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Question:

Should servicers image Release of Liens?

Answer:

As a best practice, the pre-recorded Release of Lien (ROL) should be imaged to prove compliance with state guidelines.

Why?

When a loan is paid in full, the current servicer is responsible for preparing and recording the ROL/reconveyance. However, timing requirements for filing the ROL vary by state. Therefore, without imaging the prepared document before sending it for filing, the servicer has no proof that the ROL was completed promptly and accurately to meet state requirements. 

Additionally, suppose the county clerk sends the filed ROL directly to the borrower instead of back to the servicer. In that case, the servicer has no record of the ROL being completed accurately and timely. Should an external auditor request this information, requesting a copy from the county and providing it on time could be challenging.  

It can take 90 days or more for the servicer to receive the recorded ROL from the county to send it to the borrower. In the meantime, if the servicer did not image the pre-recorded ROL, there is no proof that the documentation was completed as required.