Wednesday, August 31, 2011


Having managed lots of folks over my career I respect that individuals think and learn differently, that we aren't automotons and need some degree of personal discretion in our work.  I also know that mandatory procedures are necessary to maintain quality of service and product and, of course, meet contractual and legal requirements.  This is a constant managerial task - finding balance in the workplace with just enough procedural framework within which capable individuals perform their tasks.

As managers we always start with the right individual in the right position, presumably with enough training or experience to meet expectations.  Through trial and error, we learn where and how to implement or improve the procedures.

One of the important procedures we created is the "setting of the table" for closings. A TCS closer is expected to ask for the following at the start of a purchase closing - valid photo ID, good funds and the original deed.  Missing any one of these critical components would cause a closing failure so there is no sense starting until you know you have them in hand.  The "setting of the table" procedure has at least given parties more time to cure a deficiency and have a successful closing.  If someone forgot to pick up the deed from an attorney's office, they can run out and do the job while the others proceed and get the closing started.   If a consumer was confused or forgot to bring funds in the form of a cashiers check, they can run to the bank while the closer explains the HUD-1 to the sellers.  Whatever, the important point is that the procedure is a good one - a tool for avoiding or resolving problems.  It doesn't make anyone's job harder, it simply creates a framework around which a closer can perform.  Everyone does their closing a bit differently.   Closings take on the personality of the closer, but still, the closer works within a simple procedural framework.

I'm chatting about procedures this morning because yesterday I had a holy moly moment while reviewing a 2004 transaction.

A local attorney called to say he had discovered two items in a title we had processed and wondered if I could help him.  First, his sellers - our insured buyers - had informed him that they had a mortgage to payoff but he could not find the document on record.  Also, he had found an unsatisfied mortgage dated 1988.

At first I thought what most title insurance agents would think - maybe there was a indexing error with the mortgage and satisfaction - something that couldn't have been discovered prior to the issuance of the policy.  I said I'd check the file and call back.

Upon review I found - much to my horror - that both items SHOULD have been discovered by my staff prior to closing the transaction.

Let's talk about the unsatisfied 1988 mortgage first.  Back in 2004 when we processed this title order, we ordered a 60 year search.  We always place the order with a written request.  The title order clearly indicated a 60 year search. The abstractor must have misunderstood and did a current owner search.  Okay, they made an error.  We're all human, however, this error ought to have been discovered by our title agent who performed the examination and created the title insurance commitment.  An important PROCEDURE was skipped.  During title examination, the title agent MUST review the title chain and confirm that the search meets our requirements for that transaction.  If the agent had looked at the chain he would have noticed that search only went back to 1996.  No wonder the unsatisfied mortgage went undiscovered.

Now for the mortgage the attorney could not find in the index.  I looked aghast at the document in our scanned file and immediately knew what had happened.  Our buyer was a limited partnership.  It was a commercial loan transaction.  Unlike a residential mortgage loan, when a commercial lender closes, they typically bring the documents to the closing table and explain them directly to the borrower.  PROCEDURE would call for a pre-closing review of the mortgage document by our professional staff.  This procedure had been skipped on this transaction.  No one noticed that the commercial lender had mistakenly prepped his documents entirely in the name of the individuals who were guaranteeing the loan and had failed to include the vested entity as a mortgagor.

Thankfully the matters are being resolved with the payoff and indemnification with follow up for a satisfaction.

I'm posting this for you as a training opportunity as it was for my staff yesterday.  We live and work in a business that requires constant vigilance.  No matter how busy we are, we must take a zen attitude and focus on the file in front of us, respecting our procedures as they are the tools that help us avoid the holy moly moments and keep our consumers safe.

Holy moly.

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