Setting the ‘Record’ Straight: E-Recording Myths Debunked
(Nancy Alley is vice president of strategic planning for Provo, Utah-based Simplifile, an online service that connects lenders, settlement agents and counties. To learn more, visit https://simplifile.com.)
Despite steady growth in e-recording adoption among county recorders and settlement agents, misconceptions persist among lenders. Here we respond to the top three myths held by lenders with regard to e-recording today.
Myth #1: E-recording Isn’t Widely Available Yet.
Truth: A significant majority of all transactions are eligible to be e-recorded now.
When we ask lenders and settlement agents why they’re not e-recording, they often tell us they’re waiting for e-recording to gain wider acceptance among county clerks. The fact is, it’s been more than 16 years since the first counties began e-recording. Today, more than 75 percent of the U.S. population lives in an e-recording jurisdiction. Unless you operate in one of three states that haven’t yet embraced e-recording–Kentucky, South Dakota and West Virginia–chances are that most of your transactions could be e-recorded right now. How do we know? Simplifile alone works with more than 1,400 jurisdictions, and we’re signing new counties at a pace of about one every other day. We help recorders and customers in 39 percent of U.S. recording jurisdictions enjoy faster, more cost-effective online recording of millions of land record documents.
These e-recording counties are home to the nation’s most populous metropolitan areas, too. Together, they represent three-fourths of the U.S. population and the vast majority of all recording transactions. For example, the 21 jurisdictions in California that now use e-recording as their preferred method account for 84 percent of the state’s total population and include Los Angeles County, our nation’s most populous county with more than 10 million residents.
Myth #2: We Can’t e-Record Because We’re Not Ready to Go Paperless
Truth: All that’s required to e-record is a Windows computer, high-speed internet access and a scanner. Another common misconception is that lenders and settlement agents need to establish an end-to-end e-mortgage process, complete with e-signatures and e-notarization, before they can e-record. In reality, most e-recording is executed through a hybrid process, with the security instrument traditionally wet-signed and notarized, then scanned and submitted for e-recording. In other words, e-recording does not require a fully electronic document. Scanned, wet-signed documents represent a major portion of today’s e-recordings. The best e-recording service providers can get their clients up and running with nothing but a Windows computer, high-speed internet access and a scanner.
For many lenders and settlement agents, electronic recording is just one small e-transaction in an otherwise paper process–albeit one that greatly improves the borrower experience and saves time and money. E-recording allows settlement agents to record documents in minutes instead of the typical days or weeks, with no waiting in line and no mailing or courier expenses.
Providers that support automated clearing house payments, like Simplifile, also allow settlement agents to eliminate check-writing expenses, lost payments, payment errors and check fraud. These savings for settlement agents often translate to reduced fees for lenders, counties, and borrowers, too. Most likely, your favorite settlement agent already e-records or could get started easily. Simplifile alone works with more than 17,000 settlement companies.
Top e-recording services also allow lenders to track recording status in real time, view estimated recording fees, collaborate seamlessly with the settlement agent and create complete audit trails and reporting. Lenders should treat e-recording as the first step in their path toward a fully paperless process. They can realize all the benefits of e-recording now, while the industry works to remove remaining obstacles to fully electronic loan transactions.
Myth 3: It’s Not Worth it When I Can Only e-Record Some, But Not All, of My Transactions
Truth: Every transaction that could be e-recorded, but isn’t, is a lost opportunity. One of the most persistent myths surrounding e-recording is the notion that its benefits are realized on an “all or nothing” basis. If 75 percent of transactions occur in counties that e-record, it’s true that the other 25 percent must be submitted via traditional methods–for now. But there’s every reason to expect that e-recording will one day be ubiquitous.
In the meantime, there is no hidden cost to bifurcating the recording work flow between paper and electronic recording. Lenders and settlement agents can speed up their recording timeframes and eliminate postage and check-writing costs for 75 percent of transactions now while positioning themselves for a smooth transition to all-electronic recording in the future. Every transaction that could be e-recorded, but isn’t, is a lost opportunity to save time and money and improve customer satisfaction.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)
