After years of incrementally slow progress on the e-mortgage front, the pandemic succeeded in catapulting the mortgage and settlement services industry into the digital mortgage and closing age in short order. As state legislatures quickly rushed through a variety of pending remote online notarization (RON) laws, more agents jumped at the chance to add this capability to their tool belt.
In an April 12 release, ALTA reported that the number of title professionals offering digital closings more than tripled over the past two years, from 14% participation prior to 2019, to more than 46% in its most recent survey.
The question for agents is, do your partners and potential customers know about your new digital closing capability? And how can you get the word out?
MISMO has provided a national solution that you can capitalize on immediately to ensure potential customers who are looking for a service provider with RON capability can check on your status.
The MISMO e-Eligibility Exchange was created to accelerate industry-wide adoption of digital closings. According to a recent release from MISMO, the e-Eligibility Exchange provides centralized access to acceptance criteria that enables lenders and other industry participants to easily determine the right type of digital mortgage closing for each loan, including the use of electronic promissory notes (eNotes) or RON.
How Can Agents Get Into the e-Eligibility Exchange?
The only way to get into the exchange is by first getting registered in the ALTA Title and Settlement Agency Registry. ALTA announced that it will be the sole provider of title and settlement data to MISMO through the registry, which currently includes more than 9,000 locations, with more than 2,000 of them indicating they have RON capability.
The registry is free and ALTA membership is not required. After you register, your underwriter will confirm your information. According to MISMO, this verification, along with the uniqueness of the ALTA ID, ensures the accuracy of the data in the e-Eligibility Exchange for users.
If you are not yet signed up with the ALTA registry, here’s what you need to know:
Visit alta.org/registry to learn more about the ALTA Title & Settlement Agency Registry.
ALTA will provide you with a unique 7-digit identifier, called the ALTA ID, which is automatically assigned to each new database record as a permanent ID number.
ALTA ID numbers are available for free to title agents and to real estate attorneys.
Once you are registered, your underwriters will be contacted to confirm your status.
Recent legislation has helped grow adoption of e-recording and e-notarization, but the lack of uniformity still makes it difficult for lenders to universally adopt electronic practices, forcing lenders to make a loan-by-loan decision about what documents can be electronically signed.
MISMO’s e-Eligibility Exchange helps address this challenge by allowing lenders to quickly assess requirements for individual loans.
More importantly for you, it allows lenders to identify the availability of title and settlement agents with electronic capabilities. Hop on the digital train in 2022. With the advent of the e-Eligibility Exchange, you now have the perfect opportunity to put yourself front and center for digital closing opportunities in the coming years.
In 2021, IC3 received 847,376 complaints from consumers and businesses – a 7% increase from 2020 – with potential losses exceeding $6.9 billion. Most significantly for the title insurance industry, business email compromise (BEC) schemes resulted in losses of nearly $2.4 billion, up 33% from 2020.
In its report, the IC3 identified Russia as a hot spot for cyberattack actors in 2021. In recent weeks, the risk of those cyberattacks has grown exponentially in retaliation for the many sanctions imposed on Russia following its invasion of Ukraine on Feb. 24.
On March 21, President Biden released a statement highlighting the imminent threat to our nation’s cybersecurity. That same day, Deputy National Security Advisor Anne Neuberger said in a press briefing, “We’ve previously warned about the potential for Russia to conduct cyberattacks against the United States, including as a response to the unprecedented economic costs that the U.S. and allies and partners imposed in response to Russia’s further invasion of Ukraine. Today, we are reiterating those warnings, and we’re doing so based on evolving threat intelligence that the Russian government is exploring options for potential cyberattacks on critical infrastructure in the United States.”
These imminent threats are a reminder of how important it is to take the necessary steps to protect your agency and your customers.
In addition, the Biden Administration released a Fact Sheet, urging companies to take immediate steps to protect their systems, including:
Mandate the use of multi-factor authentication on your systems to make it harder for attackers to get onto your system
Deploy modern security tools on your computers and devices to continuously look for and mitigate threats
Check with your cybersecurity professionals to make sure that your systems are patched and protected against all known vulnerabilities
Change passwords across your networks so that previously stolen credentials are useless to malicious actors
Back up your data and ensure you have offline backups beyond the reach of malicious actors
Run exercises and drill your emergency plans so that you are prepared to respond quickly to minimize the impact of any attack
Encrypt your data so it cannot be used if it is stolen
Educate your employees on common tactics that attackers will use over email or through websites
Encourage employees to report if their computers or phones have shown unusual behavior, such as unusual crashes or operating very slowly
Engage proactively with your local FBI field office or CISA Regional Office to establish relationships in advance of any cyber incidents
The Biden Administration also encourages IT and security leaders at all companies to visit the websites of CISA and the FBI to access technical information and other useful resources. These heightened threats represent a clear and present danger for all of us. We encourage all of our agents to download the Alliant National Escrow Fraud/Social Engineeringtoday and share this information with your staff and customers.
First published in 2017 and fully updated by Alliant National’s Compliance, Risk and Education teams, the paper provides information, tips and suggestions to help you better understand the current threat environment and create a comprehensive plan that addresses the realities we face in our industry.
Time to assess cyberattack risk in light of Ukraine invasion
The paper’s release comes at a critical time as U.S. businesses brace for potential cyber warfare corresponding with recent violence in Europe. The Department of Homeland Security (DHS) issued a bulletin in January warning of the increased risk of cyberattacks in the U.S. as Russia was poised to invade Ukraine.
“We assess that Russia would consider initiating a cyberattack against the Homeland if it perceived a U.S. or NATO response to a possible Russian invasion of Ukraine threatened its long-term national security,” the agency said in the bulletin released to law enforcement partners and obtained by The Hill.
In response, the American Land Title Association warned in a recent blog that the risk of spillover cyberattacks against non-primary targets could become much more widespread.
2022: Growth of BEC/EAC
Against this backdrop of international tension, Alliant National agents continue to report an increase in attempted wire fraud schemes. These attacks are part of a growing fraud threat targeting businesses of all sizes and the general public.
The FBI refers to this threat as Business Email Compromise/Email Account Compromise (BEC/EAC). BEC/EAC fraudsters focus on organizations that perform wire transfers, making real estate especially vulnerable.
According to the FBI Internet Crime Complaint Center’s (IC3) most recent report, the center received a record number of complaints from the American public in 2020: 791,790, with reported losses exceeding $4.1 billion. This represents a 69% increase in total complaints from 2019. Business Email Compromise (BEC) schemes continued to be the costliest: 19,369 complaints with an adjusted loss of approximately $1.8 billion. Phishing scams were also prominent: 241,342 complaints, with adjusted losses of over $54 million.
Protect Your Agency
Given the increased incidence of BEC/EAC scams and ransomware attacks over the past several years, it is imperative that prevention be addressed at every level. State and federal entities, as well as most of the top tech companies are creating alliances and workgroups to stem the tide.
Title insurance companies and agents also have a role to play. Given the current nationwide threat, we encourage all agents and their staff to remain on high alert for attempted fraud, particularly when it comes to seller proceeds. We also urge agencies to remain vigilant regarding possible attempts to obtain consumer or employee PII.
Here are some immediate steps to consider:
Identify the risks your agency faces and make sure your systems are protected
Maintain strict policies and procedures for verification of wire instructions
Educate your staff and consumers about what to do when they suspect fraud
Establish protocols to quickly detect fraud and recover diverted funds
Obtain appropriate insurance, including Cyber Liability coverage
Cyber Security is Mission Critical
There is nothing more important than protecting our clients’ funds and personal information. It is mission critical for a title company to make security its highest priority in 2022. You can begin today to assess your systems and educate your staff to make sure every possible precaution has been put into place. We hope our Escrow Fraud/Social Engineering White Paper will be helpful in this work.
In addition to the release of the White Paper, Alliant National will provide updated materials throughout the year to help agents understand and respond to the threat environment we face. Of course, we’re always ready to discuss the threats we are seeing, and steps you might consider for your business. Feel free to reach out to your agency representative, or any member of the Alliant National team.
Wow! It has been an overwhelming past year-and-a-half, particularly with the pandemic and everything that came with it. I’m thankful to work in an essential business area – namely, the real estate field.
Prior to joining Alliant National, I worked at eRecording Partners Network (ePN) for eight years. They’re one of the main electronic document recording service providers. The other main vendors are CSC, Indecomm and Simplifile.
Document recording is one of the final steps in the real estate transaction process. Getting real estate documents officially on record with counties is essential to the successful completion of a transaction. This process includes traditional recording of paper documents, as well as electronic document recording (eRecording for short).
eRecording started back in 1999 and it uses technology that’s now over 20 years old; some people are surprised by this. The eRecording process offers numerous benefits for title agents, other business submitters and counties. Turnaround times are reduced. Final policies are issued more quickly and the gap time is lessened. Some other benefits include: faster rejection resolution; streamlined electronic payments; the elimination of rejections for incorrect recording fee payments; compliance with industry best practices; and lender requirements and eco-friendliness. Plus, eRecording is more streamlined, secure, and cost-effective. As one title agent said to me a couple years ago, “It’s like going from the Flintstones to the Jetsons!”
But how does the process work exactly? Well, first it’s important to understand that eRecording is an “e-delivery” business service option for title companies, law firms, banks and other businesses that record land record documents frequently. It is not a service for one-time document recording. Once you have your documents executed and ready to record, eRecording is another option for document delivery, recording and return. County business customers can choose to pay postage, UPS, FedEx, a courier or an employee to deliver and return their paper documents. Or they can pay to eRecord them. Most eRecording vendors charge a few dollars per document. Some have other fees as well. Explore your options to ensure you are selecting an eRecording provider that best fits your unique business needs.
Getting started with eRecording is easy. Requirements are basic. You need a computer, a scanner, internet access and a web browser. You’ll also need to choose and sign up for a service with an eRecording vendor approved by counties where you record documents. Once your eRecording vendor sets up your login and account, you should be able to start eRecording immediately. Most counties typically have multiple approved eRecording vendor options. Most have approved ePN, CSC and Simplifile as eRecording vendor options. Sometimes Indecomm is included as well.
When you eRecord, the fees remain the same. eRecording vendors typically charge a fee per document; usually, this amounts to a few dollars. Some have adopted a “variable rate” approach based on volume and other factors. Some also charge additional sign-up, monthly or annual fees. Ask each vendor for their pricing options to gain a clear picture.
Today, eRecording is legal and available in 49 states, plus Washington, D.C. Vermont is the only state where eRecording isn’t yet legal. As of August 2021, almost 2,300 jurisdictions are eRecording nationwide. That’s about 88 percent by population. In about 15 states, 100 percent of the counties allow eRecording. Alliant National’s home state of Colorado is one of the states with eRecording available in 100 percent of its counties. The Property Records Industry Association (PRIA) is a great resource for state and county status for eRecording. Many state and/or county recording associations also provide information on eRecording availability, as well as contact info for each county recording office.
Due in big part to the COVID-19 pandemic, use of eRecording sky-rocketed in 2020. Shortly after the pandemic hit in March of 2020, things changed for everyone. At the county level, offices closed or had limited access. Some Recorder offices closed completely for a time or tried to continue operations by working remotely. It was a challenging period, and for a time, there seemed to be a lull in eRecording activity in county offices. In some cases, operations still aren’t back to where they were pre-pandemic. But thankfully, as we got toward the latter part of last year, we started to see a rise in county adoption of eRecording once again.
Now you may be asking, what about recording turnaround times? Pre-pandemic, it was pretty safe to estimate same day or next day eRecording by counties. And in many cases, it wasn’t uncommon for counties to turn documents around within a couple hours or less. However, during the pandemic, turnaround times increased in many counties, and at times dramatically. Situations, of course, varied. Sometimes, both traditional recording and eRecording were affected. In others, traditional recording was affected, but eRecording wasn’t affected as much. Over the course of the past year-and-a-half, we’ve seen improvements. I’m sure that those of you “in the trenches” and involved with getting documents recorded have seen and experienced fluctuations and changes in recording turnaround times. But I can say with confidence that eRecording certainly helps with recording turnaround overall.
Over the past decade, eRecording has received more attention due to regulatory changes (CFPB and TRID), more stringent requirements on lenders and, in turn, on their service providers – including those that record documents with counties. ALTA released its best practices in early 2013, which included a call for faster delivery, tracking and timely response to rejections. PRIA also released their TRID Informational Paper and their eRecording Best Practices for Recorders in 2015. These documents cover items like accepting all document types, allowing multiple eRecording vendors, imaging and making eRecording easy for their business customers, among others.
While there are now almost 15 states with 100 percent eRecording, there are others that are close to the 100 percent mark. To gain a complete picture of each state’s status, PRIA put together a helpful map. Some states are working on legislation that would mandate that all counties make eRecording available by a certain date. My home state of Ohio is one of them. I know that Indiana, Kentucky and others are working on legislation as well.
As of July 2021, about 88 percent of the U.S. population lives in eRecording jurisdictions. Counties continue to come online with eRecording or expand their services by adding more eRecording document types. Counties, eRecording submitter vendors, underwriters, and industry associations like ALTA, PRIA and state associations, continue to raise awareness and promote eRecording. If eRecording is not yet available in counties where you conduct business, please ask your county recording office how soon they will offer eRecording or when they’ll start eRecording deeds and let them know that you are interested to explore the benefits of this technology.
For more information on eRecording, here are the websites for eRecording vendors that service counties across the U.S.:
In the final part of our series, we explore some of the remaining routine scenarios agents will face when closing real estate transactions.
In the first two editions of this series, we tackled several scenarios faced by agents during the real estate closing process. These issues run the gamut, illustrating how potential problems can arise even when the finish line for a transaction is in sight. In the final edition of this series, we will address the remaining issues that agents will likely deal with throughout their careers, including existing surveys, T-47 affidavits (in Texas) and lender-required conveyances.
Existing Surveys and T-47 Affidavits
During closings, agents may need to review an existing survey and determine if it is acceptable. In Texas, per paragraph 6.C of the TREC contract, the seller is required to provide both a survey and a fully executed T-47 affidavit, and if they fail to do so, the buyer can obtain a new survey at the seller’s expense. The T-47 affidavit must have all blanks filled in and be fully executed and notarized. If it is not filled in, it can cause problems. For example, what if the seller fills in the date with the purchase date and not the date of the survey? How would agents know that no changes were made before purchasing? A new survey may be required in this case.
Lender-Required Conveyances and Removal of a Spouse from a Contract
Sometimes lenders may require the removal of a spouse from a contract if they cannot qualify as a borrower. The spouse who agrees to this removal amendment must do so in writing. If the spouse does not join in the amendment, they may not realize their omission from the deed until later. It comes down to classification. “Non-purchasing” means they are not on the contract so they should not be on the deed. “Non-borrowing” implies they did not qualify on the note but should join in on the deed of trust to encumber both of their interests in the property.
During refinances, home equity and reverse mortgages, lenders may also require deeds moving between spouses. Customers need to know that this is not a title company requirement and they need to sign an acknowledgment. Instead, it is a lender requirement. If this difference is not discussed, it can cause issues, especially if it was a separate property and they end up getting divorced.
Closing the Gap
Lastly, agents need to address the “gap,” the difference between the date of title search (Issued Day on a Commitment) and the date records are certified as complete (Effective Date on a Commitment). A best practice is to request the title be “brought to date” when closing is scheduled and for the gap to be brought to 10 calendar days or less. After the initial commitment is issued, time passes and the gap between the Effective Date on a Commitment and the current date continues to grow.
When preparing new title work, the agent needs to review it and issue a new commitment with additional exceptions and requirements to both parties before closing. Agents should not hesitate to stop a closing if new matters come to light. Neither agents or underwriters should assume the risk for closing or insuring in the face of an unresolved issue.
After the transaction closes, the gap will continue to grow until the closing documents – including the deed for the owner’s policy and the deed of trust for the loan policy – are recorded, which ideally occurs the same day as funding. This is the gap insurers find most concerning. In a state like Texas, for instance, claims relating to documents recorded during this particular gap are covered by the title policies for which premiums were collected at closing.
At most, the recording should not take longer than 48 hours following funding, even if that means overnighting the documents to the recorder’s office. Agents should get confirmation on the recording of their documents and retain evidence.
As this blog series has shown, getting a transaction fully and successfully closed has become increasingly difficult. There is no shortage of complex issues. But by being meticulous and methodical in how they execute their responsibilities, agents can successfully rise to the challenge and ensure customer satisfaction.