When the Consumer Financial Protection Bureau (CFPB) enacted an amendment to its Regulation X, it established a means to hold mortgage lenders accountable for the third-party vendors they involve in residential mortgage transactions. The CFPB audits mortgage lenders to ensure compliance to their risk management standards, including those of the title companies and other service providers the lenders use. That means residential mortgage lenders now have to choose production partners who meet those risk management standards, in order to protect themselves from liability.
The American Land Title Association (ALTA) has established a set of Best Practices for ALTA members and others who don't want to lose out on business, in order to demonstrate to lenders that their business practices will stand up under the scrutiny of a CFPB audit. Through voluntary compliance with ALTA Best Practices, title and settlement companies and escrow agents can add value to their services and remain eligible to work with lenders and underwriters who have adopted very conservative guidelines to protect themselves from liability.
Seven ALTA Best Practices
- Establish and maintain current License(s) as required to conduct the business of title insurance and settlement services.
- Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.
- Adopt and maintain a written privacy and information security program to protect Non-public Personal Information (NPI) as required by local, state, and federal law.
- 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.
- Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance.
- Maintain appropriate professional liability insurance and fidelity coverage.
- Adopt and maintain written procedures for resolving consumer complaints.
Adoption of the Best Practices is strictly voluntary and the methods of implementation are left to every company to decide for itself. Many service providers have already adopted the use of these practices, but have not yet taken the steps to fully formalize policies that specify how, specifically, they will implement ALTA Best Practices. Your company can offer lenders an independent assurance that your company is fully compliant with Best Practices with an Attestation Report from a CPA firm, or another Best Practices certification.
ALTA-Compliant Forms Made Easy
ALTA standardized settlement statements are used in residential real estate transactions, in conjunction with federal HUD-1 forms, to itemize the charges that buyers and sellers will need to settle a sale transaction. Easy Soft's Real Estate Closing Solutions suite ensures accuracy and efficiency with centralized data entry and one-click forms for ALTA settlement statements and more than 200 other required types of forms. It's easy to design and store custom forms, as well, and everyone in your licensed work group will have access to those custom forms. An integrated EasyHUD module speeds you through generating HUD documents, with no additional data entry. You get consistent, error-free documents, fully compliant with Best Practices and legal requirements for federal and state agencies, and it's all automated to save you valuable time. Start a free trial and see how Easysoft Real Estate Closing Solutions can help you streamline your workflow and make consistent forms compliance a no-brainer.