Survey: Majority of ALTA Members Follow Best Practices to Protect Clients’ Money, Info
|February 14, 2013
While ALTA has created a set of best practices to help members highlight steps the industry exercises to protect lenders and consumers, a recent survey shows that the majority of professionals in the industry already have processes and procedures in place that meet lender needs and ensure a positive and compliant real estate settlement experience.
The Title Insurance and Settlement Company Best Practices were created to 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. ALTA members were concerned about warehouse lenders requiring title and settlement agents to be vetted by a third party in order to continue receiving business.
ALTA’s best practices survey, which was completed by nearly 750 title professionals, showed that many of these practices are already an integral part of ALTA members’ day-to-day business.
- Click here to view the survey results.
- Click here for information on ALTA’s upcoming webinar Nov. 20 on market demands and the best practices.
- Click here to listen to ALTA CEO Michelle Korsmo talk about next steps.
“We are already doing a lot of items that are in the best practices,” said ALTA President Frank Pellegrini. “We just need to get a little better in a few areas and get better at communicating to lenders the processes we already have in place protecting consumers and the transaction.”
Here’s a glance at some of the survey results:
- 99 percent of respondents maintain separate operating and escrow/trust accounts;
- 94 percent perform monthly, three-way reconciliation of accounts;
- 72 percent have a clean desk policy requiring employees to close files containing non-public personal information when not at their desk;
- 81 percent use strong passwords for computers and require frequent password updates;
- 90 percent record documents within one to three days on average;
- 79 percent deliver title policies to customers within a month after closing;
- 90 percent remit title premiums to your underwriter by the last day of the month following the month in which the insured transaction was consummated;
- 95 percent carry E&O insurance;
- 96 percent have procedures to ensure that customers are charged the appropriate rates;
- 81 percent have a policy in place to respond to consumer complaints; and
“It is our priority at ALTA to ensure that the title industry has the tools necessary to meet the market needs and allow title and settlement agents to continue serving as the vital independent third party to the real estate transaction,” said Michelle Korsmo, ALTA’s chief executive officer. “The survey shows that lenders should be confident they will meet regulatory requirements when conducting business with ALTA members.”
The best practices address areas ranging from controls regarding escrow and trust accounts to protecting customers’ personal information and responding to complaints. Here’s a look at the best practices:
- 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.
Diane Evans, vice president /legislative affairs of Land Title Guarantee Co., said the best practices are a tremendous tool for agents to use as a guide to enhance many of their current best practices.
“As we continue to develop resources that emphasize the important role we play in real estate transactions each and every day, this is one of the most effective means to help eliminate doubts, undue oversight and bad actors in our market place,” Evans said. “I am proud of the role agents play in a real estate transaction and look forward to continuing to promote our value.”
Korsmo said ALTA will provide training and webinars, and look into affinity programs for members that want to utilize a vendor to handle a portion of the best practices. She added that 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.”