A Loan Officer is closing a loan on Thursday. It is a small loan amount to purchase vacant land. Management stated they are not placing a lien on title BUT to have a Mortgage signed at closing for this purchase; that the land will be an "Abundance of Caution." I am very green with Abundance of Caution. I have heard of it but have never seen one. Is it OK to have the Mortgage signed at close and not necessarily have it recorded?

Well, the bank will have a lien on the property, but no-one knows about it, and the borrower can (illegally) have another lien against the land (in violation of the security agreement).

There are various regulations covered by real estate lending. An AOC relieves the bank of only one - an appraisal. Independent Bankers of Texas has a great recap of AOC and the regs.
http://www.ibat.org/legal-ease/2014/1/le...-and-regulatory

If the borrower otherwise qualifies for the loan and the LO wants just a bit more leverage, (s)he is using the land. To determine whether or not it is allowed, you would have to look to the bank's underwriting guidelines and the loan officer's lending limits.

Can a lender do an AOC with land only?

Abundance Of Caution really has nothing to do with not filing the mortgage. A mortgage can be filed and still qualify as AOC.

Not filing is a different issue altogether and the bank is (although triggering regulations by having the mortgage signed) really legally making an unsecured loan because anyone else filing a mortgage will have a superior lien. A bank doing this had better have underwritten as if for an unsecured loan because in a problem situation that is what they have.

There is no reason an AOC cannot be on land only, for whatever you get out of doing so.

To make sure I am understanding this correctly-

If the LO has the borrower sign a mortgage, and not record it, the loan documents need to show as unsecured?

No but legally you do not have a recorded mortgage so anyone can get ahead of you. You have a mortgage that, if no one is ahead of you, the bank could whip out one day and file. You do have collateral, but it is not perfected.

You have a very bad practice but don't document as unsecured.