Call it what you want, the last thing a servicer has to do in the loan administration process can be a headache. Conveying title back to the homeowner free and clear, or assigning the lien away to another lender or the homeowner, takes time and doesn't yield much revenue. But lenders that mess up the process not only add to their costs, they also can face fines and penalties for failing to record lien releases fast enough in most states.
Imagine a library with no organizational system. Just books and papers piled hither and there. Ever find yourself trying to find that one important piece of paper in a cluttered office on a deadline? (Believe me, those of us in the journalism industry have been there many times). Lenders have more at stake than most executives when it comes to record keeping. The collateral is only as valuable as the documentation that proves it actually serves as collateral. For that reason, maintaining proper title is essential to the industry.
Fortunately, with the end of the massive refinancing boom that occurred a few years ago, lenders have time to refocus on how to manage the process. Portfolio churning isn't the burden it was in 2003 and 2004, but it is still a day-to-day challenge for the industry. Electronic commerce and technology are helping lenders improve the process. But with some 3,400 property recording jurisdictions across the nation, no change moves quickly through the industry. Fortunately, initiatives like MERS have made assignments more economical and efficient. But title issues remain one of the industry's overlooked challenges.
When files get lost, destroyed or misplaced, tracking the chain of title effectively goes from being a routine task to being a big problem. Assignments and lien-releases are put in jeopardy, and deadlines can be missed. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com