With the current low interest rates, millions of people are buying property and refinancing mortgage loans. However, with a large percentage of land records offices closed for the foreseeable future, title searches, deed filings and other core title services required to close deals are challenging title agents across the country.
According to Steve Gottheim, a senior counsel with the American Land Title Association, roughly 1,000 of 3,600 land records offices in the U.S. are either closed or have reduced their hours of operation and are working with limited staff.
Of the 3,600 land records offices nationwide, roughly 2,100 are accepting electronic filings, also known as e-recordings. However, these filings still need to be processed by a human at some point.
Mr. Gottheim warned that “If no one’s there, the pipeline is still blocked at the end.” He is encouraging government officials to keep at least a few people on active duty in records offices around the country.
Lenders don’t like it when deeds aren’t recorded promptly. It opens the door for fraudulent activity. Fraudsters can take advantage of the lack of a public record to sell a property twice or to perform other devious activities.
Although recording offices usually have searchable online databases, the recordings may not go back far enough adding to the already considerable confusion. If you need more information about a title, you might have to go to the appropriate land records offices and manually search through physical documents to access the ones that you need.
Mr. Gottheim added that “Any reduction in service makes it almost impossible to get a closing completed.” As far as he knows, this has only happened twice before. The first time was in New Orleans after Hurricane Katrina in 2005. The second time was in Baltimore after a ransomware attack in 2019.
Unfortunately, getting a group of people into one room for a loan closing may itself present a problem. Many people have become uncomfortable near others without the now-customary social distancing practices in effect. Fortunately, roughly half of states, including New York, now permit notaries to perform their jobs virtually.
Borrowers and lenders might worry that makeshift online notarization systems do not afford enough protection from fraud. It might be easy to pass off fake documents as real when they’re being viewed through a camera. “How can you tell if a driver’s license is legit if you’re looking at it through a camera?” Mr. Gottheim said.
Bottom line: given the present set of circumstances, we really don’t have much choice.
If you have any questions regarding these issues, have questions about New York Title Insurance, Pennsylvania Title Insurance or any state for that matter please reach out to us today. We are happy to offer you our guidance!