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The Paperless Transaction Part 1- Online Transaction Management
Online Transaction Management Systems (OTMS) have been available to title companies for several years now. But its true usefulness has often been a topic of debate. I think however the debate should stem from which system is better rather then is a system useful. An OTMS with limited functionality would of course provide limited benefit. But we have found an OTMS that has it all. Carnanco has had the privilege of being involved in their rollout in the Pennsylvania Market these last couple of months and would like to share that experience with all of you.
Imagine, if you will, a world where you never have to leave your desk to send a fax. A world where mortgage brokers who lose title commitments never have to ask you to re-fax all 10 pages for the fifth time. A world where no one needs to call you for a file status. A world where your first voice contact with anyone in a transaction is the day before settlement, and it’s a good thing!
This world exists!
It was created by an OTMS.
ClosingSite is a service designed for Closing, Title, and Escrow Companies that adds a new level of service for your customers. Give your customers 24/7 access to closing documents, closing related events, closing party communciations, and closing party contact information.
Real Estate Agents, Mortgage Companies, Insurance Agencies, Appraisers, Inspectors, and all other contributors to the closing process can utilize ClosingSite to coordinate the closing of a property.
ClosingSite provides your customers with a consolidated view of the property information, closing parties, events, communications and documents in a simple and easy to use website. Closing parties can communicate through the site via email, fax, and message posts.
ClosingSite has earned Carnanco’s seal of approval and to be sure that all of our readers have the best service, we have made special arrangements with the ClosingSite company for sales and technical support. If you would like to know more about this system, please contact us for a demonstration.
Tax Certifications Go Live
Carnanco has been so impressed by the ClosingSite OTMS that beginning in January 2005 all of our tax certification customers will be able to use this system to obtain their tax certifications. What will this mean? Faster and more reliable service. You’ll have access to each certification when it comes in rather than receiving a fax when everything is complete. Ever call us for a status update only to be told we faxed it to you a week ago? No more lost, misfiled or incomplete faxes. Tax Certifications will be available online 24/7 for viewing, printing, emailing and faxing. That right, faxing. You will be able to fax the cert to the lender online without any special software or equipment! And best of all, this system is easy to use. Most users will not need any help or training to use the system. Those that do, only need to call. We’ll walk you through everything you need to know.
**Please note that the email address provided when ordering the certification will be the one used in all online posting and communication so make sure it is the most appropriate one.
In addition, we will also be posting to each transaction a tax report and collector contact sheets to make reading and understanding the certifications even easier.
We are accepting new clients so go to http://www.carnanco.com/html/tax_cert_order_form.html and place your first order today!
Check 21- The Good, The Bad and The Ugly
Closing out 2004, Check 21 was the hottest topic at all the agent seminars. But most of the conversations were full of speculation. A lot of questions, few answers, even from the banking profession itself. So why, you may ask, has Carnanco waited two full months to address this topic? We wanted to wait and see what happens, gather some intelligence if you will. And now that we have, we are going to share it with you.
First, for those of you who are not good with current events and who don’t open your bank statements (shame on you!),
What is Check 21?
The Check Clearing for the 21st Century Act (Check 21) was signed into law on October 28, 2003, and became effective on October 28, 2004. Check 21 is designed to improve the payment system and to enhance its efficiency by reducing some legal impediments. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check is the legal equivalent of the original check and includes all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks.
You have questions? We’ve Got Answers
Frequently Asked Questions from the Federal Reserve:
Will Check 21 increase the speed with which checks are cleared between banks?
The speed of check-processing already has increased in response to check-system improvements other than Check 21. Thus, even now, once a check is deposited with a bank, it is almost always delivered overnight to the paying bank and debited from the checkwriter's account the next business day. Check-processing speeds should continue to increase, over time, as banks make further operational changes in response to Check 21. That means money may be deducted from your checking account faster. Before you write a check, it's always best to make sure your checking account has enough money in it to cover the check.
Will Check 21 change how fast my bank must make my check deposits available for withdrawal?
Another federal check law (Expedited Funds Availability Act) specifies the maximum times by which your bank must make funds available to you, though most banks make funds available faster than required. Check 21 did not change these maximum hold times. However, the Expedited Funds Availability Act requires the Federal Reserve Board to reduce maximum hold times in step with reductions in actual check-processing times. Thus, over the longer term, if Check 21 sufficiently increases the speed of check processing, the Board will reduce maximum hold times.
What if I receive a substitute check representing a fraudulent original check?
Check law provides protections against fraudulent checks so that generally you are not responsible if you notify the bank in a timely fashion. This is the case whether you receive an original check, a substitute check, an image statement, or a line item on your account statement. If you receive a substitute check of a fraudulent original check, you may have additional rights under Check 21. Contact your bank for more information.
How am I protected under Check 21?
Check law protects you against erroneous and unauthorized check payments. In addition, Check 21 contains a number of new protections for consumers. For example, Check 21 contains a special refund procedure (called “expedited recredit”) for a consumer who suffers a loss related to a substitute check he or she received.
You’ve Got Answers, We’ve Got Solutions
By now, hopefully you have gotten the gist of this new law. Copies of checks=quicker withdraw from your account= same amount of delay for deposits. The problem title companies are now faced with is how do you get the loan funds into your account before everyone else cashes the checks you gave them at settlement. Here are a few suggestions:
1. Change your wire instructions and any other communications to the lender to require that funds be wired. Demand that if a check must be sent that it arrive 2 days prior to settlement to allow for the check clearing process. (Will this work? It has with Wells Fargo. Hopefully other lenders will begin to follow suite. The more demand from the industry, the better a response we’ll get.)
2. Deposit checks IMMEDIATELY upon arrival in your office.
3. Ask the teller for the special deposit slip that they keep behind the counter. This special deposit slip will clear cashier’s and bank checks in 1 day instead of 3-5 days.
4. Build a good relationship with your bank. Explain to them the problem you face and work out solutions with them so that your checks do not bounce. Some banks will clear checks for you even if the deposited funds have not yet cleared. Others may allow you to open a line of credit and tie it to your escrow account to cover temporary shortages.
5. Explain the situation to all parties at every closing where loan funds arrived in the form of a check. Make them understand that the check is subject to clearance and that if they run to the bank directly after settlement that the check WILL bounce.
6. Quit the title business for a less stressful line of work. :)
Is it really as bad as it sounds?
Well let us start with two true stories from just one title company.
They had two closing the Tuesday before Thanksgiving. Both closings were occurring in an office an hour away. Funds were wired for the first closing but a check was sent for the second. The second closing turned into a marathon and didn’t end until after the banks were closed. The check was deposited on Wednesday. On Black Friday, the bank contacted the owner of the company to inform him that his bank account was overdrawn.
Hard lesson learned, now the closers are much more careful about depositing checks the same day as settlement. In December, a closer for this same title company left the office around mid-day for a closing. She stopped at the bank on the way to settlement and deposited the check. Two days later, the bank called. The account was overdrawn again. The sellers tried to cash to their proceeds check and the loan funds still had not cleared.
Now do you believe me? Well it gets worse. Aside from the concern about getting those checks to clear fast enough, there is an added concern of check fraud. In addition to the check fraud problems we’ve all heard about before, the process of creating digital copies of checks at the bank of deposit creates new opportunities for fraudsters. Here is what the experts have to say:
Excerpt from: Experts Fear Check 21 Could Lead to Mass Fraud
October 26, 2004
By Theresa Carey
The implementation of the Check Clearing for the 21st Century Act, aka Check 21, which goes into effect this week, means that check handling and collection should see a drastic increase in speed.
However, security experts believe it could open up some especially foreboding issues in the financial services industry. Unisys Corp. has published a white paper entitled, "Is Your Check 21 Implementation a Fraud Hazard?" that discusses possible hazards and ways to mitigate them.
The white paper taps three security experts: Frank W. Abagnale, Ori Eisen and Elazar Katz. Abagnale, the subject of the 2002 Steven Spielberg movie "Catch Me If You Can," is a noted author, lecturer, and consultant on the subjects of forgery, embezzlement and secure documents. He has lectured to and consulted with hundreds of financial institutions, corporations and government agencies around the world for more than 25 years.
Eisen is CEO and president of The 41st Parameter Inc., of Phoenix, which has developed fraud prevention systems for protecting Internet, mail-order and telephone-order merchants against fraud. Eisen served as the Worldwide Fraud Director for American Express, focusing on Internet, MOTO (mail order/telephone order) and counterfeit fraud.
Using the fraudulently-obtained user names and passwords, the fraudsters retrieve customers' monthly statements and check images. Then the fraudsters create high-quality counterfeit checks that are nearly identical in appearance, drawn for an amount that is appropriate for the account, and bearing a scanned signature.
Abagnale brings up the point that fraud detection will be compromised due to the limitations of current check readers. Check 21 legislation requires that the converting financial institution provide warranties that the substitute check includes all the information contained on the original check. Since existing check readers can only scan at resolutions approaching 240 dots per inch while consumer-grade printers and copiers operate at 600 dots per inch or better, existing check readers are unable to distinguish between the appearance of an original item or a copy reproduced on such equipment.
Abagnale believes that banks should encourage customers to use high-security checks with eight or more security features and offer such checks to their customers. He is very concerned about the images available online, given the focus on financial data by scammers.
Katz recommends a multilayer defense approach. One layer would focus on detecting the phishing attack, the next would monitor for suspicious online intelligence-gathering sessions, and the last would focus on detecting the counterfeit check itself. Katz believes this approach would be particularly effective if the various layers could communicate and alert each other of incoming fraud scams.
Eisen concludes that protecting reputation and trust are the most significant reasons for ensuring a safe banking environment. Protecting the e-mail/online channel has hard dollar impact to the cost of doing business.
Recording Reminder
Just a reminder that Monday, January 3rd, 2005 begins the new recording requirements for Chester, Montgomery & Lancaster Counties. Make sure your documents meet all requirements. For details please refer to the December 2004 issue of the Conveyor.
Didn’t get around to updating your forms?
We have modified forms ready for use and available to you for only $10 a piece. It would cost you more to pay someone to sit at a computer for an hour or more and fiddle with your old forms. And they are beautiful too!
Currently available are:
5 deeds (standard fee simple, trust, corporate, estate, and quit claim)
3 Powers of Attorney (buyer, seller and refinance)
Mortgage Satisfaction Piece
Mortgage Release
Mortgage Subordination
UCC Subordination
These documents can be emailed to you in PDF, Microsoft Word, or SoftPro Word Merge formats along with instructions on how to save and use them.
Need a document you don’t see listed? Give us a call and we’ll modify your existing document for the same price.
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