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West Region Underwriting
and Escrow Conference
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
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AgendaAgenda
Why Electronic Recording?
San Bernardino County Electronic Recording
Expansion Issues
New Ideas
We want to hear from you
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Why Electronic Recording?
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”.
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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?
Why Electronic Recording?
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San Bernardino County Real Estate Fraud
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.
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San Bernardino CountyElectronic Recording
San Bernardino CountyElectronic 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 submitteri. 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.
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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 submissionsii. 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 Governmenta. Previous relation established by agreement
i. Franchise Tax Boardii. SBC Treasurer/ Tax Collector
b. Facsimile signature of authorizing party on filec. Transmission is by pre-arrangement with parallel transmission of
data describing type and quantity of documents submitted.
San Bernardino CountyElectronic Recording
San Bernardino CountyElectronic Recording
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Where Do We Go From Here
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 sectorb. 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?
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00/01 01/02 02/03 03/04 04/0505/06
Documents Recorded 492,293 671,000 860,496 949,864 965,416993,192
% increase over the previous year 36% 28% 10% 2% 3%
Average Docs recorded per day 2001 2728 3498 3861 3,924 4,037
# of Examiners 10 10 10 15 16 16
# of Docs Per Examiner per day 200 273 344 257 245 252
* Based on a 246 day year
Many recorders saw a significant increase in the number of documents
San Bernardino County ER
San Bernardino County ER
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San Bernardino County Recorded Documents Fiscal
Years 2001-2006
San Bernardino County Recorded Documents Fiscal
Years 2001-2006
492,293
671,100
860,496
949,864 965,416993,192
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Fy 2000-01
FY 2001-02
FY 2002-03
FY 2003-04
FY 2004-05
FY 2005-06
+36%
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A. Concern of some that ER fraud would increase.
1. Notary Public is key
2. Lost, stolen or misused stamp and book
Expansion IssuesExpansion Issues
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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 IssuesExpansion Issues
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New Ideas 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
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New IdeasNew 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.
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New IdeasNew 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 propertyii. Referral back to Title Company for reviewiii. Referral to DA Fraud unit
Recordation could be allowed or suspended as provided by law.
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New IdeasNew Ideas
B. Portal Proposal
1. Single portal for multiple countiesa. Open standards
2. Front end for submitters (title co’s, lenders)
3. Back end system interface for counties
a. Vendor-specific
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Today’s SituationToday’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”.
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GoalsGoals
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.
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Consolidated e-Recording Network (CeRTN - ConceptConsolidated e-Recording
Network (CeRTN - Concept
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New IdeasNew Ideas
C. Initial Implementation1. Current discussion/development
a. Kern, Orange, Riverside, San Bernardino Counties
2. Cetification per AB 578 – Attorney General regulationsa. One time vs. county by county
3. Best case: go live early 2008
4. Parallel development effortsa. IRS pilot for ER of tax liensb. Working with CA FTB for state liens
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D. Potential future expansion1. Available to all California counties
a. No limit because of cost/benefit impact2. 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 practicablea. Top priority is to assure the continued
smooth functioning of the system as new counties are added
New IdeasNew Ideas
Most Frequent Reasons for Document Rejection
Document RejectionDocument Rejection
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Reason #1Reason #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)
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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 AcknowledgmentNotary Acknowledgment
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Assembly Bill 361Assembly 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) ”
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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
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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 incorrector omitted.
Missing Assessor’s Parcel Number
Reason #3
Omissions
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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)
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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)
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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 #4Reason #4
Illegibility
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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 #5Reason #5
Taxes
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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 #6Reason #6
Miscellaneous
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How ER Has Decreased the Number of Rejected
Documents
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
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New Documents For 2007
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.
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New Documents For 2007
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”
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New Documents For 2007
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”.
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Recorder’s Document Reference & Indexing
Manual
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 protected]
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Contact InformationContact Information
De Ana ThompsonChief Deputy Recorder For
Larry WalkerAuditor/Controller-Recorder of San Bernardino County(909) [email protected]
For Any Questions Or Comments Please Contact:
For Any Questions Or Comments Please Contact:
