ALTA Develops Best Practices to Protect Customers, Ensure Quality Service
|October 16, 2012
While lenders have been responsible for their service providers’ actions for years, it’s only been recently that bulletins, enforcement orders and corrective actions have demonstrated regulators' intent that banking organizations are expected to oversee actions of third-party service providers, including title and settlement agents.
Consequently, regulators’ increased demand to protect consumers has forced lenders to adjust their relationships with service providers and be more sensitive to the types of companies they do business with.
To help meet this need, ALTA has created a set of best practices called Title Insurance and Settlement Company Best Practices to help members highlight practices the industry exercises to protect lenders and consumers, while ensuring a positive and compliant real estate settlement experience.
“The best practices serve as a benchmark for the real estate settlement and mortgage lending industries and illuminate the high level of professionalism that ALTA members follow to protect consumers and businesses,” said Michelle Korsmo, ALTA’s chief executive officer. “The title insurance industry has always been serious about protecting consumers and combating criminal behavior. It is beneficial for those in the title business to promote self regulation through the publication of best practices that meet high professional standards of operation to protect consumers and businesses.”
The best practices address seven main areas ranging from controls regarding escrow and trust accounts to protecting customers’ personal information and responding to complaints:
- Establish and maintain current license(s) as required to conduct the business of title insurance and settlement services. The purpose is to ensure that the company is fully compliant with all applicable laws and regulations.
- Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation. These controls help meet client and legal requirements for safeguarding client funds.
- Adopt and maintain a written privacy and information security plan to protect Non-public Personal Information as required by local, state and federal law. Federal and state law requires a written information security plan describing how non-public customer information is protected.
- Adopt standard real estate settlement policies and procedures. This can ensure a settlement company can provide a safe and compliant settlement and meet state, federal and contractual obligations governing the settlement process and provide for ongoing employee training.
- Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance. Appropriate procedures for the production, delivery and remittance of title insurance policies ensures title companies meet their legal and contractual obligations.
- Maintain appropriate professional liability insurance and fidelity coverage. Appropriate levels of professional liability ensure that title agencies and settlement companies have the financial capacity to stand behind their professional services.
- Adopt and maintain procedures for resolving consumer complaints. A process for receiving and addressing consumer complaints is important to ensure that any instances of poor service or non-compliance do not go undiscovered.
Documenting and following effective processes will help ensure accuracy, provide further safeguards to consumers and greatly reduce the risk of loss. ALTA will create a standing committee to regularly review and improve the best practices, provide sample policies and seek comments from stakeholders.
“It is the industry’s responsibility to protect consumer funds and consumers’ personal information,” Korsmo said. “Publishing industry best practices helps lenders understand the safeguards in place to ensure that closing activities meet all applicable laws and regulations. Providing professional service to consumers and safeguarding funds is the cornerstone of this industry, and ALTA will work to ensure title and escrow agents continue in their role of facilitating the safe, efficient and compliant transfer of real estate.”
This is the third article in a series ALTA has wrote about new market and regulatory demands on lenders and how it’s impacting the title insurance industry. Here are links to the first two articles:
You can join the discussion regarding agent vetting on ALTA’s Linked In Group