LANSING, Mich. (5/20/14)--The Michigan Credit Union League testified before two Senate committees on legislation that would assist credit unions with making recordkeeping more efficient.
The Senate Transportation Committee heard from the league and Credit Union ONE, Ferndale, with $821 million in assets, regarding electronic lien titling and lien transactions (Monitor May 19). Michigan is one of a small number of states in which titles are still mailed to the owner instead of the lienholder.
The paper-based title-holding system can enable "title washing," a type of fraud that hides the history of a vehicle, including whether it was salvaged or written off as a loss. SB 915, 916, 917 and 918 would move the state toward full electronic and centralized titling and holding of titles, along with placement and release of security interests.
The centralized and electronic system would offer improved technology to allow for quick and secure electronic title checks for member institutions and help minimize title fraud for consumers, Monitor noted.
Last week, league-supported legislation was passed by the Senate Banking and Financial Institutions Committee. HB 4638, 4639 and 4640 would allow a copy of an original instrument that is verified by an affidavit and recorded to be deemed in compliance with property recording.
The bills would protect lenders in the case of lost documents by allowing the creation, verification and recording of copies of the mortgage and property deeds on record. Under this legislation, verified mortgage document copies would be recorded within the meaning of the Michigan recording statutes, giving protection to the lender's position as a secured creditor.
It also creates a clearer chain of title on certain parcels of property and removes potential questions about electronic recording, which has the potential to save credit unions and recording offices time and money.