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Electronic Document Recording: The Time Is Now

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by Todd R. Hougaard

Over the past few years the land records recording industry has introduced a new document-recording model to local governments and their business partners. Though the paradigm is still evolving and the legislation and technology are still maturing, the successes seen in the industry are undeniable. Electronic document recording works. And, like any successful development, this time- and cost-saving innovation will continue moving forward to revolutionize the old traditional method of document recording.

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The electronic document recording movement has coalesced into a recognizable structure strongly reinforced by a distinct and growing following of participants, including county governments, mortgage lenders, title companies, task forces, standards-setting organizations, technology providers, and system vendors. Today, there is no doubt that there are many substantial industry players who understand the strategy, objectives, and benefits of this change.

Because of recent increased activity and budget constraints, the electronic document-recording industry has been besieged with unprecedented challenges. The result has been a focus on an initial objective—to establish the means by which both recorders and their submitting customers can adopt and integrate an effective electronic-recording system. Evaluating current successes firmly establishes the fact that today electronic document recording is a reality.

Legislation

Many legislative barriers to electronic recording have been removed during the past several years. The most important changes have been related to electronic signatures. The Federal Electronic Signatures in Global and National Commerce Act (E-SIGN) has been in effect since October 1, 2000 , giving legal validity to electronically signed transactions. In addition, the Uniform Electronic Transactions Act (UETA) has been passed by most of the state legislatures throughout the country. Legal challenges will always exist, as current laws vary from state to state. And there will be much room for interpretation. However, the legal landscape has definitely shifted in favor of electronic documents and transactions.

Standards

During the past two years it has become increasingly apparent, as a result of several recording office electronic recording system implementations that each county recorder desires an electronic recording solution that seamlessly integrates with the paper document recording processes. Similarly, document recording requirements, fees, and payment choices vary from county to county and state to state. There are currently very few, if any, comprehensive standards that are consistently implemented and followed for document recording and indexing. However, an integrated electronic recording system must comply with the recorder's individual recording process and requirements, as well as function within the mandates of state and national legislation. Furthermore, the system must securely interact with systems and data from the document-submitting customers who range in size from local operators to the largest national lenders.

Perhaps the most important step toward realizing the benefits of electronic recording has been the formation and collaboration of standards-setting organizations. These groups have already determined key legislative and technological challenges that exist among industry participants. They currently are defining the efforts needed to overcome those challenges. The Property Records Industry Association (PRIA) and the Mortgage Industry Standards Maintenance Organization (MISMO) are the industry's two main standards-setting bodies. ( ALTA® participates in both of these organizations.) These groups and others are working together to ensure collaboration by all industry participants. By creating and establishing standards, these groups are assembling a common framework where individual entities can communicate across state and system boundaries to create their own solutions. Solutions providers already have adopted many of these and other standards, realizing that systems from different vendors need to be able to communicate to be truly useful.

Technology

Judging by current installations, there are as many solutions as there are problem solvers. The new standards are helping to align these efforts. Some electronic recording installations utilize partial automation that covers a wide scope of document types. Others narrow to a few high-volume document types where full automation is possible. However, the common theme is to remove the paper from the document-recording process. As counties deal with increasing recording demands, their search focuses on electronic solutions that decrease costs, save handling time, and reduce staff involvement.

Adoption

Currently many nationwide county recorders and document submitters are implementing electronic recording solutions. In 15 states and in more than 27 recording offices, recorders are now electronically recording some documents, and more than 40 are actively working to be enabled in the near future. Furthermore, 10 vendors of paper document-recording systems are adding electronic recording capabilities to their products or are integrating third-party product offerings. These vendors serve more than 900 recording offices nationwide. Mortgage servicers are rapidly taking advantage of the ability to electronically record lien releases with transaction volumes increasing as rapidly as the recorders are available to handle them. Truly this is not a time for the industry to wonder if it is going to happen or when it is going to happen. It is happening and it's happening right now.

Future Growth

The electronic-recording industry has survived an unpredictable infancy, marking the fact that with growth comes understanding. Because recorders and organizations within the industry are beginning to really understand electronic document recording, they are also experiencing the limitations of current conditions. Industry participants are collectively addressing these issues, determining the most beneficial resolutions and forging ahead. As the technology needed for efficient implementation of electronic recording continues to meet the reality of recorder-level readiness, both in uniformity of standards and ruling legislation, participants are prepared to meet the demands of change.

Although the industry faces many challenges, we at Ingeo believe that together we can resolve any obstacle. We believe:

  • The top 250 counties in the nation will adopt electronic document-recording solutions by the year 2005. (Forward-thinking counties already have formulated plans and are seeking solutions now.)
  • Lenders will encourage and support the adoption of these technologies and will be willing to make the investment that enables them to interact with recorders. (They already have realized the early benefits of automation and are ahead of the learning curve in this respect.)
  • Technical solutions will be found to address issues of concern to a variety of participants.
  • Standards-setting groups will align the industry and will be successful in gaining the support of all involved parties.
  • Legislative issues will be overcome through the collaborative efforts of county recorders and the customers they serve.
  • Cost of recording documents will be reduced by employing technology in the process.
  • Timesaving in recording offices will lead to reallocation of personnel to other critical office tasks. (Technology will not replace personnel but will allow for redirection of resources.)

Todd R. Hougaard is president of Ingeo, a national leader in digital commerce founded in 1996. He can be reached at (435) 755-9837. In May of 2000 the company launched its Electronic Recording System, with two separate applications serving mortgage lenders, servicers and title companies, and recorders' offices. You can read some of Ingeo's case studies on county recorders implementing electronic recording at www.ingeo.com.



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