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Originally Posted by ember1205
Interesting that the lender wouldn't hold the title since it's collateral for the loan... I wonder how unique this is?
In the end, I guess it doesn't really matter since you either need the title AND a release of lien letter, or a title that shows no lien in order to transfer ownership to another party.
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You're right that it doesn't really matter - the title is just a piece of paper that should reflect the state's records, and makes it easier for an owner of a non-financed owner to prove their ownership. The lender holding the physical piece of paper vs the borrower won't really matter in any court if there is an issue, it's about the lien status. Many states have already moved to a paperless system and more will eventually - lenders in those states don't necessarily even have a paper title, just an electronic record of it - a physical title is only printed by the state when the lien is released and the title has to be sent to the owner.