Optimizing the Loan Life Cycle
NTC Keeps Focus on Core Competencies, Client Success
by Carole VanSickle Ellis
When it comes to protecting the interests of the nation’s largest investors, servicers, and mortgage lenders, Nationwide Title Clearing, Inc. takes an innovative, research-based approach to perhaps the most intimidating and complicated facets of real estate and lending. NTC’s official description is often listed as that of a “document processor” or “research service provider,” but that relatively simple nomenclature encompasses a vast array of services and a dedication to tracking down vital minutia in lending records that can make a difference of countless thousands—or even millions—of dollars for NTC clients.
“We create processes and manage them based on very complex rules,” Jeremy Pomerantz, vice president of business development at NTC, explained. “There are more than 3,600 jurisdictions in the United States, each of them with a variety of rules and requirements in terms of the paperwork and processes that affect the loan life cycle. It is our job to understand those rules and help our clients remain compliant so they can get business done and mitigate risks.”
NTC maintains an entire team of individuals operating “in the background,” as Pomerantz described it, to keep channels of communication between NTC and every county in the country. This provides the company with an ongoing, constantly updated series of requirements, templates, licensing processes, and recording information that enables institutional and large-scale investors to keep their loan portfolios in compliance.
“Each deal is different,” Danny Byrnes, chief revenue officer at NTC, observed. “Sometimes our role is as simple as providing the assignments of mortgage from entity A to entity B. Other times, it involves clearing up faulty chains of title and perfecting what is on record for transfer.” Of course, all of this must be done with little or no delay, regardless of the complexity of the process, which is where NTC’s extensive experience beyond the conventional field of “title clearing” comes into play.
“We have handled some of the largest transfers in our industry’s history,” Byrnes noted proudly. “In the last 15 years, we were involved in four of the largest transfers directly via boots on the ground and mechanical involvement in the capital markets sector.”
A Track Record of Evolving to Meet Client Needs
NTC was founded in 1991 in California and relocated to Palm Harbor, Florida, in 2002, where its headquarters have remained since that time. In the past 30 years, NTC has weathered multiple economic cycles and grown to more than 600 employees operating in three different states. “With each new growth phase, NTC keeps its focus on core competencies and client success,” said Pomerantz. The latest manifestation of that focus is the company’s new custody facility housed in Florida, which has a capacity of over 2 million collateral files, the latest in controlled access and security, and even Radio Frequency Identification (RFID) for use in locating, tracking, and updating files in record time.
Thirty years ago, the concept of title clearing was relatively simple and close to what most investors envision when they think about the process today. Put simply, a title clearing company’s role in a real estate transaction was to investigate the chain of title on a property and determine if there were any issues to be resolved prior to a new individual or entity taking ownership of the property. These issues often involve unpaid liens, easements, and other situations wherein an unknown or undisclosed party holds interest in the property. In the event that such issues existed, the title clearing service or a settlement agency would work on each issue to resolve it and “clear” the title. If an issue were not resolvable, it would be noted as an exception in the final title policy and not covered by title insurance.
That process, historically simple in light of today’s title clearing processes, is considered by most real estate investors today to be so complex that the services of a title company are invaluable and a nonnegotiable part of doing business. NTC’s role in the industry is magnitudes more complicated than its initial title-clearing processes from 30 years ago. Awareness of the vast array of complex scenarios that can exist in a large portfolio of loans and the ability to identify those scenarios and resolve them is a core strength for NTC operations.
“Each client is unique and needs a different combination of our services, which include collateral cleanup, custody, prepping pools of loans for securitization, exception management, clearing exceptions, tracking payoffs with lien releases, and many other complex, high-volume processes integral to the successful packaging, sale, or purchase of loans,” Byrnes explained. “It is not uncommon for our prospective clients to tell us they have thousands or even hundreds of thousands of loans they need to move in the next six months, and they need our services on every one of them.”
The cost of failure when it comes to the title clearing and post-closing processes is staggering in the mortgage industry, where a single oversight may be magnified thousands of times over across a loan portfolio. In the industry, both a buyer and a seller are responsible for their own due diligence on any acquisition and may attach a “side letter” to the loan sale agreement that essentially promises to “fix” any exceptions in the loan pool within a predetermined period of time. If the exceptions are not fixed, the buyer can sell the loans back, giving buyers a significant advantage over the seller if loans are not performing as expected.
“‘Buy-back’ can be a four-letter word for sellers,” Byrnes said. “Our services are designed to make those side letters, which are a common and accepted aspect of the business, smaller and easier to manage. For example, some transactions might have side letters listing 2,500 exceptions on a pool of 5,000 loans. By comparison, a side letter with 600 is much easier to tolerate and manage.”
NTC uses an internal platform to track exceptions and the widening pool of “ripples” that results when one exception is successfully or unsuccessfully cleared. Byrnes compares the process to “putting a sweater on an octopus,” proudly noting that NTC’s platform enables every team member working on exceptions to view that network of effects and side effects at the same time. “We work for clients on both the buyer and the seller side. However, we have been particularly valuable to our clients when they are selling due to our extensive experience with ‘cleaning up’ collateral,” he said. “This makes it a lot less expensive and easier for both sides to do their due diligence before they sign any contract. If we encounter a prospect on the buyer side while we are working for the seller, it is common for that prospective client to come to us down the road the next time they are selling.”
Building Relationships and Nurturing Core Competencies
Because NTC considers itself a service provider to mortgage lenders, servicers, and investors “for the life of the loan”, the company places a premium on employees’ abilities to perform independent research and data analysis in meaningful ways that benefit the client, the company, and the industry as a whole. For this reason, many of NTC’s sales executives and client liaisons publish their own industry white papers authored individually in some cases and with team members in others.
For example, Meaghan Hanley, an assistant vice president for business development at NTC, co-authored a 2020 study on assessing collateral risk in digital lending, while Pomerantz has multiple white papers on topics ranging from assignment verification practices to effective lien-release management.
“We are always encouraged to collaborate and produce these white papers because every one of us should be an industry expert if we want to be able to fulfill client requirements and help them streamline their process,” Hanley explained. “We have to cultivate and maintain the ability to really dig in and understand clients’ specific business requirements even when they may not yet have fully identified or articulated everything they need.” She cited the company’s specialized post-closing processes as an example of a service that some clients may not fully grasp in terms of scope when they first begin working with NTC.
“I can recall a client who had come to us for final document tracking [which involves receipt and review of the original recorded mortgage and title policy prior to the final purchase],” she said. “This particular client was experiencing an increase in volume, and they really needed more from us going into the new year.” NTC was able to identify the need and help the client transition into a specialized post-closing series of processes that helped prevent the types of errors that often plague major players in the lending industry when they scale up significantly without enhancing their associated operations.
Hanley observed this is of particular importance in the digital lending space, which has exploded since the emergence of the COVID-19 pandemic in the United States. “Everyone lends a little bit differently, so we were already coordinating lots of calls, webinars, and team meetings with the appropriate people to get a given job done in the time frame of a standard sales cycle,” she observed. A “standard” cycle could be as few as 45-60 days pre-pandemic. Today, the landscape and timing have changed, with companies sometimes taking four to six months to complete transactions in a period where the lending industry is booming.
“When originators who were closing and funding 20,000 loans or more a month had to send their workforces home [at the start of the pandemic], those offices were closed down. Our clients were so thankful to be in partnership with NTC; we were open and able to support them,” Hanley said. She also noted that the “huge growth” in the lending industry prompted many NTC clients to close and fund a larger volume of loans than they could have without the company’s digital experience and services. “Our leadership and operations teams really stacked our resources, had strong contingency plans, and were able to continue to operate at scale,” she said proudly.
A side effect of NTC’s ability to navigate the changing landscape of the lending industry during the COVID-19 pandemic is that the company is growing faster than ever. “We can’t hire fast enough,” Byrnes said. “We put a lot of effort into training every employee and making sure they really understand the industry, including ongoing cross-training and inter-department education, which enables them to work in other departments if they wish to do so.” This cross-training is a primary reason NTC was able to react so quickly and effectively during the lockdown stages of the pandemic in early 2020 and stay on top of the origination and refinance explosion that occurred due to low interest rates.
“There are so many highly qualified individuals that work for NTC,” Byrnes said. “NTC is already considered a premier company in our industry, and our profile as a FinTech player in addition to being a top servicing company is only going to grow.”
Sidebar 1:
Throwing the “Crystal Balls” for a Loop COVID-19, Housing, and Lending in 2021 and Beyond
In March of 2021, housing industry experts were predicting that the white-hot pandemic housing market was headed for a cooling period, if not an outright downturn. Citing “countervailing forces” from rising employment numbers and “the pull-back of higher mortgage rates,” industry veteran and National Association of Realtors (NAR) chief economist Lawrence Yun predicted stoically, “We will have to wait to see which force will be stronger.” Other analysts noted that homebuyers were already experiencing decreased spending power, and some, like Fitch Ratings senior director Suzanne Mistretta, warned that current market conditions were “not supportive of long-term, sustainable price growth”.
However, the lending industry saw a quite different side to the pandemic housing boom and has done so since the very beginning. While most in the industry agree that the pending (but as-yet unreached) expiration of foreclosure and eviction forbearance and bans will probably elicit a deceleration in home prices, not everyone agrees on the extent of the slow-down.
“The last year-and-a-half really threw everybody’s crystal balls for a loop because nobody expected both purchase and re-fi volumes to shoot up during lockdown,” said Jeremy Pomerantz, NTC’s vice president of business development. “This market has been atypical, so I don’t particularly expect any correction to be typical either given the forbearance policy and the workouts that will be required when that policy expires.” Pomerantz noted that the last housing crash better prepared loan servicers and mortgage lenders for the pending correction, which could result in far fewer homeowners going through foreclosure even if they do not ultimately remain in their homes.
“It’s inevitable that some people who simply will not be able to afford the payments on their homes are not going to stay in them, but there are many alternatives that just were not on the table [in the mid-2000s],” Pomerantz explained. “Last time, the market was flooded because there were so many compounding factors that created mayhem until all the foreclosure alternatives were figured out. Now, there is a much better understanding of what is needed and available to keep people in their homes or help them avoid foreclosure.”
NTC will be right in the thick of the action whether analysts’ predictions of a coming correction are accurate or not. “There is so much due diligence and effort involved in lending, loan collateral, securitization, and transfers,” Danny Byrnes, chief revenue officer at NTC explained. “You cannot afford a fast-tracking process that cuts corners or the lenders and servicers face huge penalties and may create unfair scenarios for borrowers. NTC specializes in keeping track of everything related to mortgage collateral; you have to understand how all documents interrelate with one another if you want to create a bulletproof process.”
Byrnes, like Pomerantz, believes there will be an increase in foreclosures in the coming 12-18 months when forbearance programs and policies expire. However, he does not necessarily see that increase in foreclosures translating to a full-blown tsunami reminiscent of the housing crash of the mid-2000s. “There is going to be a lot of work around loss mitigation and there will be an increase in defaults, but NTC is prepared (and this time, so is the rest of the industry) to handle proper loss mitigation for every single defaulting loan, whether that means following fair and proper foreclosure proceedings or seeking other, viable alternatives to keep people in their homes,” Byrnes said.
“My message to NTC clients and every party in our industry is simple: Just be ready. Have every efficiency in place, outsource processes to experts when appropriate, and find someone with the experience necessary to guide you with industry best practices. Whether you decide to work with NTC or one of our competitors, you will reduce your cost to service each loan and potential risk downstream by being prepared.”
Sidebar 2:
NTC By the Numbers
2 million
The file capacity of NTC’s high-tech physical and electronic vault that satisfies custodial requirements including a two-hour fire rating, UL fire-rated floor space, security system with controlled badge access, and RFID for file location and tracking.
1st
NTC’s ranking from HousingWire’s ninth annual HousingWire Tech 100 awards as the leading post-closing services provider for the nation’s largest financial institutions, investors, and servicers. HousingWire also called NTC “one of the most innovative technology companies in the housing industry”.
30
Number of years NTC has been in business as a premier service provider.
8
Number of local programs and charities supported by NTC in the Tampa Bay region, including the Humane Society of Pinellas, the Ronald McDonald House, local hospitals and healthcare workers’ funds, veteran support groups, boys’ and girls’ clubs, and the American Cancer Society.
