Mechanics of Electronic Recording Presented by Todd R. Hougaard President & CEO

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Mechanics of Electronic Recording

Presented byTodd R. HougaardPresident & CEO

Doing Business with Digital Documents

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A Discussion on … Technology

and

Policies

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Processes/Policies

Electronic Recording is ...30% - Technology70% - Policy

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Presentation Outline

Legal Requirements A Review of Electronic Recording TechnologyProcesses and PoliciesDefining Electronic Recording PoliciesSecurityDemonstration

Mechanics of Electronic Recording

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Legal Requirements


Enforceable?

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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 2000In effect October 2000

• Legal Requirements

• ReviewElectronicRecording

• Processes and Policies

• DefiningPolicies

• Security

• Demonstration

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Legal Requirements

StateLawsPoliciesGuidelines

Fraud and Forgery DeterrenceSecurity of Digital Documents





• Security

• Demonstration

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A Review of

Electronic Recording


Flash from the past!

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eDocument Technology

Paper Era (1630-1950)Printed FormTypewriter

Modern Era (1950s)Microfilm/Microfiche

Computer Era (1970-2000)Computerized IndicesComputer Imaging

Paperless Era (2001 +)XHTML—Data/Display FormatDigital SignaturesLegal acceptance of Digital Documents





• Security

• Demonstration

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XMLPDFTIFXHTML

WordRTFWord Perfect





• Security

• Demonstration

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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





• Security

• Demonstration

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XHTML (digital documents)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>





• Security

• Demonstration

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Electronic Signature Choices

Typed Dear Customer,

It has been our pleasure to serveyou. 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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

DBIAkEA1LD07KIbyqmOx+sUT5QKZMR8gZDtG3rDK6ii8xirrYccLQDbyttNGTYGzqTJ3Fmpi4PIAdvdJRoFlekKZMDXDwIDAQABo4ICvjCCArowCwYDVR0PBAQDAgG4MB0GA1UdDgQWBBR1gTtWveVR06WuBi4E6jfRQMl+eTCB6gYDVR0jBIHiMIHfgBR

MCjynfXFEa5YD9zbL9QuKrw8CX6GBtKSBsTCBrjELMAkGA1UEBhMCVVMxCzAJBgNVBAgTAlVUMRcwFQYDVQQHEw5TYWx0IExha2UgQ2l0eTEeMBwGA1UEChMVVGhlIFVTRVJUUlVTVCBOZXR3b3JrMSEwHwYDVQQLExhodHRwOi8vd3d3LnVzZXJ0cnVzdC5jb20xNjA0BgNVBAMTLVVUTi1VU0VSRmlyc3QtQ2xpZW50IEF1dGhlbnRpY2F0aW9uIGFuZCBFbWFpbIIQK9X1D5N3tYtN+Roe7WIsgzAdBgNVHSUEFjAU

BggrBgEFBQcDAgYIKwYBBQUHAwQwDAYDVR0TAQH/BAIwADBXBgNVHR8EUDBOMEygSqBIhkZodHRwOi8vY3JsLnVzZXJ0cnVzdC5jb20

vVVROLV

Digitized – UPS or FEDEX

Digital





• Security

• Demonstration

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Digital Signatures

How…Mathematical Equations Documents Read by Computer as Numbers Example: Todd = 1001110000110

Digital CertificateTwo 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





• Security

• Demonstration

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Digital Signatures

How do I digitally sign a document?• Legal

Requirements




• Security

• Demonstration

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Digital Signatures

How is a digital signature verified?• Legal

Requirements




• Security

• Demonstration

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Digital Signatures

Digital Signatures Provide…Signer Identity Document Integrity “tamper proof”Formal Legal Compliance Equivalent to InkEfficiency – Computer examination





• Security

• Demonstration

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Digital Signatures

Ingeo Educational Series• Legal

Requirements




• Security

• Demonstration

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Processes and

Policies


In Context!

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Processes/Policies

MISMO- Banking and Mortgage IndustryAARTT- Alliance for Advanced Real Estate Transaction TechnologyProperty Records Industry Joint Task Force – NACRC/IACREOTCalifornia XML Standards GroupLegal XML

Note: Corporate Techies

Standards Groups• Legal

Requirements




• Security

• Demonstration

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Processes/Policies

Recording StakeholdersRecordersNotariesSignerJudgesLarge LenderLarge Volume Loan ServicerGeneral PublicLocal Government OfficeTitle Insurance UnderwriterTitle Plant Operator

Prosecuting AttorneyClosing AttorneySystem ProvidersSmall LenderSmall Volume Loan ServicersDBA Filings – BusinessState Tax OfficesMisc. Private SectorIRS Tax Lien Office





• Security

• Demonstration

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Processes/Policies

Stakeholder InterestsIntegrity of recordRecord permanenceSecurityNon-proprietaryAccess to recordsTrust





• Security

• Demonstration

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Processes/Policies

Recorder’s CustomersClosing Attorneys and AgentsTitle AgentsTitle PlantsNational Mortgage Lenders • Top 10 do 55+% of all mortgage lending

National Mortgage Servicers Local/Regional Banks and Credit UnionsOther Government offices • Treasurer• IRS• State Tax





• Security

• Demonstration

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Processes/Policies

Customers’ InterestsEase of adoptionBenefits • Automation• Increased efficiency• Competitive advantage

Uniformity – multiple locations





• Security

• Demonstration

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Processes/Policies

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

Law = broad boundariesMust define and agree on industry policies Policies are not laws • Policies define guidelines





• Security

• Demonstration

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Defining Electronic Recording Policies


But we’ve always done it this way!

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Defining Policies

File Format CriteriaPresentation/Viewing/Display• Proprietary vs. Open• Processing ability/Performance• Records Quality/Permanence/Archive





• Security

• Demonstration

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Defining Policies





• Security

• Demonstration

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Defining Policies





• Security

• Demonstration

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Defining Policies





• Security

• Demonstration

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Processes/PoliciesHigh Difficulty

High

Low Difficulty

Low

Closing Attorneysand Agents

Title Agents

Nat’l Mortgage Lender

Nat’l Mortgage Servicer

Local/Regional BanksTreasurer

IRSState Tax

Title Plants

• Automation• Increased Efficiency• Competitive Advantage

• Fit Existing Systems• Training Requirements• Access

Ease of Adoption

Benefits

Customer Considerations





• Security

• Demonstration

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Processes/Policies

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

TIF Multi-File XHTML

eDocument Considerations• Legal

Requirements




• Security

• Demonstration

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Electronic Signature Policy

Purpose of Signatures*EvidenceCeremonyApprovalEfficiency and Logistics

*American Bar Association





• Security

• Demonstration

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“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





• Security

• Demonstration

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Processes/Policies

DocumentAuthentication

High Difficulty

High

Low Difficulty

Low

Digital

Digitized

Typed

SignerAuthentication






• Security

• Demonstration

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Processes/Policies

Easy toAccess

High

High

Low

LowTransport

Recorder(Licensed CA)

Self-Generated

Trust

Digital Certificate Policy





• Security

• Demonstration

LicensedNotary CA(ARCANVS) Signer

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Processes/PoliciesDocument Integrity Policy





• Security

• Demonstration

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Security


Just how secure is it?

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System Security

Receiving system isolated from other systems?Protected against system failures?

Disaster Recovery

EncryptionTransmitter Identity





• Security

• Demonstration

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Thurston County, WACounty

County Recorder, County Records Manager, RecordingAssistants, County IS/IT Staff

Title CompaniesChicago TitlePioneer TitleTransnation

Certificate AuthoritiesDigital Signature Trust Co.ARCANVS

County Software VendorEagle Systems

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Paper

2-42+ days, 2-42+ days, Some errorsSome errors

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)

The Value of Time

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)

Electronic

< 15 minutes, < 15 minutes, Minimal errorsMinimal errors

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Demonstration

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Contact Info

Todd HougaardPresident & CEO

Phone: (435) 755-9837E-mail: [email protected]