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1005 West 9th Avenue, Suite B, King of Prussia, PA 19406 PHONE: 610-265-5980 EMAIL: info@plta.org |
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The Skinny on Electronic Recording In Pennsylvania
Steven Rothberg, Esq., PLTA Technology Chair
I know that you have experienced this: You’re walking your dog through the park on a breezy fall day, the breeze is whispering, and you hear the leaves murmur…. “e-recording.” Your dog’s ears perk up, as you look to the heavens, but then it is gone. It fades to your rear lobes and eventually disappears into your long term memory.
A few months pass, and you walk by the water cooler, and something about the bubbles causes the image of a smart document to appear before your eyes, but then you blink, and it is gone.
If you hang in with me for a few minutes, you may feel a little better about the next big technological advancement in our industry. I can guarantee you this. The technology that has been developed will have an impact on our business similar to the fax machine, or email. And like those technologies, it will happen in a blink. (Or, in Pennsylvania, in three to five years.)
The electronic recording of documents will change the way we close transactions, the way the Recorder’s office records transactions, and the way that documents are bought and sold and bundled on the secondary market. Indeed, it is the secondary market that is driving e-recording. Fannie and Freddie want it because it will shorten the time it takes to start trading those real estate mortgages as securities on the secondary market. The money generated from trading mortgage-backed securities is astronomical. And Fannie and Freddie are committed to shortening the time frames. At a recent Fannie Mae/City of Philadelphia presentation on e-recording, David Mickelson of Ingeo (Erecord Software) stated the recording time from closing table to the recorder’s office and back to the closer has been 45 seconds. 45 seconds to have a recorded document in hand, as opposed to weeks, or even months.
How does it work? Well, to begin, the documents are created by a user on an internet site, similar to the sites we all visit today. The internet site hosts the production of the documents, and then enables the user to electronically send the documents for recording. With new software and an internet connection, you can be ready to rumble. The technology creates a “smart document” in XHTML form that is hashed, encoded (using algorithms), and then the parties at closing are presented with a document in HTML format for signature.
How do they sign? The same way you sign for a credit card at Home Depot. Once they sign, and the notary acknowledges the signature, the documents are bundled, encoded, and with the click of a mouse, recorded.
There are some pitfalls at this point. The recorders’ offices are slow to get the technology. They have been working in a manual environment for decades, and have struggled to grasp the changes. But Joan Decker, The Commissioner of Records in Philadelphia stated at a recent meeting that, “The recorders across the Commonwealth have been working together to change the environment.” One of the keys to moving forward is the have the Electronic Notarization statute pass the legislature. The PLTA is supporting the passage of House Bill 851, and urges its members to contact their State Senator about the importance of this bill.
At the meeting, Dave Mickelson, of Ingeo, focused on the reliability, security, speed and ease of use of the Eproduction and Erecording software. The two software products operate together to achieve electronic recording. The software operates on an open platform which allows it to work with other compatible software, as well. Dave stated that cyber-crime is a very big concern of the lending and title industry, and was very persuasive in arguing that electronic recording is safe and has great detection mechanisms to combat fraud. His message was that “ The way that we input information into the system allows us to identify fraud. And in the electronic world, a path can be mapped back to the origination of the document.” In other words, a record is created every time a document is recorded showing where it came from, the time of the signing, the location of the signing, the users involved in the signing. As a former claims counsel, I can attest to the importance of that kind of information in a fraud investigation.
As you have probably heard, many counties have begun electronic recording. It is starting with lender’s satisfaction pieces in most counties. Test sites have been implemented with large lenders in several areas of the country, and the results have been remarkable. It will not take long before various Recorder’s begin to look for test sites in title offices. Philadelphia is already talking to title offices about implementing a test pilot program.
I’ll close with a question posed to Commissioner Decker by our friend Larry Tuliszewski, “ I know this may be heresy, but why can’t there be one centralized state recorder?” Good question Larry, but let’s move one step at a time.
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