Title insurance companies will have a lot to juggle in 2023 as the housing market slows from its pandemic-fueled frenzy, wire fraud threats become more prevalent, regulatory challenges arise, and an aging workforce poses another challenge. What challenges will the title insurance industry be up against this year?
It was a record year for many in the title insurance industry in 2021. Experts predicted that things would slow down in 2022, but the abruptness of the cooling surprised them.
Rising mortgage rates and higher home prices led to a slowdown in homebuyer demand at many title firms. Increasing mortgage rates also decimated refinance orders along with a slowing purchase order volume. The result is that many title companies are now generating revenue from other sources. Commercial revenue as well as other mortgage products such as home equity lines of credit (HELOCs) are some of their sources.
There have been several market shifts, recessions, and depressions in the title industry, but one of the challenges facing the industry in 2023 is decidedly 21st-century in nature.
Consumers are increasingly demanding seamless and digital home-buying processes, which have resulted in a growing number of closing processes happening online. This makes home-buying transactions more vulnerable to cyber attacks like hacking, ransomware, and wire fraud.
Business email compromise (BEC) and real estate wire fraud were the subjects of a Congressional report released by the Federal Bureau of Investigations in mid-November. In 2021, the Internet Crime Complaint Center (IC3) received complaints related to BEC that claimed losses of more than $2.4 billion, exceeding 2016’s $360 million claims.
In spite of title companies’ increasing awareness and preparedness for wire fraud attacks, fraudsters are still intensively refining their schemes. It is paramount that the people in the industry educate themselves about wire fraud and prevention in order to combat this problem.