1. ALTA Best Practices

2. Changes in Regulatory Scrutiny
Dramatic increase in regulation and scrutiny– 3rd party service providers:
2001 – OCC guidance on 3rd party service providers
2006 FDIC guidance on 3rd party service providers
2011 Formal enforcement action requiring lenders to improve oversight of 3rd party service providers

3. 2011 Formal Enforcement Action
Foreclosure Weaknesses:
Inadequate policies and procedures;
Inadequate monitoring and controls;
Lack of sufficient audit trails;
Inadequate quality controls;
Inadequate identification of risks;
Inadequate staffing; and
Discrepancy of fees charged.

4. Changes in Regulatory Scrutiny
Dodd Frank
CFPB
1. American Express - $85 million
2. Discover - $200 million
3. Capital One - $210 million
NAIC
Market conduct examinations
Bar Examiners and random audits

5. Changes in Regulatory Scrutiny
CFPB Bulletin
“Legal responsibility may lie with the supervised bank...as well as...service provider.”
Standard
Due diligence
Lender must produce proof of review of a service provider’s policies
Lender must express clear guidance as to compliance
Lenders must demonstrate prompt action for service provider missteps

6. Lender Response to the Regulatory Changes
National lender contacts title underwriters—minimum standards for title underwriter oversight
Annual background checks
Annual credit checks
Escrow controls
Policy inventory controls
Underwriter audit of agents
Operational oversight of agents
Agent Vetting Company
ICL on steroids

7. ALTA Response to Market Demands
Establish and maintain current licenses
Adopt and maintain appropriate written procedures and controls for IOLTA accounts
Safeguard clients funds
Reconcile receipts and disbursements on a daily basis
3-way reconciliation once a month
Segregation of duties
Authority to access and transfer funds
Employee background and credit checks

8. ALTA Response to Market Demands
Adopt and maintain a written privacy and information security plan
Physical security of non-public information
Network security of non-public information
Proper disposal of non-public information
Disaster management plan
Oversight of service providers
Audit and oversight to ensure compliance

9. ALTA Response to Market Demands
Adopt standard real estate settlement procedures and policies that ensure compliance with federal and state laws
Submit Documents for recording within 2 days of closing
Procedures to ensure consumers
are charged established rates
3. Post closing quality check

10. ALTA Response to Market Demands
Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance
Policies Delivered within 30 days of closing
Premium reporting and remittance by last day of month after closing

11. ALTA Response to Market Demands
Maintain appropriate professional liability insurance and fidelity coverage
Professional E and O
Fidelity coverage – when required by state law or contractual obligations
Surety coverage– when required by state law or contractual obligations

12. ALTA Response to Market Demands
Adopt and maintain procedures for resolving consumer complaints
Procedures for logging and resolving consumer complaints
Single point of contact
Complaint log