ALTA Board Approves Modifications to Best Practices

June 30, 2016

ALTA’s Board of Governors on June 9 approved proposed changes to the association’s “Title Insurance and Settlement Company Best Practices” to better reflect market needs and trends.

“ALTA’s Best Practices Framework is the clear choice among title and settlement companies to help develop policies and procedures that protect consumers, promote quality service, provide for ongoing employee training, and meet legal and market requirements,” said Michelle Korsmo, ALTA’s chief executive officer. “The Best Practices also have become the blueprint used by many lenders to meet third-party vendor management regulatory requirements. Since initially publishing the Best Practices Framework more than three years ago, ALTA has engaged in discussions with stakeholders to continually improve Best Practices and meet market demand.”

The Best Practices changes are under a public comment period until July 29. Send questions and comments to After the review comment period ends, comments will be carefully considered before the changes are finalized and become effective Oct. 7. Companies may implement changes immediately.

Click here to view documents with all of the proposed changes.

The Board approved proposed changes and additions to:

  • Pillar 2: Adopt and maintain appropriate written procedures and controls for Escrow Trust  Accounts allowing for electronic verification of reconciliation.
  • Pillar 3: Adopt and maintain a written privacy and information security program to protect Non- public Personal Information as required by local, state and federal law.
  • Pillar 4: Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws as applicable to the Settlement process.
  • Pillar 5: Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance.

Pillar 2

Under Pillar 2, language requiring the use of positive pay, reverse positive pay, Automatic Clearing House transactions and international wire transfers was modified. The pillar and associated assessment procedure now reads:

Utilize Positive Pay or Reverse Positive Pay, if available in the marketplace, and have policies and procedures in place that prohibit or control the use of Automated Clearing House blocks and international wire transfers to protect against unauthorized transactions.

“The original Best Practices requirement to block ACH and international wires proved troublesome for companies that had legitimate business reasons to utilize these services,” Korsmo said. “Additionally, many banks reported that they do not offer ACH or international wire blocks, but rather offer controls to help prevent any unauthorized transactions. This policy was modified to help companies better perform their duties by allowing them to either prohibit or control the use of ACH and international wires.”

Pillar 3

Pillar 3 changes clarify requirements associated with maintaining and disposing of non-public personal information. Specifically, this portion of the Best Practices Framework included the addition of state law requirements for the maintenance and disposal of records (including electronic) that include NPI.

Additionally, the following requirement was added to the Pillar 3 Framework:

Companies should securely maintain and dispose of records containing Non-public Personal Information pursuant to an established timeframe for retaining records, as documented in the Company’s information security program that takes into consideration the appropriate legal, regulatory, and business requirements.

“We heard confusion that some believes the Best Practices required the disposal of records immediately after settlement,” Korsmo said. “This clarification makes it clear that a company may securely retain records containing NPI if there’s a need to preserve records to meet legal, regulatory and/or business requirements. The amendment requires companies to establish a timeline for disposing of records containing NPI to help protect against unauthorized access or use of NPI.”

Pillar 4

Changes to Pillar 4 added standards for engaging third-party signing professionals.  The pillar now says written procedures should help ensure any third-party signing professional—including Notaries Public—engaged by a title or settlement company  possess the appropriate qualifications, professionalism and knowledge that can be determined by a mix of legal and contractual obligations.

Companies must conduct the following due diligence:

  • Verify that the third-party signing professional maintains Errors and Omissions insurance and Notary surety bond; and
  • Requires that third-party signing professionals: (i) Furnish evidence that they have attained a recognized and verifiable industry designation; or (ii)Require that third-party signing professionals provide evidence of their current state licensure, where required, and an acknowledgement of compliance with the Company’s instructions.

Also, the company that contractually retains the third-party signing professional is responsible for verifying that the applicable standards are met.

“We felt that it was pertinent to include standards in the Best Practices Framework to reflect the increased prevalence and reliance by title insurance agents and underwriters on third-party signing professionals,” Korsmo said. “Given this trend and the development of industry designations and certifications in the notary industry, this additional will highlight these tools to agents.”

Pillar 5

Lastly, Pillar 5 changes modify the time frame that title insurance agents must report title insurance policies and remit premiums to their underwriters. The pillar now says that a copy of insurance policies must be reported if required by the underwriter. Meanwhile, title agents must remit premiums to the underwriter within 45 days after the later of (i) the date of Settlement or (ii) the date that the terms and conditions of the title insurance commitment are satisfied. Previously, the pillar required polices to be reported and premiums to be remitted underwriter by the last day of the month following the month in which the insured transaction was settled.

“ALTA’s Best Practices Executive Committee and Task Force felt that having a flexible timeframe for reporting remittance creates unnecessary confusion for title agents,” Korsmo said. 

Contact ALTA at 202-296-3671 or