Having been intimately involved in this very specialized field of the industry and an executive at NTC for nearly 20 years, I have, for better or worse, developed some strong points of view on certain subjects that might otherwise be given short shrift. Just recently an industry peer who was trying to understand why it takes so long to either price or onboard a client for Lien Release services asked the question, “Isn’t a Lien Release just a Lien Release?” That sparked an interesting conversation that I felt was worth elaborating on here.
Having someone sell a lien release as a commodity that is “just something you generate” is quite a liability to any company, both to the customers buying and those providing the service. Both sides need to truly understand what they are signing up for.
What does it mean to provide a lien release service to a client? The devil is in the details.
A lien release is involved in several much larger regulated processes related to paid in full loans, charged off loans, loan forgiveness or other default related scenarios that require the mortgage to be discharged. Each of these processes has a specific document type, compliance requirements and specific service levels required at different points within the processes.
Sure, one of the end products in the process is a recorded lien release document… but what goes into it? It’s not something that just miraculously is generated.
Each state and county have varying document and data requirements, complexities to recording fees, or extra processes required to get the document recorded, you need to update these regularly as they constantly change throughout the thousands of recording jurisdictions.
How important is the accuracy of the data keyed on the document and review of the underlying chain of title? Extremely, that is why all these points are important and should be considered to avoid any inherent risks.
But to do this right, additional questions need to be asked of and worked out with any client, such as:
What do you do when a chain is broken or title issues exist and the county would not accept a lien release as a result? How do you cure the chain in the short amount of time you have to be compliant? Are there alternatives?
What states require you to also mail the original mortgage or note to the borrower?
Do you need to retain the paid in full physical collateral, or should you image it and shred the docs?
Where do you need to mail a letter, notice, or copy to the borrower when the release is sent to the county? Do you need to mail a letter with a recorded release to the borrower?
What are the statutory and compliance timelines for each of the above activities in every state?
In which states do you need to send your releases via tracked courier to the county?
What states are the most prone to lawsuits regarding releases? How do you mitigate those risks?
Are there states where a licensed attorney needs to be the “prepared by” on the document and review each one?
Who is going to execute, witness, notarize these documents and will ensure they have personal knowledge of the documents? Who will QC them? Under what authority will they execute (Officers via Corporate Resolution, POA, etc.)?
What is the process for MERS loans and checking MERS status during preparation? What do you do if there is a problem with the MIN status?
When a client is missing required documentation to accurately prepare a release, what are the agreed upon processes to control and cure that in a least cost approach without causing compliance issues?
If the client has multiple POA’s from other entities, where are they recorded and what is the recording info in each county for each POA?
If any of the above is questionable as a requirement, what position does your legal department take on the matter?
All these points (and many more) need to be established clearly to have lien releases be a successful endeavor and not held up causing various risks.
But interestingly, this is just the tip of the iceberg in terms of ensuring a client is onboarded correctly. There are requirements such as the defining, data mapping and integration of document images from and to the client, status reporting, KPI reporting, integration with servicing systems, and image repositories, etc.
Clients will rely on NTC to assist them when building processes to track, predict and recoup costs. They often may elect to recoup either lien release processing fees or county recording fees where allowed – but this is itself a complicated subject driven by legal statutes, GSE/HUD/investor rules, types of loans and legal department interpretations. This also has a risk in the mortgage industry and it’s a lot of money to leave on the table if not all considered. Assisting my clients with a model and ongoing process of accurately predicting both costs, that can be audited and pass regulatory review, is an important aspect of mitigating those risks.
Having a partner who really cares to do the hard work to build successful processes surrounding a lien release can help recoup a client substantial amounts of lost revenue, and potentially avoid expenses with penalties, judgements, or fines.
So, no, a Lien Release is not just a simple piece of paper that pops out of some machine acknowledging a satisfied mortgage. It is a combination of multiple documented and audited processes with many controls, thousands of variables, pain points to overcome, QC checks and risks to be mitigated. For those of us in the trenches, it’s so much more.
About the Author
Jeremy Pomerantz, VP Business Development
Jeremy Pomerantz joined Nationwide Title Clearing (NTC) in 2004 and spent 8 years as the SVP Sales and Marketing, managing and building NTC’s Sales and Marketing teams, as well as coordinating market strategy, company PR, operational best practices, and product roadmaps. His experience and knowledge of complex sales, strategic relationship building, sales management, marketing, and product management has been invaluable to NTC.