The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

The Digitization of the Housing Industry

​​​​​​​Saul Klein
May 20, 2022
5 Minutes

When 13 Billion Dollars is dropped into the Real Estate for the acquisition of Black Knight (Beat Army!), Industry business leaders, strategists and planners, need to pay attention.

It is difficult to grasp the enormity.

Skate to where the puck will be, not where it is.

Paradigm Shift Questions:
What is currently possible/impossible, to do in your business, that if impossible/possible…FUNDAMENTALLY change the way you do business?

Text without context is pretext
ICE Vision:

  • Digitize the Loan Process From Start to Finish

  • Manufacture Quality Loans in near real time.

  • Create a Futures market in Real Estate

“Loans certified as ‘fit for sale’ before they are funded within 10 days or 10 minutes. The relative risk of loans can be matched with the requirements of investors before they are pooled for securitization. Open trading enables private capital to answer the central question posed by Ben Bernanke during the last crisis, “what is this stuff worth?”

How is housing financed in this country?
Where does the capital for individual home loans come from?

A complex, interdependent housing capital market comprised of Government Sponsored Enterprises (GSEs), private sources of capital, Securitization, Marketing and Exchange. (Private capital is more sensitive to risk than the GSEs).

Executive Summary:
ICE is creating the systems infrastructure (named Pillar) to integrate all of the elements of the real estate transaction from the first point of sale (property) through trading and settlement. This required the acquisition of several companies that provide essential components necessary for industry interoperability and low cost/high quality production. The total price tag so far is $27B not counting the acquisitions of NYSE ($8.2B) and International Data Corp ($5.2B).

Digitally Secure, Multiparty Transactions – fees on trades and exchanges. Data resource to be mined and monetized.

History of Ice
What is happening now has been in the works since Enron and Energy Futures Markets in 2002.

Opportunity for MLS to Partner with ICE to create the real estate Spot Market and participate in the Futures market.

ICE Objectives

  • Build the interoperable platforms to create the fully digitized loan.

    • Ontime creation of quality loans – less inventory and handling costs

  • Rebalance the current federalized housing system with private capital (Goals of some of the reforms after 2008 Recession and close to the meltdown of the US Economy). Facilitate Capital Formation.

Take-Aways Requiring Understanding:

  • Price

  • Risk – risks not considered in arriving at pricing for loan purpose (LTV)

    • Climate Change

  • Mispriced Financial Assets – Danger to large segment of investing world

  • Liquidity – Liquidity cultivates certainty. Certainty reduces risk.

  •  Private Capital and Capital Markets

  •  Capital Formation

  • Housing Finance System

    • US Treasury

    •  Federal Reserve

    • GSEs (Government Sponsored Enterprises – FNMA/Freddie)

    • Private Capital – Pension Plans, retirement funds

    • HUD

  • Lack of Transparency in asset purchases

  • Privacy

  • Regulatory Compliance - Securities

  • Financial Responsibility to Investors

  • Futures Markets

  • Spot Markets

  •  Top of the Funnel

  • Lessons learned from 2008

  • Restructuring of the Housing Financial system

  • GSEs (Government Sponsored Enterprises – FNMA/Freddie

  • Fed

  • New Regulatory Boards

  • HUD

  • Monetizing Data at a new level, and not dependent upon fees from agents.

  • Fluid, not necessarily liquid, in the US

  • Transforming the economic model of MLS

Saul Klein

Saul Klein is widely recognized as the real estate industry’s first Internet Evangelist. He was selected by the National Association Of REALTORS® as one of the “25 Most Influential People in the Real Estate Industry” in 2003, and has been selected as one of the “100 Most Influential Real Estate People” by Inman News in 2005, 2006, 2007, 2008, 2009, 2010 and 2011, 2012, 2013.

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