The title industry has been undergoing a bit of an “automation revolution.” We’ve always been a bit traditional or conservative, owing in large part to the highly regulated nature of our profession, so to see title agents across the nation making major investments in new technology has been quite a development. And, in many ways, this is also a welcomed development.
However, let’s be careful not to forget what got us here in the first place: elite service.
The title industry remains a service-based industry
While one could make the argument that title businesses create some manner of “products” in terms of insurance policies or closing documents, that argument is technical at best. We are a service industry. We take a mortgage transaction from the sales agreement through the labyrinth of title clearing, curative, policy jackets and, above all, the rigorous state by state requirements of a settlement or closing. Through it all, it falls to the title industry to explain—sometimes not only to the buyer or seller, but to the loan officer or REALTOR as well—what’s happening, why and how long it will take.
To be certain, there are elements of the settlement process that are wide open to improvement. And this is where new technology can often fit the bill. But don’t forget that technology is a tool. Some things will always require human guidance and decision-making. Such as escrow reconciliation.
The importance of professional escrow reconciliation services
Unfortunately, more than a few title business owners see escrow reconciliation as a “nice to have.” The task might fall to a generalist or an office manager without formal training in the process. Maybe the owner herself does it, or has the accountant look in once in a while. Often times, they’ll purchase an escrow reconciliation tool or platform, and consider the matter closed.
This is a dangerous mistake. Don’t get us wrong. We use escrow reconciliation software as well. Most good accountants don’t do taxes by hand any more either. But to ask someone unqualified or inexperienced with escrow reconciliation to take on that task is to flirt with disaster.
Consider, further, that escrow reconciliation for the title insurance and settlement services business is quite a niche. There are few other industries that face such local or regional compliance and custom nuances as real estate—and specialized expertise helps ensure that the reconciliation process is accurate and compliant. While there are technological tools that take these things into account, like any technology, they’re still subject to the way in which the user wields them. And an inexperienced or untrained user is just as likely to make omissions or mistakes—or even miss the tell-tale signs of fraud—as a high school student using Turbo Tax to manage a business’s monthly payroll taxes.
An easy solution
Fortunately, Positively Balanced has been managing the escrow reconciliation (and bookkeeping…and other title-related support services) of title agents and attorneys for quite some time. We’ve seen it all through the years, and are very familiar not only with legal compliance requirements for escrow reconciliation, but also with lender, underwriter and auditor demands, too.
Sure, you can roll the dice and continue to trust that your escrow reconciliation process doesn’t really need professional attention. But the cost of fraud or error can be extremely high. Is it really worth it?