconnected businesses involved in theprovision of product and service packages required bythe end customers in a supply chain.[2]Supply Chain Management spans all movement andstorage of raw materials, work-in-process inventory,and finished goods from point of origin to point ofconsumption.
  • 8. SUPPLY CHAIN FUNDAMENTALS• Real time demand inputs from point of sale back upstream to suppliers• Suppliers can then gauge demand and throughput requirements• Today, real estate participants do not communicate demand, supply or logistics availability between one another• Result: ‘Hire Big, Fire Big’
  • 9. SUPPLY CHAIN & DEMAND CHAINReal Estate Transaction Process Supply Chain Demand ChainProducts Marketing Analytics Consumer Sales Service
  • 10. THE U.S. REAL ESTATE TRANSACTION PROCESS IS DISCONNECTED Transaction Providers Are Not True ‘Trading Partners’• REALTORS …the inventory The Providers’ Who should• LENDERS …the financing individual own or• TITLE INSURERS …the guaranty supply chains are not linked manage the• SETTLEMENT AGENTS …close the transaction to a supply supply chain• RECORDERS …legal, public notice chain platform platform?• SERVICERS…mortgage & escrow payments• SECURITIZERS …new capital in the supply chain• REGULATORS …prevent financial abuse or fraud
  • 11. WE’RE ALL IN THIS TOGETHER Realtors Appraisers Lenders Credit Attorneys Title & Notarization Insurers Recorders Technologists Securitization Investors Regulators Agencies Closing Consumers The Supply Chain of Real Property Transactions Real Property Transactions Mortgage & Title Transactions Capital Markets Transactions Origination | Appraisal | Title Exam | Securitization §FANNIE Property Search | Analysis | Contract Closing | Recording | Disbursements §FREDDIE eDelivery Appraisal Title Search, Mortgage Examination, § Closing Agent · MIN REALTOR SELLER BUYER Origination UMDP | UCDP Curative, § Title Company · MOM Loans WALL ST. § Attorney MERS as UAD | ULDD Underwriting INVESTORS MortgageePROPERTY DATA Mortgage (RETS) eTransaction Platform (Data, Documents, eSigs) Processing eClosing eVaulting Backed Securities Electronic Audit & Compliance Trail (MBS) eSignatures Closing Documents eDoc Custodian Gov’t Property Sales Oversight MLS Listing Contract eNotarization Loan App Loan App VOE, VOI eVault LOAN Initial Loan Quote SERVICERS Credit Disclosures Rates & SMARTDocs MI GFE, TIL Pricing Appraisal Lock Title eDisclosures eNOTE Archive Data Warehouses: Analytics Data Data eVault Lender’s Back Office System Deed POS & LOS System County Recorder Consumer Paper Brokerage Search Portal Court House Search Sites Documents IDX Syndicators Recorder | Assessor | Taxation State Laws © All Rights Reserved eRecording eFile eRecord Wright | STRATEGY | Advisors
  • 12. SUPPLY CHAINS SHOULD HAVE CONNECTIONS
  • 13. If You Believe In This Industry; If You Believe In Housing Opportunity For Our Kids And Our Grandkids;If You Believe That The American Dream Is Alive And Well; If You Believe Opportunity Should Not Be Limited To The 1 Percent; If You Believe That Housing Can Help Get This Economy Back On Track Again. Let’s Work Together. Stand Up And Be Counted As Part Of Mba, As We Rally Our Forces In Washington David Stevens President &CEO Mortgage Bankers Association Oct. 22, 2012
  • 14. ON LEADERSHIP“It is not up to the Government to decide the future of the real estate industry; It is up to the Leaders of the real estate industry to decide real estate’s future.” Ken Harney Keeping Current Matters® Speaking at the National Association of Realtors Conference, Orlando, FL 11-11-2012
  • 15. WILL YOU HELP MAKE IT HAPPEN? Travis Wright travis-wright@comcast.net 281-217-2789