How One Small Title Company Tackled Implementation of Best Practices
|January 30, 2014|
Over the last six months, Carolyn Toigo has spent a great amount of time and money ensuring compliance with ALTA’s ”Title Insurance and Settlement Company Best Practices."
She’s bought new filing cabinets with locks, performed employee background checks, implemented email encryption, and increased and purchased additional insurance coverages, just to name a few of the things she’s done during the process.
The president of Wisconsin-based company Dominion Title and Exchange Services even purchased a new vacuum cleaner. It wasn’t to have a cleaner floor, the title company’s server is located in a storage room. This meant the cleaning crew could potentially access non-public personal information (NPI) stored on its hard drive.
“We couldn’t take that risk, so we decided to do the cleaning ourselves,” said Toigo, who now shares cleaning chores with her six employees. “It’s important for title companies to analyze their operations because the Best Practices impact every part, from the landlord and the office cleaners to the IT department.”
To tackle implementation, Toigo divvied up the seven pillars of the Best Practices between herself and two employees, executive assistant Jennifer Fass and closing coordinator Stephanie Kabat.
Toigo assigned herself the daunting third pillar, which addresses protecting NPI, as well as ensuring the company maintained appropriate professional liability insurance and fidelity coverage. To start, she made a list of things the company physically did or needed to implement to ensure everything was in place.
She tackled insurance coverages first. Because her office backs up to a river, the company carries flood insurance. That policy was reviewed to verify there was proper coverage. Toigo plans to add cyber security coverage when she updates her errors and omissions coverage. At the end of the day, Toigo said the changes will cost her company 30 percent more in insurance coverage.
“We saw the proverbial ‘writing on the wall,’” Toigo said. “I do not want our company to ever be in a position of losing potential business because a lender or customer decides we are not qualified. Luckily for us, we had the wherewithal to afford this. That may not be the case for everyone. Until you really start doing this and follow all the pillars, you have no idea what you are in compliance with.”
Dominion Title uses a third party that shreds and destroys documents with NPI. The company backs up its information offsite every day, so Toigo had the IT company document their security policies. To speed recording and provide documentation of this process, the company now offers e-recording. Additionally, Dominion Title is working with a company to provide a disaster recovery solution. This will double Dominion Title’s IT expenses.
All told, Toigo said the company has invested nearly $40,000 to meet the requirements of Best Practices. They’ve shared with lender clients what has been done to ensure the integrity of the transaction, protect money and NPI.
“We’ve received positive feedback because they appreciate we are taking the initiative on this,” Toigo said. “In the long run, we are hoping this will generate more business.”
Toigo said the growing, small company followed many safeguards internally, but many items were not documented and they lacked the ability to prove the policies. The majority of Dominion Title’s business is commercial, with about 10 percent of its orders being residential. Because of its business mix, the company typically holds large amounts of money in its escrow account. Aside from protecting NPI, the biggest adjustment involved disbursing of funds. A significant part of Fass’ duties were cutting checks and sending wires. Because of the need for segregation of duties the small staff at Dominion Title has had to juggle trust accounts on who can balance and who can sign, according to Fass.
“If our other full-time employees aren’t in the office, there’s not a second person to authorize a wire,” she added.
Another area Dominion Title has struggled with is deciding what qualifies as a customer complaint, according to Kabat. While important to the company and a policy has been implemented, it’s been difficult for the small staff to draw a line in the sand to determine what issues should be addressed and by whom.
When analyzing pillar five, which requires appropriate procedures for the production, delivery, and remittance of title insurance policies, the company learned its title production software system could not tell them which files were closed and which transactions needed policies issued. The software provider is working providing details on when policies are issued.
“We remit when we issue a policy. Now we have proof,” Toigo said.
The only outstanding issues from Dominion Title being completely compliant with Best Practices, according to Toigo, are the ability to send policies to its underwriters that don’t want them and finding an approved company that can conduct an assessment and issue a certification. “Whether you’re a company with two employees or 50, there’s a lot do tackle. I consider our company a typical agent, and if people want ideas on what we did, we’d be happy to help them,” Toigo added.