The ‘Unintended Benefits' of the RESPA Rule

January 21, 2010

Although the implementation of the new Good Faith Estimate (GFE) and 2010 HUD-1 forms mandated by RESPA reform has been a headache for some settlement services companies, the customers of one title technology provider are learning that the new rule is producing “unintended benefits” as well.

TSS Software Corp., an independently owned provider of software and services for the title and settlement services industry, has seen a significant spike in new business over the past four months. TSS attributes this, in great part, to the need for new forms to comply with new RESPA regulations promulgated by the U.S. Department of Housing and Urban Development (HUD). While title companies currently using production software developed and supported by some of the more widely recognized developers, including TSS, have been able to rely on their providers to help bring their processes up to date; settlement services companies using proprietary or outdated systems have found the transition to be much more complex, if not impossible.

“We have found that, for many title agencies and law firms, it has actually been less expensive and less time consuming to transition to new software rather than upgrade or even rebuild outdated or proprietary systems developed and installed five, ten or even fifteen years ago,” said Barbara Miller, president and chief operating officer for TSS. “In many instances, the original software is no longer even available, or the system is too outdated for a simple tweak.”

Miller admits that these customers have not always been excited about the technology transition.

“It has been a financial investment for these firms at a time when cash is not always readily available,” she said. “We’ve worked hard to offer these firms flexible financing to accommodate the market conditions.”

Despite the poor timing for what some agencies might consider a regulation-mandated technology investment, it appears RESPA reform may actually have positive long-term effects on the firms, amounting to “unintended benefits.”

“In many cases, transitioning to an established technology provider brings an increased flexibility to the firm and its capabilities,” noted Miller. “Having an established and supported technology in place gives the agency or firm access to much more than just the software.” In using a company such as TSS, Miller observed, a firm also gains access to future upgrades and enhancements. “Who knows if this will be the last new regulation requiring changes in workflow or process?”

Additionally, companies such as TSS often make Web-based hosting solutions available, delivering even greater flexibility, and freeing firms that once relied upon IT contractors or dated hardware from additional costs and inefficiencies.

Title agencies and attorneys moving to a more established technology have also gained some flexibility in the very way they do business. Miller said that many of the systems being replaced were originally developed to accommodate a single underwriter, or functioned more effectively in limited geographic jurisdictions.

“But with a national system such as TSS, the agent wins the flexibility to work with any underwriter, regional or national, without needing to extensively rework the production software. That firm can now move into new geographic markets without having to do extensive forms research, programming and data entry, which is often required of those using an outdated or unsupported system.”

Finally, Miller has observed that many of the firms forced to make the transition to a national title technology system have begrudgingly accepted that they are now in a better position to service the rapidly changing field of lenders and originators.

“They’re not always happy about the cash outlay, and we can understand that,” she said. “But I’m starting to hear back from these new customers. They’re finding that having more robust and up-to-date production software makes life a little easier each time a regulation changes or a lender adjusts its process.”

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