Releases & Title Services
Think the front end of the mortgage business has been busy lately? Maybe you should talk to people on the back end. Record loan origination activity, most of it in the form of refinancing, has created a record amount of lien release, reconveyance and title activity as well. And unlike loan originations, lenders are not in a position to make much money doing this work. That's because in some cases lien release fees are limited by statute or regulation.
So the work adds up, lenders are reluctant to add staff to manage the heavy volume, and consumers start complaining when they find out (as increasingly they do, because of the fast past of refinancing and housing turnover) that a lien release hasn't been recorded on time or has been done incorrectly.
And with lenders already facing a variety of civil suits related to loan origination and servicing issues, the last thing most lenders want is heavy scrutiny of lien release and title reconveyance work.
To be sure, problems that have been reported often have nothing to do with the lender. County recorders, themselves overburdened by the number of real estate transactions taking place, often have a backlog of title recordation work sitting in their offices. The lender is generally powerless to fix delays that are happening in county courthouses across the country.
In 2003, the number of home loan transactions was triple what it was in 1986, also a big refinancing year. While we may not see a repeat of 2003 anytime soon, the mortgage industry is still a growth field that is likely to strain the resources of payoff departments and county officials for some time to come. New technology, outsourcing and process overhauls are needed to help the industry manage this growing workload.
Managing releases, assignments, and other title work is getting easier, in part because the growing use of an electronic registry (MERS) for tracking ownership of loans and servicing rights is helping to eliminate some assignments. But more progress needs to be made if the lending industry is going to effectively manage the cyclicality of the mortage business.
But technology alone is not enough. Lenders will need the cooperation of county officials and business parters if they are going to improve the process of recording title work, to everyone's benefit.
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