Recording Burden is 'Dark Side' of Refi Boom.(Brief Article)

A surge of refinancing generates loan origination income and fresh loan servicing rights for big lenders, but not without a cost.

Some expenditures, such as those associated with recording lien releases, also surge in times of heavy refinancing.

Outsourcing is one way to manage the extra workload, but some lenders hesitate to leave this important task in the hands of an outside specialist.

It's not because they couldn't save money by relying on someone else's expertise. But they worry about legal compliance.

With the requirements for filing a release varying from state to state, many lenders have been stung by lawsuits from angry homeowners who had a home sale or refinancing transaction held up because a lien wasn't released in a timely fashion. That risk only increases when the volume of work surges.

One of the nation's most prominent providers of loan document retrieval and research services, Nationwide Title Clearing, Glendale, Calif., believes that a key tool for monitoring compliance from a release or research vendor is reporting. Not surprisingly, NTC has invested in technology and systems to enhance its own reporting capabilities, emphasizing access to loan level data for its clients, according to senior vice president Jim Stewart. He estimates that NTC records and delivers more than a million documents a year.

In a period of heavy refinancing, the volume of lien release work increases dramatically. But for mortgage servicers, the lien release department only adds to their expenses.