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Best Practices

Lenders Will Play Role in Determining Which Entities Acceptable to Conduct Best Practice Assessments

December 5, 2013

A common question among title professionals is what entities will be approved to conduct Best Practice Assessments and certify that a company has implemented the policies and procedures.

The answer is that this will be determined by lenders. The types of entities that may be acceptable to lenders could be underwriters, a public accounting firm or local certified public accountant. (ALTA is still working to identify companies that can appropriately perform assessments. Stay tuned to communications from ALTA on progress in this area.)

Dan Mennenoh, president of H.B. Wilkinson Title Co., said ALTA developed the standard procedures to allow various companies that are acceptable to lenders to conduct the assessments. The Assessment Procedures, which are part of ALTA’s "Title Insurance and Settlement Company Best Practices” framework, can be used by title professionals to help lenders decide if a service provider meets different pillars of the Best Practices. A certificate is then issued to the company after it passes an Assessment.

“Lenders have provided input and are looking for a consistent uniform assessment process of title companies and settlement providers,” Mennenoh said.

In past conversations, national lenders have hinted they would prefer assessments be conducted by companies with a strong financial backing. Other lenders indicated they preferred underwriters not perform the assessments as it could be a conflict of interest.

Another question is how often an assessment should be performed. Mennenoh said the assessment is intended to be conducted every two years.

“The intent is to keep the intrusion into business and cost to a minimum,” he added.

Steve Gottheim, ALTA’s legislative and regulatory counsel, urges members to have discussions with lender clients to find out what type of companies they will require to conduct the assessments. He also encouraged members to reach out to companies to see if they can and will conduct these assessments.

Title professionals also are curious as to when they need to complete and assessment and become Best Practice certified. Timing will be determined by lenders as well. This is another reason for ALTA members to have conversations with lender clients to better understand expectations.

Some lenders have already started conducting audits. Gottheim said lenders are looking at things such as clean-desk policies, security for files, office security and written policies and procedures.

“We are hearing that a number of lenders are preparing for a slew of regulatory changes including the Qualified Mortgage rule and soon-to-be-released final rule for integrated mortgage disclosures,” Gottheim said. “It will be up to each lender when they expect agents to be Best Practice certified.”

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