Our 2021 State of the Title Industry Report found that 9.4% of respondents have no standard process for tracking instrument recordings after closing. That’s a small minority that could have a big impact on future closings. Releasing liens is one of the standard requirements found in a title commitment, and the release isn’t official until it’s recorded in the public record.
While it’s a part of the title policy, title agents are dependent on lenders and other parties to draft and record satisfactions of mortgage, deeds of reconveyance, and other trailing documents. Additionally, lenders expect to receive their policies within 30 days, but state regulations may allow these documents to be recorded long after. Add in delays at the lender’s post-closing department or a backup at the recording jurisdiction, it’s easy for these releases to take more than 30 days to be recorded. As a result, checking the public record at the time of title policy typing doesn’t guarantee that documents listed in the title commitment are in actuality released.
In order to address the problem, it’s imperative that every company issuing title policies has a clear written process on who, when, and how release tracking will be conducted after closing.
Download: 7 Reasons You Need Release Tracking
Tips to improve post-closing processes
The American Land Title Association’s best practice #4 recommends companies to “adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws.”
I spoke with Ayla Pettyjohn from our release tracking department to get more insight on how she and her team handle this task.
Here are some tips to establish or improve post-closing processes at your company:
- Break down each step of the post-closing process
- Assign each task to an individual
- Decide when you’ll check the public record
- Set automated calendar or closing software reminders
- Be persistent with problematic files
Break down each step of the post-closing process
The first step is to write down every task that must be completed after closing and be sure to add release tracking to the list. Only 50.5% of survey respondents said they always check the public record for lien releases, mortgage satisfactions, deeds of reconveyance, or other documents after closing.
At the same time, 43.8% reported running into an issue with lien releases within the last three months. If agents don’t spend the time following up after closing, they will likely have to spend more time in the future performing title curative work.
Assign each task to an individual
Most files have at least two to three people working on them at the same time. When asked who is responsible for checking the public records, nearly a third of survey respondents (31.2%) said the individual responsible for the file.
Ayla points out that there is potential for confusion and assumption if the task isn’t assigned. “At what point do you become the responsible party for the file? Are you thinking the processor is the one who put together the title commitment, so they are responsible for the requirements? Who is saying it is my responsibility to do this step? Or is it assumed?”
Without clearly defined tasks for each role, this small but important step may be overlooked.
Decide when and how often you’ll check the public record
Typically, agents will check the public record when issuing or typing policies. This is a great starting point, but because the Uniform Residential Mortgage Satisfaction Act and state statutes allow mortgagees anywhere from 30 – 90 days to record a satisfaction, some documents might not be officially recorded by then.
ALTA best practices are at odds with these federal and state laws. As Ayla notes, “Both owner and lender policies must be completed in 30 days. If you’re checking then, 90% of the time it’s not going to be there.”
In most cases, you’ll need to check the record more than once. Ayla notes that about 25% of release tracking files her team handles become an issue file because the lender doesn’t record the documents within the statutory time frames.
Outsourcing title policy typing has also grown in popularity as title order volumes have risen over the past two years. If you’re one of the 43% of respondents who check the public record when issuing policies and there have been any changes in who types policies, be sure to update how release tracking is managed as well.
Set automated reminders
Using a calendar or closing software reminder is the second most popular method of tracking lien releases (40% of respondents use one of these). Meanwhile, a little over 10% still use spreadsheets or logs to manage this task, but this can get messy. One wrong keystroke can easily delete important information, so Ayla recommends sticking with a process that reduces manual errors.
Ayla and her team typically follow a cadence of checking 30 then 60 days after closing. At the 90 day mark, files without releases are escalated.
Be persistent with problematic files
If a file is reaching the end of the statutory time frame and a release still isn’t recorded, it’s a good time to “grab everything in your file and throw it at them.”
Gather the proof of payoff, authorization signed at closing, title commitment, and any other documentation you have to avoid additional back and forth.
“The more you give them up front, the more likely they are to do it. Really it’s just a matter of playing the waiting game,” says Ayla.
If you’re a smaller team, consider consolidating all the problem files that need follow-up and have a day dedicated to calling the lien holders.
Every lender has a post-closing department, so build relationships with lenders and know when to escalate an issue to the right person. General customer service representatives don’t always know what’s going on with a file.
Remind the lender it’s in their best interests to ensure that these chain of title documents are recorded in addition to the legal consequences. Some representatives may insist that the satisfaction was sent to the borrower and wash their hands of further action, but Ayla explains, “It’s not required that you send it to somebody; it’s required that you record it.”
PropLogix Release Tracking Services
It’s easy to see how this small task of release tracking can snowball into a much bigger problem for title companies. “It’s not a matter of a lack of requests or communication.” Ayla says, “You really shouldn’t have to but you do have to annoy the lender into doing their job. If you’re a tiny title company, you don’t have time to bug these people every week, but it’s really the only thing that ends up working in the long run.”
Outsourcing aspects of title production, like release tracking, is becoming more common as title companies struggle to recruit the right professionals, keep up with title orders, and educate real estate agents and consumers. Having a plan and dedicated person in place to track and resolve lien releases delivers value to your clients and protects you during audits, but your staff may already be stretched too thin. If you want to take release tracking off your post-closing plate, we can help.
Learn more about our release tracking services.
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