Episode 029: Steve Papermaster, First Title & Escrow

Joel Epstein:
Welcome to another episode of The Big Joel Show. Today I've got a guy that I've actually known for a long time, Steve Papermaster, I call him the Pape, so if you hear me call him the Pape by accident just know that I'm referring to the guy next to me. Steve's a 25 year veteran of the title industry and president and co-founder of First Title and Escrow, Nationwide Title and Settlement Services Company headquartered in the Washington D.C. metropolitan area and Steve's here in the studio with me, which is awesome. His clients are lenders, banks, mortgage, real estate brokers, law firms, asset managers and government agencies nationwide.

Joel Epstein:
Steve could go on for hours about all the different stuff he does because he's actually he's an attorney by trade but really he's kind of geeky and he's a technical guy. So his company has a lot of really cool tech, but what I asked him before he came on today is I asked him to be prepared to share things that loan officers and real estate agents, real estate brokers could take away from this podcast to enhance their business. To help them either sell more homes or list more homes, or do more loans if you're a mortgage person.

Joel Epstein:
And you know there's a lot going on in our business right now. Tons going on and Steve is at the pulse of it because he's involved in so many different things and we'll leave a lot of the high tech stuff alone and at the end, I'll give you information so you can contact him if you have questions but Steve welcome to the show.

Steve Papermast:
Thanks, I appreciate it.

Joel Epstein:
I think you need to get a little bit closer, there you go. Say something again.

Steve Papermast:
Thanks, buddy, I appreciate it.

Joel Epstein:
You got it, you got it. So you got into the title business when?

Steve Papermast:
25 years ago.

Joel Epstein:
This is how I suck their age out of them because he wasn't 10 when he got in people. So he's been through it all. So give me an overview right now, give me a bird's eye view from your vantage point, it's an interesting vantage point of what you're just seeing going on in mortgage and real estate right now. It could be tech-related, it could be related to the title industry, anything. Just go.

Steve Papermast:
Wow, okay. The last year has been really exciting with regard to technology. And everyone is truly focused on the customer experience, right? Everyone hears it all the time. So everyone from mortgage, real estate title is trying to figure out what they can do to add value to the customer, so we've seen a lot going on. We've seen a lot of really cool technology.

Steve Papermast:
If you started from the realtor perspective, there's been a lot of changes going on with the use of artificial intelligence and predictive analytics where we're seeing sort of a 2.0 version of agents being able to now see trends and data available to try to figure out whose a home buyer? Who's wanting to sell their home? There's things that have been out there for a while to figure that out. You've seen that from a lot of big players but there's even better technology out there right now and a lot of cool companies out there doing some things to spot those trends and to help agents find those customers.

Steve Papermast:
They're trying to attract in certain towns down to cities and states, zip codes everywhere to go and help these customers because they're looking for real estate and shopping in different ways as you know and a lot of these types of technology offerings are taking advantage of that.

Joel Epstein:
And in the old days I used to literally teach, if you see old tape of me I would say, "High tech, low touch equals no money. It's high touch, low tech." Now it's high tech, high touch and one of the biggest mistakes I see agents and lenders doing all the time because everyone is super impatient. Hear me loud on that one, stop being impatient. Is super impatient, they want things immediately.

Joel Epstein:
You know they get exposed to this technology and they think, "Okay this is it, this is the end, this is everything." And I was just in front of a bunch of agents actually in Boise, Idaho last week and of course they're all stressed out at the end, they were talking about technology and I said, "Listen there's nothing that can replace the relationship you have with your customer."

Steve Papermast:
100%

Joel Epstein:
The technology just enhances the relationship, makes it easier for the customer and easier for you and provides more value but the relationship is what it's all about. What are you seeing? What type of technology, we'll just talk about agents right now. What type of things, if I own a broker shop or I'm a franchise and I'm not getting a whole bunch, a lot of corporate stuff, what type of stuff are you seeing people beginning to use and look at?

Steve Papermast:
Well, we've started to take advantage with our agent partners of some more collaboration tools. Technology-based. There are some offerings out there that allow you to give the customer, I'm going to go back to that experience again, is giving the customer information to, for example, where they're moving to.

Steve Papermast:
You have someone that's relocating or moving to another town, they're not familiar with things such as who do I need to get my cable set up with? You go sign a contract and your moving in 30 days and there's a lot you need to do. So there's a lot of cool technology portals out there that we work with our agents on to give the customers all these tools because a lot of people aren't doing it.

Steve Papermast:
You'll see, if you go down to an individual closing you'll see what happens where an agent will be at the closing table and then let their customers know, "Oh this is who your utility providers are, this is your cable provider, this is what you need to do your hook-up." So there's things you can provide them and automated tools in advance to then provide them this information to deliver just an easier, smoother closing experience and at the end of the day, the realtor is looking for a great relationship with this consumer so they can go and get referral business. So a lot of these tools are a focused generation of new business.

Joel Epstein:
So instead of the old passing the paper across in the really cool folder that the agent paid a bunch of money for, their closing folder with all the stuff in it, the good agents are cutting that off, whether it's an app or whatever it is, it's all loaded in there before. They're not getting that at settlements.

Steve Papermast:
Exactly. It sounds so basic but this information is just so helpful. It's so helpful to customers.

Joel Epstein:
And you're telling me, so you guys do thousands and thousands of settlement every month and every year, are you telling me very few agents are really adapting it yet?

Steve Papermast:
It's amazing. When you start talking to agents about it a percentage of them are implementing this.

Joel Epstein:
Small?

Steve Papermast:
A small percentage.

Joel Epstein:
Interesting.

Steve Papermast:
It's amazing. I'll tell you something that's really caught storm in the last couple of months. We've implemented a product that is changing the way the earnest money deposit's collected. It sounds so simple, right? If you think about how that process works today someone's either overnighting a deposit to you-

Joel Epstein:
Hold that thought for one second, stay right there.

Steve Papermast:
Yeah.

Joel Epstein:
So he cut me off at the pass here because I was going to go there and of course we didn't prepare. You know, if your not dead you've read the news and your probably close to somebody, one, two, or three people removed that completely lost their earnest money somewhere through some kind of scam. One of my clients in Jacksonville, someone just ate $80,000. Gone, in the wind, ungettable. So where Steve's going with this, I just want to give them the beginning.

Steve Papermast:
Sure.

Joel Epstein:
Is there is a ton of fraud around that and these people are really good? These people that commit this fraud they're good. If they would just apply that knowledge to something good, they'd be really good at something, I mean they're slick. And so, I'm going to let you finish that thought but this is all about protecting the flow and the earnest money and this is for any agent out there, especially smaller brokers where your brokerage is not doing it for you right?

Steve Papermast:
No doubt.

Joel Epstein:
So go ahead and go and I'm sorry to cut you off, I just wanted to give the beginning of that because there could be people watching that haven't experienced that. Or haven't seen earnest money disappear, and tell them how that happens by the way. They get an email, tell them what happens.

Steve Papermast:
Sure. What happens is, so first it actually starts with your email. The kind of email that you're using. We're finding a lot of people out there are still using a Gmail account, or still using Yahoo or a Verizon account or wherever they may be.

Steve Papermast:
Not that there's actually anything obviously bad about that but the idea is there's so many hackers and what's happening is they're figuring out a way to break into people's email and then they're tracking conversations going back and forth. So the first thing that would really happen is let's say a fraudster would track and email to see that a transaction's taking place.

Joel Epstein:
They would see an agent sending an email or even a title company, "Hey you need to wire so and so here."

Steve Papermast:
Correct and what would happen is the first email we would get would be a good email that would say, "Hey please wire my seller proceeds to this account." And we would take that information and we'd use that. And the first scenario of bad things happening would be an email coming two days later, "Oh Mr. Smith, can you please, instead of wiring to my Charles Schwab account, can you now email to my Wells Fargo account? Here's the wiring instructions." And what happens is, as you can imagine, is it's not the seller's email.

Joel Epstein:
It goes to the email, they've taken it over.

Steve Papermast:
Yeah, they've taken over the email and they're telling you where to send it. So a lot of bad things have happened just as a result of that. So a lot of people, a lot of title companies for a while now have made it very clear that no changes to wiring instructions, no wiring instructions by email. There's a lot of different ways.

Joel Epstein:
And that built a lot of fences.

Steve Papermast:
Yeah, built a lot of fences around these issues. There's some great technology we've implemented just with regard to seller proceeds alone even if we receive information as to where proceeds should go, we have another wall in place that we put that actually validates that account information before the wire gets sent out. So we will literally get instructions for someone and then we will put those in our system and it will give us a check. It will give us a green and red and it will tell us good to go, we're validating that customer's account so we know it's theirs.

Steve Papermast:
Or red that says don't send it, there's some issue. And it may be a valid account but in that case we're going to question it, we're going to call a flag and we're going to just simply, you know what, we're going to overnight you your proceeds or we're going to get another way to courier you a check so you get your proceeds on time, but we're not going to deliver by wire. Just because of the various issues. So it only happens in a small percentage of cases, but as you said when you're looking at proceeds of anywhere from $10,000 to millions of dollars.

Joel Epstein:
Well, when it's gone-

Steve Papermast:
It's gone.

Joel Epstein:
It's not gettable. Like you can't get it back, it's gone.

Steve Papermast:
Yeah.

Joel Epstein:
I mean it's literally in the air. Who knows where it is, but it's in the air at 100 miles an hour, gone. So that's one thing for agents, so if their title company or where ever their closing stuff is not using technology like that, that's a heavy recommend for you correct?

Steve Papermast:
100%. 100%.

Joel Epstein:
They need to be using something secure.

Steve Papermast:
You want to ask your title partners what they're doing just to validate information. Also, I earlier started talking about EMD's. Some really cool technology out there and you would think well, sending a check, I'm so used to doing that or dropping by the title company or sending it.

Steve Papermast:
Now there's everything you can do in the world with your mobile phone that's secure. So we've got a great product that we've recently implemented that allows a borrower, an agent to take that EMD that they have in their hands at their office the day they're getting it, snap a picture.

Steve Papermast:
They identify the title company they're working with, they identify us, pick where the property's located and they can even upload their contract if they want or send us some details in the contract and it immediately goes to the right account. So nobody is having to send a check, nobody is having to worry about wiring instructions, funds instantly go over to us, automatically validated, they know where it's coming from.

Joel Epstein:
It's easy too to bounce over to the loan officers, it's funny we talk about it all the time about running around before a settlement with your hair on fire trying to get stuff closed and one of the big perpetrators there is EMD.

Steve Papermast:
100%.

Joel Epstein:
Always, always. So what do the lenders ask you for on that? What do you typically... What kind of documentation are you giving them? Is it just easy? Is it just showing a picture of the check and the wire and where it is and it's done? Lenders are good with it?

Steve Papermast:
100% yes. Because we get an image around the same time. But a lender just wants validation that we received the EMD. They're not asking for pictures of checks from the title company it's more the validation that we received it, letting the customer know we received their funds.

Joel Epstein:
The lenders are taking that, FHA, VA, conventional, no problem?

Steve Papermast:
Oh, 100% yeah.

Joel Epstein:
That significantly makes it easier for a loan officer on the backend. If their agent partner is using that kind of technology, meaning for the chase at the end for verifying that, that's where it's supposed to be especially.

Steve Papermast:
Correct. Yeah because what you're doing is your hooking your bank up directly with this provider, right? And then you can't just pick any bank. You're setting up an integration in advance that's setting that technology provider up with your bank and identifying, which escrow account that money goes to based on where that property's located.

Steve Papermast:
So you there's no, you know people do business around the country in various states they know regulations require that you have a Maryland specific account or a Florida specific account. You can't have other real estate funds from other states in those specific accounts, so you can direct it.

Joel Epstein:
What percentage of your purchase money closings are not in an office anymore? Like what percentage of those are mobile? I'm just curious.

Steve Papermast:
Oh wow, where our agents to... Our closing agents are traveling to other agent's offices, 85%.

Joel Epstein:
85%. You see that, is that just normal?

Steve Papermast:
That's normal.

Joel Epstein:
The old title company with the big room and the bowl of candy is going by the wayside.

Steve Papermast:
That was the cool part about buying a house.

Joel Epstein:
I know. You know what I mean? That was the cool part about it.

Steve Papermast:
We still have a lot of candy and people, again the closing experience it's not that it's not happening in an office, it's just not happening at a title company office. These days it's all about convenience. Where somebody may still see this or they say, "Well I have to close by 2:00 p.m. because my title company closes at 4:30 p.m. and they can't have a closing past 4:30 p.m."

Steve Papermast:
Those days are just... No one's really considering time. As a title company you're working on somebody else's time and you want to be a great partner to that agent or that lender that you work with and you want to work at the borrower's convenience, the agent's convenience.

Steve Papermast:
So we're going to obviously prepare to have that closing ready with checks based on what kind of transaction it is, where the state's located, whether we fund the same day, we fund the next day, so we just prepare in advance and it's exciting. And then with the onset of e-closing, talking about the whole bricks and mortar and anything that's a traditional office closing, that's really changing things. So there's a lot going on with that right now.

Joel Epstein:
So when do you think we're really... You know, it's funny I was just talking to someone, I was trying to explain to them and I know this is your world so I might even mess something up here and you can correct me on it but they're just talking about the whole rest of the world is basically completely automated with the exception really of mortgage really. Even the real estate piece is pretty automated but the mortgage still isn't.

Joel Epstein:
And I was explaining to someone that a big part of that is mortgage is risk-based lending. It's actuarial and when lenders are lending money they're lending money based on an assumption that okay we're not going to have to foreclose on these people because of what they look like. You know because of their whole profile and the foreclosure laws in the country are just crazy. I mean they change per jurisdiction. I mean you could be five miles from a house and walk into another township and have a different type of law in place to actually foreclose on someone's house.

Joel Epstein:
I was explaining this is one of the reasons it's not fully automated yet because foreclosing is not just a general term that you can do anywhere at any time. It's very different depending on where you are and because of that it's really slowed down the onset. I can imagine some people who shall remain nameless who run massive companies that are taking over the world, you know how they're kind of eyeing the mortgage business a little bit and going, "Why aren't we in here? Why aren't we doing this?" And then someone stops them and goes, "This is why you're not doing it. You need to wait until this is cleaned up." Are we any further down the road on that?

Steve Papermast:
You know we are. There was a lot of reluctance for a while about eNotes and about right foreclosing. Can you foreclose on an electronic note?

Joel Epstein:
With an eNote right.

Steve Papermast:
Sure with an eNote. Now things have really changed. Fannie and Freddie are both buying eNotes. A lot of large investors are now accepting eNotes. You're able to get them secure ties.

Joel Epstein:
Tell everyone what an eNote is so they understand.

Steve Papermast:
Right, eNote is basically, you know a note you're signing that tells you what your monthly payments are every month and an eNote is just an electronic note. So when you go and you digitally sign a note it's an eNote.

Joel Epstein:
No ink. No pen.

Steve Papermast:
No ink. Right? So now instead of that folder sitting in the lender's office, there's now a vault they call it an e-vault and that stores all the documents. So to get to that point where you as a lender can e-close, you need to get an e-vault in place.

Steve Papermast:
And a lot of the loan origination platforms are connected or have their own type of e-vault to then prepare that lender so they could start accepting e-closed documents and produce e-closed, right? Produce e-closing packages. So we're now getting to a place with e-notaries and e-notarization laws changing and expanding nationwide.

Joel Epstein:
And no human being there?

Steve Papermast:
Yeah. Yeah.

Joel Epstein:
So how do you notarize something without a human being there?

Steve Papermast:
So camera. You're using a camera. So now what you do is there's now what they call remote online notarization going on in 20 plus states today where including Maryland, D.C., and Virginia where we literally could be... I could be at my office, you could be at your house, you would be on a camera, you'd be using an iPad.

Joel Epstein:
FaceTime?

Steve Papermast:
FaceTime, whatever it is, well it's not FaceTime but you'd be using an application.

Joel Epstein:
Skype or something.

Steve Papermast:
Yeah, you'd be using an application that validates you and then you literally hold your license up to the screen to validate who you are and that's you and there's technology that actually reads that ID and validates that you're that person.

Joel Epstein:
How many lenders are using that right now? Very few?

Steve Papermast:
I like to say there's about two dozen lenders right now.

Joel Epstein:
Using that type of technology?

Steve Papermast:
That are doing remote online notarization, they're allowing it. It's been a huge boom to a number of lenders.

Joel Epstein:
That's a massive slow down getting something notarized. That's like [inaudible 00:20:01], everything stops.

Steve Papermast:
It's amazing.

Joel Epstein:
Yeah.

Steve Papermast:
If you think about the e-closing days way back when it was a hybrid. They call it a hybrid because you'd have to wet sign the mortgage, and then you would e-sign the note and send a partial package back to the lender, and then you'd have to hand record the mortgage.

Steve Papermast:
It just wasn't a great process but now not only is there a full e-closing where everything can be digitally signed including the mortgage that you can now e-record with a particular county because thousands of counties you can now e-record documents. It's now the standard as opposed to the exception for e-recording. That's what's allowed this big expansion of e-closing.

Joel Epstein:
So have you seen agents... So the agents that you've seen, what are they doing to replace that cool part of closing? Because you know what, even though it's a pain to get in your car and go close, let's face it buying a house is major.

Joel Epstein:
Most people, I forget the percentage but most people when they retire their largest investment will actually be their home. It's not going to be an IRA, 401k or a stock account. It's literally going to be the equity in their home. It's a very high percentage. So it's kind of a cool thing when you close and it's a cool celebration.

Joel Epstein:
Thinking I was making fun of the candy bowls and the old school walking into the big conference room in the title company and you know that's years and years ago. I think most of you guys watching me know how long I've been doing this but it's a long time ago. How do they replace that? I mean that's a cool part of it. What are they doing today?

Steve Papermast:
It is. You know what, instead of having the closing agent and the seller at the table, you'll have an agent with their buyer there and they'll be literally looking at a big TV right? You look at a big TV today with a video camera and they're just watching a closing go on and everyone's doing it as a collaboration. So it makes it cool in a new way.

Joel Epstein:
Okay, so it's almost like the multiple screens going on.

Steve Papermast:
Yeah.

Joel Epstein:
Okay, so they've made it... How many closing do you think are going down like that right now? What percentage? How far into this are we? Are we 20% in? 10% in?

Steve Papermast:
No, not even close. Not even close, it's a couple points.

Joel Epstein:
So this is a trend. This is where we're going and depending on what kind of market you're in, depending on who your title company is, what lender you're working with, it's just going right there at 100 miles an hour.

Steve Papermast:
Yeah. It's going fast. It went actually at 100 miles an hour and then slowed down a big because lenders are also trying to catch up and prepare. Lenders are always in an interesting position, they're trying to prepare and everyone's so busy originating and there's compliance and there's the day to day and then there's infrastructure and technology.

Joel Epstein:
But you know how lenders pick new... You know how they pick new technology right? They study it for two years and by the time they pick it, it's three years old. I mean if you think about it, to implement technology if you have 1,000 loan officers to implement that tech, I mean it is... We're talking about massive undertakings, massive.

Joel Epstein:
And you have to be willing to actually spend and invest and these are all pre-taped and edited but it is almost May of 2019 and this latest little refi boom has helped a lot of lenders stick around because a lot of people were teetering and they did a study, not a study but they released some information last year that at the end of the second quarter last year of 2018, if they did a liquidity basically, liquidity equation, something close to almost 50% of the lenders would have failed liquidity for their warehouse lines.

Joel Epstein:
And that wasn't the end of September but so the people that were teetering because there's a lot of mergers going on, there's a lot of people trying to buy other people that were teetering got a little breath of fresh air. My question is what are they using that money on? Are they using it on technology or are they using it to keep their doors open and they really need to be heavily investing in technology right now, right?

Steve Papermast:
100% and what we're seeing is wow I know that they're all talking about rolling out and e-close. Putting out an e-close initiative. They're also focused on the customer side, so they're focusing on that user experience at the beginning, so there's a lot of neat technologies out there that are focused on at that point of sale when that consumer is there and they're shopping and they're getting the mortgage or doing the loan application that's where I'm seeing when I talk to our client today.

Steve Papermast:
I'm seeing their putting their time and energy into that beginning phase to get that application process tighter and easier because everyone wants to create their own rocket right? And that's what we're seeing a lot today but I do believe the e-close initiative will continue to push forward in the next couple years and it's getting pretty exciting and people shouldn't be scared about it.

Steve Papermast:
People should really embrace it. Nothing's at the end of the day going to replace the agent, nothing's going to replace the local title company on the street corner but there's some cool technology that will really help. I mean even the title space. I'll switch gears for a minute.

Steve Papermast:
You talked about actuarial, you talked about them figuring out risk and adjusting risk. There's a couple companies that have, one in particular that has used predictive analytics to actually create an instant title commitment that's curative free. So think about that for a second. You're able to, and for a refinance, you're able to order a title and get a commitment back that's a clear title, no issues that you can close within minutes.

Steve Papermast:
They've basically used artificial intelligence to deliver this commitment. Not 100% of the cases but in a good percentage of the cases in some states right now it's pretty exciting.

Joel Epstein:
Have you seen that come with purchase as well?

Steve Papermast:
Not yet. Not yet.

Joel Epstein:
Are we marching that way?

Steve Papermast:
Yes. Yeah, we are involved with this particular company as they rolled out. A Silicon Valley-based company that has really done some neat things to deliver a faster product and again an error-free product.

Joel Epstein:
I was going to say, it's not only faster it's error-free.

Steve Papermast:
Yeah. Curative frames.

Joel Epstein:
People always laugh about, I mean you guys just get hammered constantly. Title insurance, are you kidding me? What am I paying for? This is insane. You know I mean how many times have you heard that? Nine million times in your career? Like this is a scam. Until someone builds a fence on your... Until you have an issue.

Steve Papermast:
Until someone has a problem, yeah.

Joel Epstein:
It's the biggest scam ever. What about these title... You know I was reading about them all the time, these title scams. These people getting scammed on their house. They're getting phone calls and saying their title's not clear. Do you know what I'm talking about with that? People are taking over their house based on... You know where I'm going with that?

Steve Papermast:
You know I did hear years back in certain markets where someone was trying to... People that were in distress. Homeowners that were behind in their mortgage, someone would come in and they would say, "Look your $20,000 in arrears why don't you let me pay your arrears and then transfer the property to me. Or transfer half the property to me."

Joel Epstein:
Right. Equity stripping. Yeah.

Steve Papermast:
Yeah, equity stripping.

Joel Epstein:
Yeah, that's over.

Steve Papermast:
But this other.

Joel Epstein:
Yeah, they're coming back with new stuff now where I was just looking at a program and I just saw it. I don't know where I saw it, but where it's an equity share. I can't even believe that you could securitize that.

Steve Papermast:
Yes, I know what you're talking about now.

Joel Epstein:
Because the big lenders want nothing to do with those. You know, with equity share.

Steve Papermast:
100%, yeah we did see that out a couple years ago. I know what you're talking about.

Joel Epstein:
What about QM, 9QM are you seeing lenders, if you look at your percentage of business are you seeing the percentage just creeping up that's non-agency?

Steve Papermast:
100%.

Joel Epstein:
What type of programs are you seeing?

Steve Papermast:
We're seeing everything now. It's almost back to where-

Joel Epstein:
Are we scary back?

Steve Papermast:
I don't think so. I think under writing's better. Under writing's better than it is.

Joel Epstein:
Smarter.

Steve Papermast:
Yeah. And there's more tech out there. People have sort of learned the ways of how not to get hurt. You know I also think that with the current administration regulations are easing, that's why you see banks doing better overall. You see record profits from all these banks all the time now. So regs are easing and that takes us to that definition of a QM loan. I think that's going to change.

Steve Papermast:
You know originally, which was important to title providers is there was a rule in the QM laws that basically said if a lender or refer business owned even a small percentage of a title service provider they had to include all the fees earned at that title company with the lender fees and then if all of it together including origination and the title fees exceeded three percent you couldn't sell that loan.

Joel Epstein:
So an agency. It was knocked out.

Steve Papermast:
It wasn't a QM loan, exactly it was knocked out so I believe the rules are going to change soon and I think that may eventually go away because we are seeing more joint ventures that were dismantled because of all that.

Joel Epstein:
Are back?

Steve Papermast:
Are now coming back. Lenders are looking at the affiliate businesses again. Especially taking marketing service agreements and all the wrath that, that caused a number of years ago with the CFPD.

Joel Epstein:
Oh, the agents are still in a mode where it's very hard for them to be profitable and so that's why they look to a lot of these affiliate business arrangements to some people to keep the lights on.

Steve Papermast:
Sure, 100%

Joel Epstein:
I mean it's hard when you're paying a lion, lion, lion share. I mean you know when we started doing this if you were a great agent, you know you made 70% and that was the best agent around. So at least there were some profit or whatever. For loan officers, if you had a loan officer sitting in front of you and they said, "Hey Steve you've been doing this a long time, you're out on the street you see people all the time, are there ways loan officers can leverage being more knowledgeable about the title process? Being more knowledgeable about the closing process to provide a better value?"

Steve Papermast:
Oh, 100%. You know it's interesting if you ask a loan originator if they've ever read a title commitment what do you think they're going to tell you?

Joel Epstein:
Oh, it's going to be low.

Steve Papermast:
It's going to be low right? So what we try to do is when we go into a lender of any size, we want to ask them about their processes and find out who's reading the title commitment? Who's skimming it because we want to give them just a bit of training on trusts and estates and tax liens and just different vesting issues and transferring titles. We see a lot of that where we have lenders saying we need to add so and so to title, we need to remove someone from title.

Joel Epstein:
So is it recommended... You know, would you recommend that loan officers, it's funny because I mean I did this when I started, but would you recommend if you're a loan officer, if your newer or even if you've been doing business a while and you're not really educated on this, that they take a guy like you to lunch and ask a bunch of questions?

Steve Papermast:
100%. We even offer to lenders to just do title one on one training with new loan officers in the business where they've taught them how to sell, they know what their job is for that lender but if they can teach them title it's not that they want their loan officer to be involved in the process.

Joel Epstein:
No.

Steve Papermast:
But when they get the questions from a borrower on the phone about these items, they're most likely having to hang up the phone, call their local title guy and say, "Hey this came up, can you tell me what do I need to tell my borrower? What do we need to do in this case?" So it's not that they're there for that advice but just so the bells go off in their head when they're talking to a consumer.

Joel Epstein:
Well if you figure that 50% of marriages end in divorce and most people buy homes your probably getting these phone calls all day every day. Correct? Because something is going on having to do with a divorce or a separation or whatever that has to do with either a house being sold, a house being kept, a house being retitled, I mean something going on right?

Steve Papermast:
100%. It's either divorce or someone passed away.

Joel Epstein:
Right, all day long. So that's an interesting take away for loan officers listening and for real estate agents. That's for both. Like if you don't think that you're really educated on, I'm just going to use the word title but you know that's a broad word.

Joel Epstein:
I would suggest that whoever your favorite title person is, whoever you do a lot of work within your market that it's worth it for you to take a couple of minutes and sit down with them and really learn. This doesn't mean you're going to be giving expert advice because I don't recommend that, but you would be able to give some type of advice to then be confirmed by somebody. Just say you know, "Hey based on what I know this is what you're going to have to do."

Steve Papermast:
100%.

Joel Epstein:
We're going to need to confirm it because it's interesting, I would say if I put up, if I lined up 10 loan officers right now they would be fairly weak in that department. They would be weak, weak I would think.

Steve Papermast:
Yeah, 100%, I mean you don't expect them to know this and in a lot of cases, they don't want to know. You know they don't want to know because they want to focus on what they're really good at and I understand that.

Joel Epstein:
But it's a value proposition that to be perfectly honest when you know that kind of stuff it takes a lot of pressure off from a rate shopper in two seconds.

Steve Papermast:
Yep, you're right because it shows you've got an extra level of education-

Joel Epstein:
It takes a lot of pressure-

Steve Papermast:
... That someone else doesn't have.

Joel Epstein:
You know if you're listing someone's house and you're going against a discount broker or something like that and you're charging a full listing fee, which by the way, you should be because if you're doing your job you're earning that money. You're going to sound a lot different than the discount broker there when you're really educated on that and do you find that a lot of agents are lacking in that department? I mean I know you do business nationally.

Steve Papermast:
Sure.

Joel Epstein:
Do you find that a lot of people could know a lot more?

Steve Papermast:
I do and we get some people calling us more than others actually and we will go and educate them more and talk to them about these issues and tell them what to look for. So some are seeking knowledge.

Joel Epstein:
Yeah, yeah. What else for loan officers originating today would you recommend? It could even be technology-based. What do you recommend?

Steve Papermast:
Well from an originator perspective the biggest thing that has to get out is disclosures in the beginning right? So one of the biggest problems we've identified years ago was pricing. Was getting instant, accurate pricing because nationwide you had states that have different transfer taxes.

Steve Papermast:
You highlighted title insurance rates are different, closing costs are different, so you want to get with a provider a title provider that can deliver in an automated way pricing information to you for your transactions so that you can price out on the fly when you need to, and then deliver that information back into your disclosure. So that processor-

Joel Epstein:
That seems so simple, are you telling me there are loan officers that are struggling with that right now?

Steve Papermast:
Oh, 100%. People estimate those costs right now. If they don't have access to something as simple as an accurate calculation platform.

Joel Epstein:
What percentage of people are using an accurate calculation platform do you think?

Steve Papermast:
You know I'd hope that obviously, more than half have to be using some kind of calculation platform but there's a lot of people that estimate pricing and there's a lot of lenders we've talked to in the past that build into their platforms estimated pricing and they even estimate high so they don't have a tolerance cure. So they make sure they're not having to write payout money after the fact in a restitution penalty.

Steve Papermast:
However, what they're doing by overestimating is they're going to lose a deal to a lender that's got automation that's accurate and then their pricing's going to be perceived to be a lot higher and they're going to end up losing that deal. So they want to leverage any technology that would be in their loan origination platform.

Joel Epstein:
If you work for a big company they're controlling that at their level correct? Your not able to do that right?

Steve Papermast:
Interesting, 50/50. Sometimes the originator and the processor are able to... They're actually tasked with going out and getting the right pricing because the lender may not have a pricing platform or you as the originator have to deliver the pricing to them and then you get the pricing and then you give it to the lender and then they send the disclosures out for you to your point, but they're relying on the information that you sent. There's a lot of problem areas in that way but platforms like that really are critical for an originator right now.

Joel Epstein:
So if you're an originator right now and your not using something like that you're a little crazy. It's stupid not to.

Steve Papermast:
You're a little crazy and you're wasting time. You may get the accurate pricing but if it takes you an hour or a day to get that pricing you've potentially lost a deal.

Joel Epstein:
Interesting. Anything else for loan officers? I'm looking at the time. Anything else for loan officers that you see the big picture? What do you see coming down the road, 2020? What do you see that they can control at their level?

Joel Epstein:
I tell loan officers all the time when I'm talking to them and they're complaining about something or something regarding technology and I'm like, "Look your literally telling me you want to turn around an aircraft carrier by yourself. Your not turning the aircraft carrier around. This is not happening.

Joel Epstein:
The only people that can turn that around are in the control room and you're nowhere near the control room and your not working for a tiny little company with pt boats." What they can be doing on their end from a technology standpoint or even it could be title technology. Just trends that you see, not taking this away from call it the title world but I know that your very techy and you stay on top of that stuff. What are you seeing out there? Just as we wrap up?

Steve Papermast:
Well, collaboration. We're seeing a lot more tools out there that are allowing agents and lenders and title companies to work together.

Joel Epstein:
Easier.

Steve Papermast:
Easier, so there's a lot of great collaboration tools out there. So then there's not the disconnect your seeing with email.

Joel Epstein:
Now could you use these tools even if you worked for one of the big, massive companies? Could you still use these tools and then have it feedback into the process?

Steve Papermast:
It depends. Yeah, it depends.

Joel Epstein:
On who you work for.

Steve Papermast:
Yeah, it depends on who you work for.

Joel Epstein:
So if you have an agent partner that you do a lot of business with and that agent partner does a lot of business with a specific title company and you guys are all working together, which is, if I think back to my business, I could point a lot of those outright.

Joel Epstein:
Doing a lot of business one agent partner and that agent partner pretty much always did a lot of business with this title company and it was always sort of a triangle going. There's collaborative software out there now where everyone can be connected very easily and seamlessly.

Steve Papermast:
There is. There is and you can even control the messaging out there as well, which is exciting. We built some really cool tools addressing a lot of that collaboration where you're picking how people are even messaged. If you think about a real estate agent today they're getting thousands of emails a day, so if you realized that the best way to get with that particular agent is messaging. Is SMS text messaging for certain events in the process?

Steve Papermast:
You can build that into your platform based on the clients you're working with and get people more... Just get the touches when they need the touches. They don't want the phone calls, email's becoming less relevant that they're checking. So everyone wants real-time. So we think the collaboration platforms are going to create more real-time, faster closing process like we talked about earlier where this process shouldn't be 45 or 60 days. It should be a much faster process.

Joel Epstein:
Does anything scare you as we wrap up or where do you see the whole business? Where do you see it going in one year, four years, five years? I mean I know that's a very broad question but things are changing at 100 miles an hour. I think as they figure out this, you're calling it eNote, that's a huge jump off right there.

Joel Epstein:
I mean I think that will allow some bigger non-mortgage players to come into the market in a safer way because right now you need a lot of experience to close a lot of loans, you really need to know what you're doing. And securitize them and make sure they're not buying them all back. Where do you see, what does it look like in five years?

Steve Papermast:
Wow in five years I think that I mean... Five years is a long time in this business.

Joel Epstein:
It is, that's why I'm... Or three years it could be three years.

Steve Papermast:
I mean yeah, it doesn't seem out of the ordinary that you're going to be able to close a mortgage loan in a week. I don't see why you won't be able to do that based on where the tech is going right now especially-

Joel Epstein:
The appraisal stuff is big.

Steve Papermast:
Yeah. Evaluations changing, the title information is becoming more readily available, more automated. Analyzing that data. The engines on the origination side for underwriting are becoming... Pricing is becoming more, you know everything. Real-time, faster, so yeah buying a house sitting in Starbucks or Panera just sitting over a cup of coffee and buying your house, I don't see how that's... I mean people are doing it today technically.

Joel Epstein:
You still got to go look at it. I said to-

Steve Papermast:
Of course.

Joel Epstein:
... A group of agents, they were all scared about technology and I said, "Raise your hand if you're okay with a potential buyer previewing your home without anybody in it with them. Even if it's completely wired up and there's cameras everywhere. Are you good with a potential buyer letting themself into your home without anybody there?"

Joel Epstein:
And not one hand went up and it was interesting. And I said, "You know that's a big piece of this." Who's going to allow people in their home without a licensed bonded agent and until that happens that piece I don't see much changing there. You know what I mean?

Steve Papermast:
You're right because that's the only true part of the process. That homeowner needs to touch and feel obviously it's the biggest investment of their life.

Joel Epstein:
Not one hand went up that said I'd be okay with you know their primary residence, not someone that owns an Airbnb where it's occurring all day. Their primary residence with their bottom drawer with who knows what's in it. With their pictures, with their stuff all over, no problem. Yeah just go in my house and look around. Without a license bonded agent with you.

Steve Papermast:
Yep, 100%.

Joel Epstein:
Not one hand. Not one hand went up.

Steve Papermast:
Well, that just goes to show you.

Joel Epstein:
Yeah, yeah. It's really interesting. Steve your website is...

Steve Papermast:
Sure, firsttitleservices.com

Joel Epstein:
And it's F-I-R right?

Steve Papermast:
F-I-R yep. Firsttitleservices.com.

Joel Epstein:
I've known Steve for a long time. He's great, he's natural in the coaching department. What I mean by that is, is he loves taking phone calls. That's his website. Your email is Steve@ right?

Steve Papermast:
Yes. Yep, steve@firsttitleservices.com.

Joel Epstein:
Steve@firsttitleservices.com. If you have any questions we could go on for a long time here but I'm looking at the clock and I appreciate you all spending some time with us today. I think this is a great subject and I think there's a couple of really good takeaways from this that you can use in your business right away and as always I appreciate you watching or listening to The bigJOEL Show. You can listen to it and watch it on all major platforms. If you like what you see please leave a comment, follow us on YouTube or Facebook and also you can leave questions if you'd like me to answer them on the air as well. So with that said we're going to wrap this one up. Thank you, Steve I appreciate it.

Steve Papermast:
Thanks for having me.

Joel Epstein:
And we'll see you next time, bye-bye.