Title insurance agents might have a new competitor entering the title and escrow arena. A startup company from Seattle named Modus opened early this July. Modus allows real estate agents to use its resources as a title and escrow workshop, bypassing a traditional title firm altogether. Both agents and clients can log onto the company’s platform to track every step of the closing process. By using a shared platform, the service reduces the potential for fraud and speeds up closing by eliminating the back-and-forth of personal and financial information via email. Agents also will have the ability to outsource manual data entry, cutting down on time for closings once more.
Modus is not the only start-up offering such services. The fledgling company is joining names such as Spruce and JetClosing, startups which offer similar services for the sake of simplifying the title and escrow process. The increasing popularity of such companies raises concerns among title companies- will existing firms have to provide more to compete with these young startups?
Or does this sound like these companies are trying to offer a solution that is looking for a problem? If someone had a problem at a closing it could have either been a bad real estate agent or an escrow agent. Typically it is the buyers that pick the escrow, but in today’s market it seems to be this responsibility has fallen on the listing agent, whose primary job is first and foremost a marketing one. The listing agent does not directly sell your house, but they should be the reason your house sells. Thus being knowledgeable in escrow is not a primary responsibility for them.
Then there could also be issues with banks accepting electronic signatures when it comes to payoffs on the seller’s mortgage and getting new loan documents on the buyer’s loan. When it comes to real estate transactions, electronic signatures are enforceable, however certain documents (e.g. mortgages and deeds) will require original signatures for recordation. Borrowers and lenders continue to require originally executed notes to maximize their comfort level that there is only one negotiable instrument.