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Doing Business with Digital Documents. Mechanics of Electronic Recording Presented by Todd R. Hougaard President & CEO. A Discussion on … Technology and Policies. Processes/Policies. Electronic Recording is ... 30% - Technology 70% - Policy.

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Doing Business with Digital Documents

Mechanics of

Electronic Recording

Presented byTodd R. Hougaard

President & CEO


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A Discussion on …

Technology

and

Policies


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Processes/Policies

  • Electronic Recording is ...

    • 30% - Technology

    • 70% - Policy


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Presentation Outline

Mechanics of Electronic Recording

  • Legal Requirements

  • A Review of Electronic Recording Technology

  • Processes and Policies

  • Defining Electronic Recording Policies

  • Security

  • Demonstration


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Enforceable?

Doing Business with Digital Documents

Legal Requirements


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Legal Requirements

  • Uniform Electronic Transactions Act (UETA)

    • Currently adopted by 24 states (as of 3/01)

    • In consideration by additional 22

  • Electronic Signatures in Global & National Commerce Act (E-SIGN)

    • Signed June 2000

    • In effect October 2000

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Legal Requirements

  • State

    • Laws

    • Policies

    • Guidelines

  • Fraud and Forgery Deterrence

    • Security of Digital Documents

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Flash from the past!

Doing Business with Digital Documents

A Review of

Electronic Recording


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eDocument Technology

  • Paper Era (1630-1950)

    • Printed Form

    • Typewriter

  • Modern Era (1950s)

    • Microfilm/Microfiche

  • Computer Era (1970-2000)

    • Computerized Indices

    • Computer Imaging

  • Paperless Era (2001 +)

    • XHTML—Data/Display Format

    • Digital Signatures

    • Legal acceptance of Digital Documents

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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XML

PDF

TIF

XHTML

Word

RTF

Word Perfect

eDocument Technology

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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eDocument Technology

  • XHTML - (XML & HTML)

    • eXtensible Markup Language

      • Readable by computers

    • HyperText Markup Language

      • Code used to view an internet page

      • Readable by human eyes

  • Combination Creates “Smart” Documents

    • Humans and computers can read

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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eDocument Technology

  • XHTML (digital documents)

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

Human View

DEED OF RECONVEYANCE

Lot 21, Murray Bluffs Subdivision, according to the official plat thereof, on file in the office of the Salt Lake County Recorder. 21-23-153-001

Computer View

<InstrumentType code="Recon">DEED OF RECONVEYANCE</InstrumentType>

<LegalDescList>

<LegalDescBlock LDidref="">

<Lot Rcrd="" fill="textbox" tooltip="Lot">Lot 21,</Lot>

<Subdivision Rcrd="" fill="textbox" tooltip="Subdivision">Murray Bluffs Subdivision,</Subdivision>

<Township Rcrd="" fill="textbox" tooltip="Township/Block"></Township>

<Range Rcrd="" fill="textbox" tooltip="Range/Plat"></Range>

<Section Rcrd="" fill="textbox" tooltip="Section"></Section>

<QtrSection Rcrd="" fill="textbox" tooltip="Quarter Section"></QtrSection>

<QtrQtrSection Rcrd="" fill="textbox" tooltip="Quarter Quarter Section"></QtrQtrSection>

<Meridian Rcrd="" fill="textbox" tooltip="Meridian"></Meridian>

<LegalDesc Rcrd="" fill="textarea" tooltip="Legal Description"> according to the official plat thereof, on file in the office of the Salt Lake County Recorder.</LegalDesc>

<ParcelNo Rcrd="" fill="textbox" tooltip="Parcel Number">21-23-153-001</ParcelNo>

</LegalDescBlock>

</LegalDescList>


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Dear Customer,

It has been our pleasure to serve

you. We eagerly anticipate a successful project. We will contact you next week to schedule a launch meeting.

Sincerely,

Todd Hougaard

Digital Certificate File- Public Key

<Certificate Base64value= "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

Electronic Signature Choices

  • Typed

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

  • Digitized – UPS or FEDEX

  • Digital


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Digital Signatures

  • How…

    • Mathematical Equations

    • Documents Read by Computer as Numbers

    • Example: Todd = 1001110000110

  • Digital Certificate

    • Two Very Large Prime Numbers

      • Private key – Known only by the person signing

      • Public key- Used to “unlock” a signature and validate

    • Authenticated by Certificate Authorities

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Digital Signatures

How do I digitally sign a document?

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Digital Signatures

How is a digital signature verified?

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Digital Signatures

  • Digital Signatures Provide…

    • Signer Identity

    • Document Integrity “tamper proof”

    • Formal Legal Compliance Equivalent to Ink

    • Efficiency – Computer examination

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Digital Signatures

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

Ingeo Educational Series


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In Context!

Doing Business with Digital Documents

Processes

and

Policies


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Processes/Policies

Standards Groups

  • MISMO- Banking and Mortgage Industry

  • AARTT- Alliance for Advanced Real Estate Transaction Technology

  • Property Records Industry Joint Task Force – NACRC/IACREOT

  • California XML Standards Group

  • Legal XML

    Note: Corporate Techies

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Recording Stakeholders

Recorders

Notaries

Signer

Judges

Large Lender

Large Volume Loan Servicer

General Public

Local Government Office

Title Insurance Underwriter

Title Plant Operator

Processes/Policies

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

  • Prosecuting Attorney

  • Closing Attorney

  • System Providers

  • Small Lender

  • Small Volume Loan Servicers

  • DBA Filings – Business

  • State Tax Offices

  • Misc. Private Sector

  • IRS Tax Lien Office


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Stakeholder Interests

Integrity of record

Record permanence

Security

Non-proprietary

Access to records

Trust

Processes/Policies

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Processes/Policies

  • Recorder’s Customers

    • Closing Attorneys and Agents

    • Title Agents

    • Title Plants

    • National Mortgage Lenders

      • Top 10 do 55+% of all mortgage lending

    • National Mortgage Servicers

    • Local/Regional Banks and Credit Unions

    • Other Government offices

      • Treasurer

      • IRS

      • State Tax

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Processes/Policies

  • Customers’ Interests

    • Ease of adoption

    • Benefits

      • Automation

      • Increased efficiency

      • Competitive advantage

    • Uniformity – multiple locations

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Processes/Policies

  • UETA requires that parties “agree on how to do business” …

    • Law = broad boundaries

    • Must define and agree on industry policies

    • Policies are not laws

      • Policies define guidelines

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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But we’ve always done it this way!

Doing Business with Digital Documents

Defining Electronic

Recording Policies


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Defining Policies

  • File Format Criteria

    • Presentation/Viewing/Display

      • Proprietary vs. Open

      • Processing ability/Performance

      • Records Quality/Permanence/Archive

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Defining Policies

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Defining Policies

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Defining Policies

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Processes/Policies

Customer Considerations

High Difficulty

Closing Attorneys

and Agents

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

Title Agents

Local/Regional Banks

Treasurer

Low

High

Benefits

  • Automation

  • Increased Efficiency

  • Competitive Advantage

Nat’l Mortgage Lender

IRS

State Tax

Title Plants

Nat’l Mortgage Servicer

Low Difficulty

Ease of Adoption

  • Fit Existing Systems

  • Training Requirements

  • Access


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Processes/Policies

eDocument Considerations

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

TIF

Multi-File

XHTML

Proprietary Adobe Vendor Dependent W3 Internet Standard

Longevity mid 1980’s Vendor Sys Dependent 1960’s

Doc Data Source Typist Data Linked to Doc Data Contained in Doc

Automation Ability No Scanning Data Entry Complete End-to-end

Processing Speed Typist Speed Depends Processor Speed

Print/Display Tools TIF Viewer Vendor Internet Browser


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Electronic Signature Policy

  • Purpose of Signatures*

    • Evidence

    • Ceremony

    • Approval

    • Efficiency and Logistics

      *American Bar Association

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Electronic Signature Policy

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

“The statute of frauds of the common law tradition, for example, does not render a transaction invalid for lack of a “writing signed by the party to be charged,” but rather makes it unenforceable in court …”

American Bar Association


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Processes/Policies

Electronic Signature Policy

High Difficulty

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

Digital

Digitized

Low

High

Document

Authentication

Typed

Low Difficulty

Signer

Authentication


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Processes/Policies

Digital Certificate Policy

High

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration

Recorder

(Licensed CA)

Licensed

Notary CA

(ARCANVS)

Signer

Transport

Low

High

Easy to

Access

Low

Self-Generated

Trust


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Processes/Policies

Document Integrity Policy

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Just how secure is it?

Doing Business with Digital Documents

Security


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System Security

  • Receiving system isolated from other systems?

  • Protected against system failures?

    • Disaster Recovery

  • Encryption

  • Transmitter Identity

  • Legal Requirements

  • Review

  • Electronic

  • Recording

  • Processes and Policies

  • Defining

  • Policies

  • Security

  • Demonstration


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Thurston County, WA

  • County

    • County Recorder, County Records Manager, Recording

    • Assistants, County IS/IT Staff

  • Title Companies

    • Chicago Title

    • Pioneer Title

    • Transnation

  • Certificate Authorities

    • Digital Signature Trust Co.

    • ARCANVS

  • County Software Vendor

    • Eagle Systems


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The Value of Time

Paper

Electronic

  • Prepare documents(5-10 minutes)

  • Execute documents & fee prep (5 minutes)

  • Delivery (½ to 5 days)

  • Recorder processing (½ to 21+ days)

  • Return delivery (½ to 5 days)

  • Enter documents into system(½ to 21 days)

  • Prepare documents(5-10 minutes)

  • Execute documents & fee prep(5 minutes)

  • Delivery(< 3 seconds)

  • Recorder processing(< 20 seconds)

  • Return delivery(< 3 seconds)

  • Enter documents into system(< 10 seconds)

2-42+ days, Some errors

< 15 minutes, Minimal errors



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Contact Info

Todd Hougaard

President & CEO

Phone: (435) 755-9837

E-mail: [email protected]


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