“Bundling” the right way with XSites backed by Mercury servers

A buzzword in mortgage lending lately is "bundling," often called "bundled services." Companies that make their money from mortgage originators who order ancillary products and services necessary for mortgage production have seemingly all decided that everything they do needs to have a package price now.

Old Republic Title announced last week it "will leverage the technologies and vendor management capabilities that we have had for years [and] will place them in the hands of our agents and provide them with access to a broad array of services including flood reporting, credit reporting services, appraisal services, automated valuation models, bankruptcy reporting, home warranty, 1031 exchange services, relocation services and site management services."

Earlier this year, Stewart Mortgage Information (SMI) debuted "Build Your Own Bundle" for mortgage lenders, including services such as electronic closing, credit reporting, flood zone determination, "full appraisal and AVM solutions," title, disbursement and recordation services and post-closing services, the company said.

TransUnion, the credit repository, has a "settlement solutions" arm that offers credit, valuation, title searches and insurance, flood determinations, document preparation and delivery, and closing and recording, among other things.

ABN AMRO, one of the top ten mortgage originators also doing business under names like LaSalle Mortgage, Standard Federal, and Mortgage.com pioneered the idea from the lender side. It began guaranteeing its borrowers a single fee for their mortgages and developing a division of the company – OneFee Services – to bring all the services the borrower needs to pay for, including appraisal, under one company roof.

A mortgage lender vying for borrower business has a great case for guaranteeing an amount early on the borrower will have to pay at closing, as anyone who has bought a house or refinanced can guess. How they accomplish it, and whether it means appraiser-vendors will have to start guaranteeing their fees up front, is a different and even more complex issue.

And title companies like Old Republic and Stewart – and the biggies, First American and Fidelity, which have spent the last several years diversifying into (that is to mostly say, acquiring) other "mortgage information" businesses, have their own reasons for wanting to include valuations, be they human or otherwise, as parts of their "bundle." It's often easier to get stuff in one place than to shop around – this is as true of mortgage lenders as Wal-Mart consumers or users of eBay.

But it points to a misconception of the role of the appraiser that we've been fighting for years. There are a lot of responsible, intelligent mortgage lenders and brokers that regard appraisal as a "settlement service," like title, escrow, recordation, closing, flood, etc. – things that need to happen to "settle" a loan once a borrower has qualified, agreed to loan and repayment terms, and an underwriter has agreed to underwrite. From the perspective of the broker or loan officer, often the number the appraiser comes up with is part of the to-do list they check off on the way to the commission check. They need to order title, get a flood determination, make sure the funds are in escrow, and the appraisal has to come in at a number appropriate to the loan-to-value. Pick up dry cleaning on way home.

But appraisals can't be "bundled" with settlement services. Absurd rules do allow parties with a (commission) stake in the closing of a loan to order the appraisal and choose the appraiser, but the appraiser works for the underwriter of the loan, and the appraisal is necessary long before "settlement" to make a responsible underwriting decision.

With our new Mortgage XSites, our Agent XSites and our Appraiser XSites, backed by our Mercury Network of servers, we go at it the right way: Get the people involved in negotiating the terms of a mortgage working together efficiently, so good decisions can be made cheaply and quickly.

"Settlement" occurs after the buyer and seller have agreed on a price, the underwriter has agreed to underwrite it, and the buyer has agreed to repay the lender. Appraisal is an integral part of that agreement. Our XSites network, which will allow parties to transact business together and stay apprised of one another's progress, will send a buyer, seller, broker, agent and underwriter to a company that can provide "settlement services" with all the pieces in place to "settle" the loan, including (especially) an appraisal supporting the decision to underwrite the loan.

We're "bundling" the right way.