DECREASING DOCUMENT REJECTIONS: 5 WAYS ERECORDING CAN HELP

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Annie: Hello, everyone. Welcome to today's webinar, "Decreasing Document Rejections: 5 Ways eRecording Can Help." My name is Annie Triboletti, and I will be your moderator. Joining us today are Kevin Kinderman, and Matt Metta. Kevin is the market director for CSC's Real Estate Division where he defines product positioning and marketing strategy to maximize revenue and strategic growth. Under Kevin's leadership the CSC electronic recording network has grown exponentially ensuring CSC's presence as the market leader.

Matt is a national consultant and manager based out of Wilmington, Delaware for CSC. Matt is dedicated to CSC's electronic document recording program. He joined CSC in 2015 and currently works with leading title underwriters, real estate firms, and lending institutions throughout the country. And with that, let's welcome Kevin and Matt.

Kevin: Thank you, Annie. I appreciate everyone's attendance today. We're excited to go through the PRIA results from some research and analysis they've provided related to document rejections at county recording level. Today's agenda will consist of seven primary findings or categories from that PRIA information and that research project. We're also going to consolidate those seven categories and provide five eRecording solutions that would help you reduce the rejections that you might be experiencing. We'll talk about some recommended best practices. And even some additional reasons why CSC eRecording would fit really well into this topic of decreasing rejections, identifying where some gaps are, and then putting new processes in place to ultimately get documents recorded faster.

Just a quick tidbit about CSC. So CSC has been in business since 1899. We support over 10,000 law firm clients throughout the country and throughout the world. We have over 180,000 corporate customers. We even support over 90% of the Fortune 500 companies with some of the various services that we provide like corporate compliance and governance services, secretary of state, entity filings, UCC filings and even digital brand services.

All right, cool. So just a little bit of context on this PRIA research, so PRIA is the Property Records Industry Association. And they have a mission to basically identify opportunities for collaboration amongst these industry stakeholders that are members of the association to develop recommendations and develop standards or best practices for those industry members and really anyone in a property records industry, so mortgage lending, title and settlement. You know, there's even contractors and construction companies that file documents at a land records division of a county. So there's all sorts of industries involved, but the idea is for us to review ways to make things better and develop new standards.

So this initial research project, it started back in 2017. And there were three phases to it. The first obviously was to do a little exploration to discover some opportunities and some gaps and where things could be improved. And it was really compiling a lot of the collected data.

The second phase was to define more specifically and elaborate what that information was. So we wanted to analyze it. We wanted to try and categorize it and group it and see what we could learn from it specifically.

And then third, obviously, is to develop some best practices or recommendations as a result of how we analyze the information and see if it can make improvements for all of us as document submitters or document recording jurisdictions.

So you'll notice at the very bottom, there was more than 150 different rejection reasons. But we've done our very best and PRIA did as well to place the majority of those in seven primary rejection categories. And you'll notice that some of our answers in the polling question are here, again, because they're the most common rejection reasons. But the first being document formatting. And along with that, we're almost going to group image quality within that, and we'll talk a bit about that in a second. But incorrect information that's listed on the document. Missing information that wasn't included on the document or in the electronic submission. Payment error and again, that can happen through the traditional paper process for eRecording, but very rare through the eRecording process. And then wrong jurisdiction. Matt'll mention that later, but kind of interesting that there's a lot of counties out there with the same names between the different states.

And then very last here is customer courtesy. We thought to mention this, but turns out, there was actually a high number of rejections provided back from counties because clients were asking the counties, "Hey, I sent this in error, or I sent this too quickly without something that needed to be included." So the county is rejecting it really more as a courtesy than anything.

So with that, we'll begin with some of the five specific examples about how eRecording can help. And I'll transition here over to Matt.

Matt: Thanks, Kevin. So yeah, with all of you on [inaudible 00:06:27] call today, any of you doing the back of the envelope math, you've just seen the seven top rejection reasons from PRIA and now you see that we're going to present you with only five solutions. So as Kevin mentioned, the first two will be grouped together, the document formatting and image quality. And then that seventh reason of customer courtesy, we're just dropping off because obviously it's a common rejection reason because you as a submitter are asking for it.

But with the first solution that we're able to provide in regards to document formatting and image quality, this kind of aligns with some of the things or some of the information as CSC has gathered were most notably missing or illegible signatures or notary information. The problem is that for improper formatting, when generating the documents, not enough attention is paid to the actual document requirements or the formatting requirements from the counties. I suppose this could be margins. This could be a 3-inch margin along the top for the endorsement of the electronic stamp from the recorder's office. It could boil down to the font size being under 12 or under 10.

All of the things can result in rejection or probably more detrimental could result in a non-conforming fee and force you to pay additional funds to actually have document in place on record.

The image quality is still ranking up there pretty high isn't so much of a concern nowadays because of the advances in scanning technology. This is something that was probably very prevalent and was very prevalent back when eRecording started back in '99. But over the last 20 years and the technological advances that we've seen just in scanning, more often than not, the resolution of the scans are great in and of themselves. If anything happens during scanning, it's normally due to the scanning surface being a little bit less than perfectly clean, which could cause some documents to, you know, come up that way.

So again, you know, all this really boils down to not really taking enough time to look at the documents scanned before sending it through. It could have to do with the documents being originated by separate party if you're taking title and settlement and that mortgage doc is coming from a lender. Most times lenders may not be quite as familiar with the specific restrictions that recording jurisdictions put on you for getting your documents recorded. Because they quite honestly do not record as many documents as title agents can do.

That being said, the ways that eRecording are able to help is we provide tools within the application that you have an account for, to head off and prevent any of these things to be seen by the county recorders. With these tools, you're able to take the image that you've scanned and uploaded to our application. And you can enhance it. You're not changing the content of the image or the file in any way, you're simply making it more legible by the recorder so that they're able to read it and actually get it placed on record.

We offer viewing windows that allow you to see the margin requirements at a quick glance. That way you can see at a moment whether or not your document is falling within those marginal requirements and tools to enable to make sure that

that happens for you. But let me kick it back over to Kevin so he can go over a second solution with you.

Kevin: Yeah, so the second solution addresses where rejections occur from incorrect information. And this most specifically means for documents that need to reference already recorded documents. So if there's a satisfaction of mortgage and the satisfaction needs to reference the original mortgage or deed of trust, and it needs to detail a book and page or instrument number of that original mortgage, this is an example of what information might be missing that caused the problem.

This is frequent with many types of documents. In fact, it could be regular and normal that most documents would contain some information that is referencing another previously recorded document, depending on the type of submitting company that you are.

But same sort of understanding of why most times it's either inexperience, we were maybe a bit too quick in processing the doc and just didn't pay close enough attention. There's occasions where in the doc prep information was miskeyed, whether it was characters or numbers. And even in any reporting process that that potential was there to miskey some sort of character or number in providing that information to the jurisdiction. And then there's even been scenarios where it just simply was, you know, not found, so document submitters would send it to the jurisdiction without the reference. And that could have caused rejection as well.

So different reasons why it happens. But some of the things and how eRecording can help is we provide specific alerts or notices or checks within our application that prompts the user to provide specific information. In fact, there's even, these prompts or, you know, alerts that become requirements within our system. Where the documents submitter or the individual user sending the doc, they would not be permitted to click "Submit" which would deliver it to the jurisdiction. They wouldn't be able to do that until all requirements were met. So there's some checks and balances, I guess, that are within the application that provide that extra caution to make sure that the package is complete before it's really submitted.

So our suggestion really here is, you know, slow down, take your time, do a little bit of research. The rejection is never worth the time and resource strain that it takes, as opposed to just taking 30 extra seconds to make sure the documents complete before you send it over.

Matt: Thanks, Kevin. Moving on to our third solution for you, this is going to specifically address missing information. Now, more often than not, the information that is missing is the legal description. And it really falls under two instances as to why this might be happening. You know, part of the problem is that legal descriptions aren't always included as the in verbiage in the actual document itself, date of deed or mortgage or what have you. Because the descriptions come in both long and short form. More often than not, yes, your short form legal description will be included in the verbiage of the document itself. But when it comes to the long form version this is more often than not included as an appendix or as the final page of the document. And because of that, it more often than not gets left off, or it's very easy for it to be left off.

So really the solution that we have in place to make sure that this does not happen for you is that with eRecording, we have the ability to make customizable fields for you. Now, these customizable fields are not seen by the county, this is something for your specific reference. And it basically creates a visual cue, a reminder for you to go back and double check this. Basically, the preference is that you do a little bit more of the QC work on the frontend before you scan to make sure that these fail safes are necessarily needed, but they're there for you just in case. So with that it provides you, you know, a checkbox or however you would like it to be set up so that you can make sure that these things are included with the scan. That you're not sending over an incomplete document that would ultimately result in a rejection.

Kevin: Great, so the fourth solution here that eRecording addresses is payment errors. And this is a topic that I'm sure no one is exempt from. I have stories of being a 16-year-old, and my first job was for a real estate law firm. And I was charged with, you know, being a courier, taking these transactions, these packages down to the recorder of deed's office. And I would see these, you know, check amounts for massive amounts of money. And I was instructed, you know, just go to this place and go to this counter and everything would be fine. And I was like a deer in the headlights with some of these transactions that happened to being a 16-year-old boy.

But basically, when check amounts aren't accurate, even if they're off by a few pennies, this causes a rejection. You know with the paper, you know, traditional recording process and a physical check is cut and it's taken to the jurisdiction. And if there's any variation in the cost to get the document recorded, they have to reject it. The eRecording process accommodates that and actually eliminates any rejections if, you know, there's a scenario where the payment amount is off by a few pennies, that's just not encountered with eRecording.

There's all sorts of variations and county nuances and different ways to handle calculations. Some of them specifically are certain counties have a $12 fee to index up to four grantors or grantees. And every name after they'll charge an additional $2, and that's one complexity that makes a calculation a little difficult. There's other scenarios where the consideration amount or the loan amount would vary. An estate might have a mortgage tax or transfer tax. There could be exemptions to that tax, partial exemptions. There could be mentioned taxes. And, you know, it's reasonable to say it's challenging to always know to the penny, what the recording fees are going to be.

So those are reasons why payment errors have happened. You know, historically it's just it's a complicated world out there and recording documents is getting easier. But it's been tough in certain cases. eRecording helps with this scenario because the eRecording vendor we would front or advance or recording fees and taxes on behalf of our clients. We actually pay the jurisdiction for the exact recording fee amount. And then after the document's been recorded, an entire day later, is when we then recover those recording fees and taxes and get reimbursed from our clients.

So, again, we avoid and eliminate these rejections all together through the electronic recording process. Because we're able to pay the exact recording fee, not having to go through that back and forth and wait three weeks for the county to reject the document and send it back to you by snail mail. You're able to be notified instantly, as soon as the document gets recorded.

Matt: Yeah, Kevin, it's probably also of note to mention that with the electronic payments through eRecording, it also cuts down on a lot of the time for prepping these packages to go out by snail mail. More often than not the checks are being cut by finance departments. So you have to request a remittance of a check and so on that, you know, all of that processes went down by this process.

Kevin: It's a good point. We did some studies years and years ago and I recall the overarching result of the studies. But the cost to cut a check, we in the studies we found is in excess of $20. Just if you capture all of the internal staffing, employment, software costs, even the paper costs to check and the postage.

Matt: So once you aggregate all your overhead to actually cut a physical check is over $20.

Kevin: Twenty. So yeah, if you can eliminate that actually, you know, saves actual costs.

Matt: Absolutely. Well, rounding out our solutions here, let's dive into wrong jurisdictions. Now, many of you may think that this is a no-brainer, you know what county this needs to go to, you know where the document should be recorded, should be no problem. Well, the problem is that it does happen. Fortunately enough for us, we have many different counties that have the exact same name, over 30 Washington counties across U.S.

I've read somewhere that there is a city in every U.S. state named Magnolia. So there are jurisdictions within jurisdictions, you could be sending something to St. Louis County, but that property is withheld within the city limits of St. Louis, it needs to be recorded there not with the county. Different recording jurisdictions may be broken up, you Berkshire County, Massachusetts is being divided into a northern, southern and middle district. So you need to know which district within the county itself, this property resides in order to make sure this is recorded properly.

All of these can result into different rejections for you. And the way that we can help with this is that when we're going through the prep process in our system, in selecting the jurisdiction, it will pull up for you any county or any recording jurisdiction that is matching what you have hand-keyed so far. It is predictive text. And when I get into the demonstration in a little bit, you will see what I'm talking about here. But it will display for you the name of the jurisdiction along with the state abbreviation. Going a little bit further to the right will actually be a shaped outline of the state. So you can be sure that the jurisdiction you're selecting is the appropriate one that it should be going to.

But like I said, this is something that many feel, you know, all this would never come up, it does. And it happens a lot more than anybody would probably like to admit. But it is something that is very easily taken care of by eRecording. But probably the best way to head off this rejection is really just to do your research on the frontend. When you're prepping your closing package, when you're prepping that HUD or that CD, make sure you know where these documents need to go. Make sure you know exactly where that parcel lays, exactly where the recordings jurisdiction is, so that you know exactly where these documents need to be recorded. It's going to save you a bunch of time and a bunch of hassle on the backend.

Kevin: Yeah, well said, Matt. So here, toward the end of some of the slides before we get into the demonstration of our eRecording application, we wanted to hit on a few best practices that really were the conclusion of the PRIA research that came out.

The very first one was increasing level of communication. And this could be increased communication within the organization, you know, the submitting company. And making sure that their various users are aware of county nuances and little quirks about how different counties operate. There's also a communication opportunity where counties provide back a rejection notice and where they can be more specific in what that rejection reason is. Then that allows the document submitter to make a more thorough change to their processes because they have understanding of it now, and it can avoid those rejections in the future.

One other best practice and recommendation that came of all this was, there's some effort that could be spent to improve the doc preparation. And this doesn't always fall on the document submitter. There are plenty of scenarios where the lender is preparing the mortgage or deed of trust, but it's the title and settlement companies that are recording that document. So it's a matter of still embracing that first recommendation of communication. So when these document submitters learn of things related to document preparation. Matt talked about formatting, Matt talked about margins, Matt talks about the endorsement region, you know. If we can get that information back to the software companies that provide the title production system. Software companies that provide the origination systems and help them refine and tweak their document template tools, then that'll eliminate some of the rejections as well.

And then error correction. So this is in light of the rejection reasons that I had already mentioned. But it's easier to correct the errors if the submitter understands the details of the error. And this is where the counties have a much greater opportunity to communicate those details, and really specify the best they can, what needed to be corrected.

And then finally, the use of technology, even the eRecording companies, there are things that we can do to refine the process a bit. To prompt the submitters of how to be aware of unique nuances of certain counties and it's the adoption of technology. We were getting bombarded with this, you know, digital age and digital mortgage process and eNotary legislation, and all these ways technology is beginning to be used in our industries. And they really are all for the greater good to help us refine our business processes to help us, you know, cut costs, and to be more efficient in how we operate our businesses.

So those were five best practices, excuse me four best practices that we were able to, you know, put together from the PRIA results.