Title Industry Launches Major Consumer Initiative
|September 18, 2007|
WASHINGTON --The American Land Title Association (ALTA) today announced the launch of "The Title Industry Consumer Initiative," which details the association's five-pronged strategy for improving industry oversight and educating and protecting consumers. The initiative was developed in response to the recommendations by the Government Accountability Office (GAO) in an April 2007 report, "Actions Needed to Improve Oversight of the Title Industry and Better Protect Consumers."
The Title Industry Consumer Initiative includes a consumer education program, the adoption of a "Principles of Conduct," member education on regulatory compliance and ethical standards, and a plan for working more closely with state and federal regulators to ensure that the title industry is meeting the needs of consumers.
"This sweeping initiative marks a significant milestone in ALTA's 100-year history," said ALTA President Gregory Kosin. "The title industry has been widely criticized over the last several years--some of it deserved. Unfortunately, these criticisms have caused some to question the value of title insurance. We were extremely pleased that the GAO recognized the importance and value of title insurance to consumers. Our new initiative addresses the GAO's recommendations on how the industry can improve."
The thrust of ALTA's consumer initiative is to help educate consumers so that they can make informed choices when it comes to title insurance and title-related services. ALTA has already taken a major step by developing a consumer Web site, homeclosing101.com, which provides an overview of the closing process and explains the purpose and role of title insurance including the process of searching and examining title and repairing title defects. The site also describes how consumers can shop and compare prices for title insurance.
"Historically, most consumers have relied on their real estate agent, attorney or lender to select their title company and are not always aware that they have a choice," said Kosin. "Our new Web site helps consumers understand the process as well as their rights and choices concerning title insurance."
ALTA will also launch a consumer awareness campaign that includes advertising on home shopping Web sites, registering with Internet search engines, and working with other real estate trade groups and businesses to include information about title insurance and links to ALTA's consumer Web site.
Another major component of ALTA's Consumer Initiative is a newly adopted "Principles of Fair Conduct," which state what ALTA expects of its members: to engage only in business practices that are lawful and consistent with a high standard of ethical behavior, and to treat consumers in a fair an ethical manner. The Principles also encourage members to provide consumers with timely and comprehensive information on their policies, services, products and prices to enable consumers to shop among providers of title-related services.
Although ALTA has no authority to enforce its Principles of Fair Conduct with its members, the association will implement a number of strategies that it believes will achieve the same result. First, it will encourage members to regularly review their business practices to ensure that they are lawful and consistent with a high standard of ethical behavior, and that members do not enter into any business arrangements with persons or entities in a position to refer business unless the arrangements are in accordance with RESPA and applicable state law.
Second, it will encourage its larger members to foster a culture of compliance within their organizations, provide periodic training to their employees, assign an internal compliance officer who has senior staff responsibility, and develop internal procedures for notifying senior management of questionable business practices by divisional offices within their companies.
Third, ALTA will seek guidance from the Department of Housing and Urban Development (HUD) on self-regulatory measures the title industry can adopt that complement HUD's enforcement activities, and request that HUD provide timely responses to ALTA requests for guidance on certain business practices.
Fourth, ALTA will ask Congress to amend Section 8 of the Real Estate Settlement Procedures Act (RESPA) to provide a competitors right of action for injunctive relief. This will allow members of the industry who are aware of RESPA violations to file a cause of action with the courts, which is currently not allowed under the current RESPA rules.
"When members of our industry engage in unlawful practices in order to gain business, they create an uneven playing field for everyone else," said Kosin. "Many of the regulatory bodies lack adequate enforcement resources, and we believe that members of our industry are in the best position to recognize violations among their competitors."
ALTA also has created a new staff position to serve as a liaison between the title industry, state land title associations and state governments; seek guidance on regulatory matters; and help to ensure that consumers are being served. They will also stay on top of new regulatory and judicial decisions that impact the rules and laws governing title insurance in order to keep ALTA members informed.
On the federal front, ALTA held an educational seminar on Capitol Hill on September 18 to familiarize legislative staff with title insurance, closing costs and the closing process. ALTA also will debut its new Consumer Web site so that members can make this resource available to their constituents.
"A significant part of our strategy is to meet regularly with appropriate legislators, regulators and staff member to provide information and solicit feedback on what the industry can do to meet the needs of their constituents," said Kosin.
To view the entire Title Industry Consumer Initiative and Principles of Fair Conduct, visit the ALTA Web site at www.alta.org. ALTA's new consumer Web site is at www.homeclosing101.com.