ALTA Board Approves Final Changes to Best Practices
September 27, 2016
ALTA’s Board of Governors on Sept. 19 approved final revisions to the association’s Title Insurance and Settlement Company Best Practices and the Best Practices Assessment Procedures. The Board also approved the adoption of a new assessment reporting tool, the Best Practices Maturity Model.
The revised Best Practices and Maturity Model go into effect Oct. 7. All of the materials are available at www.alta.org/bestpractices.
Initial modifications to the Best Practices were proposed over the summer and were subject to a 30-day public comment period. During this time, ALTA received over 80 comments from title agents, underwriters, lenders and assessment providers.
“The Best Practices are designed to reflect market demands and trends, and active involvement from our industry helps us meet that goal,” said Michelle Korsmo, ALTA’s chief executive officer. “The comments we received undoubtedly helped us elevate the Best Practices to create stronger products for our industry.”
Following the comment period, the Best Practices Executive Committee, along with the Internal Auditing Committee, reviewed each comment and revised the Best Practices products for final Board consideration.
Many of the comments ALTA received focused on the new standards in Pillar 4 for engaging a third-party signing professional.
“These comments highlighted the differing state standards for licenses, errors and omissions insurance, and notary surety bond requirements,” said Diane Evans NTP, chair of the Best Practices Executive Committee and Task Force. “We were able to revise the proposed due diligence requirements to better inform companies about what to look for when engaging a third-party signing professional.”
ALTA also received comments about the change in Pillar 5 to the timeframe to remit premiums to the underwriter. Many agents pointed out that a 45-day timeframe following settlement or the date in which the terms of the title commitment were satisfied would be difficult to meet since many underwriters do not invoice their agents within that period. The updated revisions allow agents to remit in accordance with applicable statutory, regulatory or contractual obligations.
ALTA also heard many concerns about the removal of the sample sizes and Assessment Recap column from the Assessment Procedures.
“From the comments ALTA received, we learned that it would be very difficult for assessment providers to render independent assessments due to the lack of guidance and standards within the Assessment Procedures,” Evans said.
In response, the Best Practices Executive Committee partnered with the Internal Auditing Committee to reincorporate guidance and standards within the Assessment Procedures. The Assessment Procedures were also updated to reflect the changes in the Best Practices and to meet current market trends. The revised Assessment Procedures also incorporate elements of the Best Practices Maturity Model, making this new tool an even more valuable one for title insurance and settlement professionals.
The Board also approved the introduction of the Best Practices Maturity Model.
“This new assessment reporting tool allows companies to measure their policies and procedures against the Best Practices to determine compliance,” Evans said. “It helps companies determine where they are on the path of Best Practices compliance and educates companies about how they can improve their practices to be fully compliant with the Best Practices.”
Contact ALTA at 202-296-3671 or [email protected].