PERSON OF THE WEEK: Paul Clifford is president of Simplifile, a software company founded in 2000 that connects lenders, settlement agents and counties. Simplifile leads the nation with the largest e-recording network, having securely e-recorded over 40 million land record documents to date. MortgageOrb recently interviewed Clifford to learn more about e-recording adoption rates and the last obstacles to achieving an end-to-end e-mortgage.
Q: Can you provide an update to our readers on county adoption rates – how many counties have adopted e-recording, and how many more to go?
Clifford: Currently, 1,372 counties are e-recording across 45 states, including the 20 largest U.S. counties by population. Though that is only 38% of the total number of recording jurisdictions, it represents 74% of the U.S. population.
In general, we have found that counties have started to adopt e-recording faster, as the technology has been proven and is no longer considered something new or scary. Some counties, however, simply feel that it’s easier to keep doing things the way they’ve been done for decades. In many of these cases, the county recorders become pressured to adopt e-recording because their customers and their market need them to be e-enabled. With our years of industry experience and knowing both sides of the process, we understand why the transition from a 100-year-old process of paper document recording to e-recording can seem overwhelming at first. But, no matter how big or small a county is, it’s always rewarding to help it finally make the switch and hear it say, ‘Why didn’t we start e-recording sooner?’
Q: Do you agree that county adoption of e-recording is one of the last obstacles to achieving an all-digital, end-to-end e-mortgage?
Clifford: Although this is a common assumption, our experience challenges that thought, and the adoption of e-recording is broader than most people are aware.
Oftentimes, lenders think that 100% of counties must be e-recording before they adopt an e-mortgage solution. We often hear customers say that they don’t want to change from paper recording until all of their counties are able to e-record, and they don’t want to manage a bifurcated workflow internally. The truth is that 74% or more of a lender’s documents can be e-recorded, which is significant adoption of an e-initiative in the mortgage industry.
At Simplifile, we believe that if settlement agents enable ‘e’ as soon as a county is enabled, they would be able to move away from their remaining paper and transition to fully electronic over time and enjoy the efficiency and cost savings with the ‘e’ process along the way.
Q: What barriers to adoption still exist, and how can they be overcome?
Clifford: The two most common barriers include a lack of local demand and fear of the unknown. With regard to local demand, if local settlement agents are not asking the county to enable e-recording, the recorder may not see it as a priority.
We think the new American Land Title Association (ALTA) Best Practices (driven by the new TILA-RESPA Integrated Disclosure, or TRID, regulations) may change this. E-recording supports timely recording of documents, as well as the ability to track rejected documents. Both of these are recommendations in the ALTA Best Practices.
With regard to the fear of the unknown, a combination of continuing education efforts along with the real-world experience of 1,372 counties, some of which have been e-recording for more than 14 years, will help the remaining counties understand two things: 1) that this technology is not only reliable, but also provides a better customer experience and 2) that it helps create a more reliable public record.
Another barrier we hear about from counties is that they would love to begin receiving documents electronically, but their current software and equipment doesn’t provide them with the capability, and they don’t have the money in their budget to upgrade their software. For this reason, Simplifile provides an e-recording QuickStart solution at no cost to any county.
Simplifile is also focused on continuing discussions for things such as e-notary. In spite of the Uniform Electronic Transactions Act and ESIGN Act, there is a lack of clarity regarding the acceptability of electronically notarized documents, which is key to fostering a full electronic mortgage transaction. If we can clarify the rules relating to e-notary in each state and combine that with the already broad adoption of e-recording, then we will see a great deal of momentum added to the e-mortgage and e-closing initiatives.
Q: Why are certain counties slow to adopt?
Clifford: A majority of the remaining counties are smaller in size, which often limits their access to technology support. This is where Simplifile’s QuickStart product provides the solution. QuickStart is designed with small jurisdictions in mind. The connection to the county’s land records system is semi-manual, but it supports the submitter’s ability to leverage the benefits of e-recording. For many small jurisdictions, the old adage of ‘simpler is better’ certainly applies.
Surprisingly, there are also counties that still work exclusively with paper. Their documents are not stored electronically but in traditional recording books, and some county offices do not have Internet access. We have some counties that are just now beginning to work with email as a communication tool, so they are slower to adopt current technology while they work to improve their infrastructures.
Q: Do you believe that there will be ‘holdouts’ at the end?
Clifford: I guess it depends on how you define ‘the end.’ Certainly, there will be counties that lag way behind the adoption curve – given that we currently are already able to service nearly three-quarters of the transactions. When compared with many other electronic initiatives in the mortgage space, we are closer to ‘the end’ than most people are aware.
There will probably always be counties that just don’t want to do anything different from how they have been working for the past 10 years, and it will likely take the county recorder retiring before that county will adopt new technology. Seeing as they have a lot of autonomy at the county recorders offices, I believe there will be a few holdouts. One hundred percent participation is certainly a goal that several states have already been able to accomplish, and we hope to facilitate many more states to follow their lead.
Q: What are the challenges of implementation?
Clifford: Perhaps the biggest challenge to implementation is the nuances between counties, even within the same state. In many ways, every county connection we maintain is a custom integration. Yes, there are baseline similarities provided by the Property Records Industry Association standards and our ongoing partnerships with over 70 land records management system vendors – but, as anyone who submits paper documents knows, there are unique requirements in every jurisdiction. Making all of these unique requirements transparent and easy to accommodate is a key value-add that Simplifile brings to our customers.
Sometimes, we run into folks on the county side that may not have the best information or fail to look at successful implementations of other counties and develop their own way of doing things. In most cases, this greatly increases the complexity and cost of working with that county and, in-turn, slows the adoption by document submitters. Some examples of this non-standard implementation at a county have included exclusion of certain types of submitters, the selection of only certain document types that are allowed to be recorded electronically, not allowing electronically signed documents, charging submitters for rejected document, and not allowing automated clearinghouse payments, just to highlight a few. We believe that, over time, these counties will recognize that there is a better way to embrace this technology, and we will see much better adoption when they do.