California eRecording: Tools to Adapt to the Ongoing Wave of Change

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Tiffany: Hello, everyone, and welcome to today's webinar, "California eRecording: Tools to Adapt to the Ongoing Wave of Change." My name is Tiffany Van Beverhoudt, and I will be your moderator.

Joining us today is Jana Miyasaki and Sarah Savery. Jana is a senior project manager for CSC's electronic recording business real estate division. She has been an operations leader for the past 16 years, involved in all aspects of building a strong and results-oriented support team. She's always looking for new ways to improve customer satisfaction. Sarah is a CSC electronic recording national account manager for CSC in Wilmington, Delaware. In her role, she onboards submitters to our eRecording digital tools and assists in new client acquisition. Since joining the eRecording team in 2018, Sarah works with leading title underwriters, real estate firms, and leading institutions throughout the country. She provides first-class training and customer service as well as live demonstrations.

And with that, let's welcome our presenters.

Sarah: Thank you, Tiffany, so much for facilitating today's webinar and, of course, welcome to everyone who is in attendance today.

Before we dive into today's content, I would actually like to introduce CSC to anyone who's not familiar. We are an industry leader in multiple markets, privately owned and proudly serving since 1899. We actually like to say that we are the business behind every business.

So, as you can see, we support over 10,000 law firms, including the most prominent in the U.S. We serve over 180,000 corporate customers. We protect more than 65% of the 100 Best Global Brands, including 7 of the top 10. We provide solutions to over 3,000 financial market customers. And while we are headquartered in Delaware, where I'm located, we have office locations worldwide, and we serve 90% of the Fortune 500 companies.

In addition to eRecording, we supply a myriad of business solutions for diverse industries across the globe. Some of CSC's solutions include but are not limited to registered agent services, UCC search and filing, and digital brand services. In fact, most of our clients have more than one relationship with CSC. Many of my financial customers who have partnered with CSC for their eRecording service also use us for UCC filings. And it's always nice when I can introduce a customer of mine to a colleague in another service area and know that they will receive that same first-class service.

Now that we all have a little bit of background information about CSC as a corporation, I'm going to turn it over to my colleague Jana, who's going to cover today's agenda.

Jana: Thanks, Sarah. Our agenda today is going to have us reviewing some of the California market trends, and we're also going to take a look at some of the changes that have happened over the last couple of years in eRecording with the California portals and legislation. And lastly, we're going to talk a little bit about how CSC can help with your workflow and eRecording processes.

We've certainly seen a big surge in the demand of housing in California and I know all the way across the nation. I was speaking to Sarah earlier, and she mentioned something like sort of the same sort of craziness we're seeing in California they're also seeing in Delaware. So we know this is nationwide.

I know that this states of the current median home price is $759,000, and I can kind of relate to that very well. The town that I live in, we have tract homes that were built in the '70s, and walking my dog through the neighborhoods during the summer, I would see houses that were popping up and within two, three weeks they were already sold. And I'd quickly run home and Zillow them and see what they sold for and crazy that a house built in the '70s is still selling for that type of money, but that's where we're at in today's market. So it's really been some interesting times seeing things go up and up and up in the prices.

And I was recently on a call with San Diego County, and they said they're still on track to record more documents this year than last year. We all had sort of considered that COVID was going to be that high year with recordings with interest rates so low and people buying and selling. But it's holding true this year as well, and, like I said, San Diego is thinking they're going to record more documents than they actually did last year.

Something else that I learned that was interesting on that call was around SB 2. So if you're recording documents in California, we all know about that $75 fee per document title on a document. And what they mentioned on the call was that, in 2019, they remitted $39 million for the recordings of just the SB 2 funds, and that was with keeping an administrative fee of about $1.4 million to $1.5 million. In 2020, they remitted $50 million. And so far in 2021, they've remitted $40 million. So that's just one county on those SB 2 fees. So there's certainly lots going on in the state and things are sort of changing and evolving very quickly.

As I just mentioned, some of the market forces that are going on were the low interest rates, which led to people either refinancing or deciding to sell and buy somewhere else. Also additional workspace that was needed. With COVID, you've got people working from home that never really needed home office space before. So we're seeing a lot more sales going on due to COVID.

And then talking a little bit more about COVID and what it was like to actually try and record documents, we saw that counties had to shift and get their employees working from home, so relating back to having more people working from home. Now, all county staff had to have some sort of laptop, workstation, something at home so that they could start eRecording documents because counties literally were not taking paper during the early part of COVID until they worked some process out. I know I had heard some counties were leaving the paper in a lockbox outside for a long period of time because we weren't sure about how things could spread with COVID. So they were concerned and would sort of let their documents fry in the sun sort of thing.

But that whole process, you know, we went through taught us that eRecording is a critical piece. If you can't get into the county, you can certainly eRecord your documents. I know L.A. County just recently opened up to appointments. San Diego, you have to make an appointment there as well. So things are just slowly coming back to sort of a norm, but it's surely been a very slow process.

As most folks know who record in California, there are two portals that are operating that are sort of governed by the Department of Justice. Those two portals are CeRTNA, which works mostly in the Northern California, and SECURE, which is mostly the Southern California counties.

We have seen some changes in the portals this year. So one of the big changes is several counties have moved from the CeRTNA portal to the SECURE portal for whatever their own internal reasons are. And then we've also seen CeRTNA decide, come January 1st, that they are going to charge the agent, which is what CSC is, a $0.75 charge for every document that records through CeRTNA. So they're still working out the changes that have been affected by COVID and also some of the movement of some of the counties within the portals.

Sarah, do you want to talk a little bit about one of the biggest impacts we've seen in California as of late?

Sarah: Hi, Jana. Yes, absolutely. And actually, I want to take a moment and just thank you and give you a shout out because you were such a resource to myself and, of course, my teammates here on the East Coast as we were navigating through that transitional phase as Synrgo managed through their bankruptcy last May.

So obviously Synrgo had a massive impact on the California market, Synrgo's abrupt bankruptcy in May of this year. I would say it had really a catastrophic impact on their customers who were depending on them to get their documents recorded in a timely way. And this impact is really still being felt even now by counties and former customers alike.

Here at CSC, I do remember when the news broke. I think it was just before the weekend. I was speaking to several impacted title agencies who were frantic to try to set up accounts and record their time-sensitive documents. Now, luckily, we were able to work closely with SECURE and CeRTNA to ensure an expedited approval process and transition these impacted customers as seamlessly as possible.

And that really kind of, you know, drives in the importance of having a continuity plan. It's really a lesson to all of us in the industry. One, of course, to have that continuity and plan in place in the face of business disruptions, but also to really choose wisely and understand the financial health of the company with whom you partner.

CSC is financially rock-solid, and we do not rely on lines of credit to service our clients. We move over $1 billion annually to the counties on behalf of our customers. And it's just kind of a better way to manage that flow of funds on behalf of our clients and give them that peace of mind.

I also think for us in the industry that this event really showed us which business models do not make sense and which business models really do incur too much risk for the customers.

Jana, I'm going to pass it on back to you to discuss the interpretation of ERDS and the DOJ regulations.

Jana: Thanks, Sarah. I think we all know that within the last year or so a couple of big changes happened with the DOJ. They expanded the doc types that were allowed to be eRecorded. And the biggest thing was they opened up eRecording to sort of everybody, but everybody with the caveat that if you're not a bank or a financially-backed institution, title company, something along those lines, that you had to provide a certificate of insurance with a $1 million general liability.

So, you know, we all think it's kind of crazy. I could walk up to the counter with a document and a check and get my document recorded, but because the DOJ is in the middle of eRecording, they've made it clear that for any other entity that is not, like I said, a bank or a financially-backed institution, you have to have that certificate of insurance on file, which obviously has led to folks like us, agents, having to keep those certificates of insurance on file. We need to make sure that they're active and they haven't expired. The counties will and the portals will shut off a submitter if their certificate is expired and they don't have the new one on file. So it sort of added to a lot more background business work for us to do to handle that new ability for more people to be able to eRecord in California.

And speaking of the ERDS interpretation, I can pretty much explain from one scenario that I hear a lot. Different counties have different interpretations of what the ERDS regulations say. One county specifically will say you absolutely cannot make any changes to a document after it has been signed and notarized. So if it's stamped and the notary stamp is not clear, they expect you to put a notary clarity page on the document to be recorded. Another county will reject it back and say hand-write in the notary stamp information, it's not clear. So the regulations are really up to interpretation by the county. We just have to work with them as best we can and provide as much information out as possible to our submitters.

One thing that we have definitely done to try and help everybody and make sure that we're handling the ERDS regulations as the most stringent counties see it is that we've removed the ability to sort of edit any of the documents once they've been uploaded into ePrepare. So that means you can't darken a seal or remove a smudge or anything like that because some counties have made it clear that the actual scanned-in image, like I said, must be exactly matching what you have there on paper.

So those are some of the interpretations that we're seeing out there with these ERDS regulations. Sarah, I'm going to hand things off to you so you can talk a little bit about some of the adoption of eRecording.

Sarah: Thank you, Jana. And to your point on the previous slide, it certainly does show the importance of partnering with a company that has a pulse on what's going on over with each and every county. So from county requirements to county expansions in a time of really great uncertainty, one thing that really remains certain, the far-reaching benefits of eRecording. Obviously, when county offices were closed to the public, the availability of eRecording kept real estate and the market forging ahead.

And just as we saw tremendous growth of new submitters during the last 19 months, we also saw widespread adoption from some previously reluctant counties. Since 2020, in California alone, we have brought on seven counties into our network, which services over 2.3 million in population. Our network is ever-expanding. We recently added the entire state of Alaska to our list of active counties, and we are really excited to see further growth and adoption of eRecording as we head into 2022.

And now a little general overview of the benefits of eRecording with CSC. Some of the benefits include, of course, convenience, speed, transparency, and communication. When you're eRecording with CSC, you do retain control of all of the internal processes. No outsourcing required. You get to partner with a financially rock-solid company. As I mentioned before, CSC advances billions of dollars on behalf of our customers annually. And we have a really rich core history of working with government entities and partnering with them. The documents are submitted in seconds, not hours or days. The documents are returned electronically same day. You have immediate notification of rejections with an ability to correct and resubmit.

For our title customers, they can enjoy the convenience of selecting the ADM queue to expedite the recording of documents, and, of course, you have document security, and all fee-based rejections are eliminated through this process.

CSC takes your security with eRecording very seriously, and we do this through enhanced measures, which include data encryption, disaster recovery, secure data storage facility. And we are, of course, SOC 2 compliant, audited, secure, and web-based. With CSC, all of your data is stored encrypted in a state-of-the-art center. We have two of these data centers, one on the East Coast and a secondary on the West Coast to ensure, even in the event of a disaster, there would be no business interruption for our clients.

Why customers are trusting CSC more than ever before. So at the end of the day, this is a technology game, and CSC has developed enhancements and features to make the eRecording process more efficient across multiple industries. Now, some of those enhancements include custom email notifications. This is a great feature that allows you to notify third parties when documents record. This feature can be customized to include your business' name and any sort of letterhead or iconography that you would like to have on there. And it's a great way to keep your customers in the loop as the document moves through the recording process.

We have some automation built into the system through document recognition. This is a way that the system will skim your document for language and try to identify the document type so that you're not having to manually hand key that or utilize a dropdown. We have enhanced integrations with title and mortgage production platforms, and we also do quite a bit of custom integrations for our clients as well.

Seven additional services and tools that we've rolled out since 2020 include the property search services, document templates for commercial and residential templates, Signer Manager tool, eTrustee service, deed of trust look-up, custom email notifications, which we touched on, and, of course, our borrower notification letter services.

When you partner with CSC, you get the best of both technology and service. We have dedicated account managers to assist our clients and a world-class support team.