The clock is ticking. Time is a-wasting. Drop dead deadlines. We all know the sayings, and with mortgage recordation in the U.S. Mortgage market, they’re as applicable as ever.
Timely recordation of mortgages, deeds of trust and assignments is critical for maintaining lien positions and avoiding penalties (or worse). But with nearly 3,700 U.S. recording jurisdictions, getting documents to the right county, in the requisite format, with the correct amount of recording fees – all in the time required - can be challenging. That's an understatement for lenders or servicers with nationwide or multi-jurisdictional lending and servicing footprints.
Add in the recent uptakes in refinancing, foreclosures, loan transfers and bank takeovers, and you find those same entities facing backlogs in recording thousands of documents that ultimately lead to county recording deadlines being missed, fines imposed and rejections.
So What’s Really The Worst That Can Happen?
When a borrower pays off his or her obligation secured by a mortgage or deed of trust, the clock starts ticking to record that there’s no longer a lien on the property. But as the old phrase goes, "So what?"
It can be a BIG "so what," actually, as most states have laws that require the lender to record a satisfaction of mortgage, lien release or reconveyance of a deed of trust within ten and 90 days, and many now require sending a notice of the recording to the borrower (often called a "Borrower Notification Letter").
If the lender fails to record a satisfaction within a required time limit, it’s subject to damages set by statute. This can mean considerable financial risk, as the statutory penalties can be substantial – sometimes hundreds of dollars a day and cumulatively tens of thousands of dollars.
And the hurt doesn’t end there: many states allow the courts to award damages, attorney fees and court costs in addition to the statutory penalty since in the eyes of a third party, there remains a "cloud on title" on the property and it’s difficult or impossible for the borrower to sell or refinance.
Nor is this risk limited just to lenders. Servicers, investors and attorneys that assume responsibilities on behalf of the lender must comply as well.
Why Does this Happen?
Although it’s 2013 and technology is widely transforming our personal and professional lives, many lenders and servicers put themselves at risk, since they still don’t automate the preparation of lien releases and assignments. In many cases, there’s not a strong familiarity or easy method to obtain up-to-date requirements like county recording document formats, content requirements and fees - and many continue to manually send documents to counties to be recorded.
All are risky, antiquated, costly and time-consuming processes that can lead to recording rejections, fines, internal inefficiencies and external and internal compliance headaches.
Fortunately, there is an easy, cost-effective way to minimize the risk of rejections and non-compliance: Adopt a vendor.
Several industry providers offer the benefit of automated or outsourced document preparation, recording and tracking for a multitude of mortgage documents and related transactions, including satisfactions. They help minimize risk by always having access to the latest jurisdictional requirements and ensuring documents like satisfactions are recorded before compliance cutoffs.
A qualified vendor will ensure documents are prepared and recorded according to jurisdictional requirements (like margin requirements, fees and deadlines) either through nationwide service teams or ‘self-serve’ technologies like secure, web-based platforms where no software or IT involvement is even needed.
Other benefits of working with a vendor include:
- Current information relating to applicable fees for each document, notary and signature requirements, and margin and form requirements
- Document(s) overnighted to respective county recorder's office
- Tracking of document(s) through completion of the recording process
- Electronic recording - now available in over 800 counties
- Audit trails of each document recorded
- Data download and integration capabilities
- Workflow analysis to identify ways to streamline mortgage document preparation and recording operations
- Increased profitability and compliance
In a world of increased refinances, bank failures, shorts sales and more, the last step is getting a paid-in-full mortgage on the public record. Properly.
Lenders, servers or attorneys that fail to record satisfactions correctly, and before statutory deadlines, may be in for an ordeal. Even those who understand the requirements may not realize the gravity of non-compliance until they see the big picture.
A trusted vendor partner can reduce those risks with the tools and intel required for preparing, recording and tracking compliant releases and associated documents.
Trust us, that’s time well spent.