Presentation on theme: "West Region Underwriting and Escrow Conference Presented By: Larry Walker Auditor/Controller-Recorder San Bernardino County Presented By: Larry Walker."— Presentation transcript:
West Region Underwriting and Escrow Conference Presented By: Larry Walker Auditor/Controller-Recorder San Bernardino County Presented By: Larry Walker Auditor/Controller-Recorder San Bernardino County
2 Agenda Why Electronic Recording? San Bernardino County Electronic Recording Expansion Issues New Ideas We want to hear from you
3 Why Electronic Recording? The Recording process Real Estate Industry –Highly competitive County Recorder: –under constant pressure to record documents ASAP Title companies, escrow, agents, lenders: –need timely recordation and confirmation for release of funds Buyer: waiting to move in; “moving van in driveway”.
4 Title Company hand delivered documents and waited until all documents were examined, recorded and cashiered. -might take most of the day Delivery person may travel long distance –San Bernardino County 20,000 square miles County budgets constrain ability to increase staff to meet the increasing workloads. Why Electronic Recording?
5 San Bernardino County Real Estate Fraud General Comments about Real Estate Fraud Cases These “cases” reflect one prosecutor’s experience and knowledge of real estate fraud law: 1.Notaries Public play a monumental role in real estate transactions. Their malfeasance or negligence is involved in a large number of criminal acts. 2.Many fraud cases take place on the fringes of the real estate world. Few of these transactions would come through the main channel of real estate activity that, at least initially, would be the source of electronically recorded documents.
6 San Bernardino County Electronic Recording In San Bernardino County (SBC), the key factor in ER, and the consistent theme of our requirements, is establishing the identity of the submitter – both organizational and individual. 1.Digitized ER (Electronic Submission)– the scanning of a paper document and electronic transmission to our office via internet with SSL encryption (“The San Bernardino County Model”) a. MOU created between SBC and submitter i. 24 hours of corporate training in system and security requirements. ii. Includes list of individuals who will process submissions 1. Must have no fraud-related criminal record. 2. Two hours of individual training. 3. May not be a Notary Public. iii. Biometric confirmation of individual processing submissions.
7 2.Electronic Recording – Transmission of document images via internet (SSL encryption) for recordation. a.Submitter approved by SBC. i.Includes list of individuals who will process submissions ii.Facsimile signature of authorizing party on file b.Submitter required by SBC to contract with InGEO for actual transmission services. c.InGEO provides authentication and security from submitter through InGEO to SBC. 3.Government to Government a.Previous relation established by agreement i.Franchise Tax Board ii.SBC Treasurer/ Tax Collector b.Facsimile signature of authorizing party on file c.Transmission is by pre-arrangement with parallel transmission of data describing type and quantity of documents submitted. San Bernardino County Electronic Recording
8 Where Do We Go From Here Opportunity Presented By Electronic Information Systems Electronic Recording is attractive to many in the real estate industry, for a variety of reasons. 1. Speed 2. Efficiency: a.A better bottom line for the private sector b.Reduced cost to the public In addition, ER may offer additional benefit in the area of real estate fraud. 1. Could advancing technology in the area of data bases and the exchange of information enable future efforts to combat real estate fraud that are impossible today?
9 00/01 01/02 02/03 03/0404/0505/06 Documents Recorded492,293671,000860,496949,864965,416993,192 % increase over the previous year36%28%10% 2% 3% Average Docs recorded per day20012728349838613,9244,037 # of Examiners101010151616 # of Docs Per Examiner per day200273344257245252 * Based on a 246 day year Many recorders saw a significant increase in the number of documents San Bernardino County ER
10 San Bernardino County Recorded Documents Fiscal Years 2001-2006
11 A. Concern of some that ER fraud would increase. 1.Notary Public is key 2.Lost, stolen or misused stamp and book Expansion Issues
12 B. Concerns about number of operating systems 1.Title companies fear stand-alone county systems a.58 California counties; more than 4,000 jurisdictions nationwide b.SBC/OC experience 2.Vendor fears of single statewide system Expansion Issues
13 New Ideas A.Register of Notarial Acts 1.On line verification of status 2.On line reference to notarial act a.Potential direct connection to ER system
14 New Ideas A few observations from one County Recorder’s perspective: (does not necessarily represent the opinion or policies of any other Recorder or Association of Recorders) 1. Notaries are crucial to the process. 2. The actions of a few bad apples can tarnish a whole industry. 3. Recorders want to be able to rely on a notarized document on its face. 4. Recorders do, however, have an important role in assuring the accuracy and veracity of the documents that we so carefully record and maintain. 5. I believe that we must join in the effort to give greater assurance that the signature on a document is genuine as represented.
15 New Ideas 6.Major benefit of the Notarial Database -- Direct Reference within the recording process. a.Ideal situation: Electronic Recording System 1.Person submitting document for electronic recording enters data in fields required for notarized documents. 2.ER system automatically queries statewide Notarial Database for entry matching all data – date, name of signer(s), name of Notary, Notary number, etc. 3.Direct match provides confirmation that notarization is valid. 4.Discrepancy in information sets in motion processes designed to further test the legitimacy of the notarization i.Notice to person with interest in affected property ii.Referral back to Title Company for review iii.Referral to DA Fraud unit Recordation could be allowed or suspended as provided by law.
16 New Ideas B. Portal Proposal 1.Single portal for multiple counties a.Open standards 2.Front end for submitters (title co’s, lenders) 3.Back end system interface for counties a.Vendor-specific
17 Today’s Situation San Bernardino and Orange recording electronically with title companies. Proprietary systems – non-interoperable. –Multiple system interfaces per submitter. –Support issues for counties and submitters New law (AB 578). –Regulations being developed. –Security focused. –“Implementation dependent”.
18 Goals Interoperable system that is AB 578 compliant Develop and implement within 1 year of regulation adoption. Develop and share standards to allow for any county or vendor to utilize system. Involve AG and industry early in process to align development efforts.
20 New Ideas C.Initial Implementation 1.Current discussion/development a.Kern, Orange, Riverside, San Bernardino Counties 2.Cetification per AB 578 – Attorney General regulations a.One time vs. county by county 3.Best case: go live early 2008 4.Parallel development efforts a.IRS pilot for ER of tax liens b.Working with CA FTB for state liens
21 D. Potential future expansion 1.Available to all California counties a.No limit because of cost/benefit impact 2.Every participant pays same cost per document a.Counties are authorized by AB 578 to charge up to $1.00 per document recorded to pay for development and operation of ER system. 3.Additional counties will be brought on as soon as practicable a.Top priority is to assure the continued smooth functioning of the system as new counties are added New Ideas
Most Frequent Reasons for Document Rejection Document Rejection
23 Reason #1 Notary Acknowledgments Issues: –Illegible seals –Incomplete or missing acknowledgment –Did not use “all-purpose” acknowledgment –Name in acknowledgment does not match the signature –Ink color other than black (colored)
24 When re-recording a document, it must be re-acknowledged. AB 361 – New law specifies that the officer taking the acknowledgment must insert their name and title in the acknowledgment Some counties will no longer accept “the undersigned”. 58 counties within the state are divided in this. Notary Acknowledgment
25 Assembly Bill 361 Effective January 1, 2006, Assembly Bill 361 modified the requirements for notary acknowledgments by removing the word “substantially” from Civil Code 1189 (a) which states, Any certificate of acknowledgment taken within this state shall be in the following form: “On __________________ before me, (here insert name and title of the officer), personally appeared ______________ personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature ________________________________ (Seal) ”
26 Two names in acknowledgment, only one signature. Transposed letters in name in either the caption, signature, or acknowledgment. Name of company or trust must be above or below signatures (as shown in caption). Reason #2 Names Must Agree In Caption, Execution and Notary Acknowledgment
27 Original signatures must be affixed. Legal description omitted. Referenced exhibits not attached or attachments not referenced as exhibits. Recording reference (date & document number) of prior recorded document incorrect or omitted. Missing Assessor’s Parcel Number Reason #3 Omissions
28 Titles incorrect - Request for Notice crossed out in document but still listed in the title. Property not in the proper county or county not stated. No grantee/grantor shown. No return name and/or address. No tax statement address. Omissions – (cont’d)
29 Insufficient space for recording information (needs cover sheet) Missing/incomplete Preliminary Change of Ownership Report (P.C.O.R.) Missing notary seal No printed or typed name under parties signature Omissions – (cont’d)
30 Illegible signatures –names need to be printed or typed below or above the signatures Illegible document – will not reproduce on film Illegible notary seal Incomplete document Reason #4 Illegibility
31 Documentary Transfer Tax statement is incomplete or incorrect –Amount of tax shown in relation to the P.C.O.R. –City or “Unincorporated” not shown. Incorrect amount of fees sent in Insufficient exemption for Documentary Transfer Tax Reason #5 Taxes
32 Incomplete or document not properly prepared Not an original document Wrong county “Recording requested by” not properly completed Return address/tax statement not properly completed Exhibits not labeled properly No provision to record Reason #6 Miscellaneous
33 How ER Has Decreased the Number of Rejected Documents Documents are examined immediately Immediate e-mail notification of recorded or rejected documents Immediate re-submission of corrected documents Title Company rejected documents have dropped from approximately 6% to less than 1% ER allows for live recordings all day
34 New Documents For 2007 AB 2587 – Contaminated property: methamphetamine cleanup Extends the Methamphetamine Contaminated Property Cleanup Act of 2005 (Act) to a mobilehome or manufactured home located on private property, a mobilehome or manufactured home located in a mobilehome park, and a recreational vehicle that is sited in a mobilehome park. Provides for the recording by the local health officer of both lien and release documents.
35 New Documents For 2007 AB 2922 - Redevelopment: Low and Moderate Income Housing Fund. Requires redevelopment agencies to record a document that specifies the date on which the affordability restrictions will expire and describes the property that is subject to the restrictions. Creates new document entitled “Affordable Housing Restrictions on Transfer of Property”
36 New Documents For 2007 SB 668 - Mining Makes numerous clarifying and technical changes to statutes governing mining operations in the state, mine reclamation, and public agency contracting for mineral resources. Creates new document entitled “Notice of Reclamation Plan approval”. Provides for the recording of a “Notice of Lien”.
37 Recorder’s Document Reference & Indexing Manual It provides the user with basic document requirements, what can or cannot be recorded, and definitions common to legal documentation and the recording process. The Recorders’ Document Reference and Indexing Manual is available in hard copy or CD-ROM For more information and/or an order form please send an e-mail to email@example.com firstname.lastname@example.org
38 Contact Information De Ana Thompson Chief Deputy Recorder For Larry Walker Auditor/Controller-Recorder of San Bernardino County (909) 386-8924 email@example.com For Any Questions Or Comments Please Contact: