UWM introduces alternative to traditional lender title process

United wholesale mortgage (UWM) CEO Mat Ishbia announced three initiatives for brokers at AIME Fuse on Saturday. Perhaps the most effective is an alternative to the traditional lender title process called TRAC. Ishbia said his company hired attorneys to review the title and closing documents, ensure the title is clear, and then facilitate the closing process.

Ishbia said brokers using Attorney Opinion Letters (AOLs) through TRAC could save borrowers up to $1,100 on purchase loans and about $800 on Refis.

Ishbia also announced the launch of UClose 3.0, an enhanced version of UWM’s UClose 2.0 platform launched in 2018. The new platform will allow brokers to choose from three deal options: in-person, hybrid or virtual deal. Ishbia said it will now only take minutes to progress from Clear to Close to final closure with the new version.

“UClose 3.0 and TRAC are changing the way we close deals,” Ishbia said in a press release. “These exclusive offers allow everyone involved to have a faster, cheaper and more efficient experience. Brokers now have access to a streamlined platform that guides them step-by-step through the closing process with more transparency, smarter technology and better control.”

Ishbia also announced Safe Check, which allows borrowers to receive a pre-appraisal waiver check prior to submitting their loan. This is a soft-pull credit check that helps them drive the process forward without initiating trigger leads to the brokers’ competitors.

In April, Fanny Mae announced that it would accept written opinions from an attorney in lieu of title insurance “in certain circumstances.”

According to the announcement, lenders must “ensure that the loan is covered by either a title policy (including all necessary endorsements) issued by an acceptable insurer or a title opinion letter issued by an attorney.”

Fannie’s terms of using an AOL are that it be obtained from an attorney who is properly licensed and has malpractice insurance covering legal opinions “at a level customary in the jurisdiction”.

In addition, AOLs must be addressed to the lender and any assignee, be generally accepted in the jurisdiction of ownership, provide gap coverage for the duration between close and record, and contain certain other information.

Diane Tomb, Managing Director of American Land Title Association (ALTA), responded to the announcement by UWM. “Title insurance, unlike alternatives, protects against hidden risks that cannot be discovered by searching public records. For example, a core protection of title insurance is that it protects against fraud or counterfeiting related to the property rights acquired by the buyer. This is not covered by alternative products and is just one of many coverage gaps that should be of great concern to consumers.

“The homeownership industry plays a critical role in the ability of American households to build wealth through homeownership by ensuring the orderly transfer of properties from seller to buyer, safeguarding title rights and fostering the growth of the secondary mortgage market. Lower protection alternatives to property insurance will make homeownership less sustainable and increase unnecessary risk, particularly for first-time homebuyers and low- and middle-income consumers who need it most,” Tomb continued.

Regarding the potential cost savings from using alternative products like AOLs, Tomb said that any initial cost savings “are highly speculative. Consumers pay more in the long run by taking an additional risk and losing the title company’s legal defense obligation in a title dispute. Taking shortcuts to potentially save a small amount of money only serves to undermine homeownership opportunities nationwide.”

This The story was updated on October 2 to add comments from ALTA CEO Diane Tomb.

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