ALTA Best Practices Compliance

Is your Title Company prepared to take itself to the next level with ALTA Best Practices Compliance?

It’s a dog-eat-dog world where everybody is looking to gain a competitive advantage. Being in compliance with ALTA Best Practices and being certified can provide the competitive advantage you are looking for. The type of engagement, controls and procedures matter to banks. Title insurance and settlement companies should dig in and analyze their framework in order to determine the condition your business. Below are some tips to help take your company to the next level.

The Rules by the American Land Title Association (ALTA)

 For those who don’t already know, ALTA’s Board of Governors teamed up with the Consumer Financial Protection Bureau (CFPB) and Wells Fargo to create the ALTA’s Best Practices Framework: Title and Insurance Settlement Company Best Practices, otherwise known as ALTA’s Best Practices. With ALTA’s Best Practices framework, settlement and title service providers can demonstrate they have the proper procedures and safeguards in place to ensure compliance with relevant real estate closing laws and regulations. Even though ALTA’s Best Practices Framework is currently a voluntary tool, certain lenders are beginning to require third-party verification in order to close transactions and/or issue title commitments and policies on their behalf.

Why should you obtain Third-Party ALTA Best Practices Certification and be Vetted by a CPA firm?  

Mortgage lenders have been under increasing pressure to scrutinize third-party vendors’ efforts to safeguard nonpublic customer data and maintain legal and regulatory compliance. We are now seeing the voluntary standards slowly becoming an industry norm. In this competitive world of mortgage lending, settlement attorneys and title service companies are adopting the American Land Tile Association’s (ALTA) Best Practices in order enhance their market share and distinguish themselves from their competitors. This secret weapon is one asset you want on your side. For example, if a mortgage lender works with a closing attorney or title company and requests your manual or certification, and you don’t have one because you aren’t in compliance with ALTA Best Practices, then your mortgage lender could deny the funding. Making this investment now will save you thousands in potential lost revenues because of lost closings.

The SEVEN Pillars of ALTA Best Practices

The following seven pillars of ALTA Best Practices are the conditions your business needs to focus on:

1. Licensing – You must establish and maintain current license(s) as required to conduct the business of title insurance and settlement services.
2. Escrow Trust Accounting – To adopt and maintain appropriate written procedures and controls for escrow trust accounts allowing for electronic verification of reconciliation.
3. Protecting NPI – 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.
4. Settlement Processes – 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.
5. Policy Production – Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance.
6. Insurance Coverage – Maintain appropriate professional liability insurance and fidelity coverage.
7. Consumer Complaints – Adopt and maintain written procedures for resolving consumer complaints.

The pillars mentioned above are just the starting point. Lenders want to see that the policies and procedures are in place to ensure compliance and that the settlement agents are familiar with them.

Ready…..Set…..Where to GO?

If you are like most companies out there, then you probably aren’t sure where to start. Lucky for you, there are solutions. You can begin with a Readiness Assessment, which allows you to evaluate your current compliance status. The Readiness Assessment will highlight any needed remediation areas to potentially pass the certification. Think of it as getting blood work done to see if there are any foreseeable problems you need to address. If you need specific areas brought into compliance, we can provide solutions through a separate engagement. Lastly, you can decide to immediately start your manual to in order to become compliant with ALTA’s Best Practices. Contact us now to get your Readiness Assessment or your ALTA Best Practices Compliance underway. As one of Orlando’s top Certified Public Accounting Firms, let Gregory, Roman & Associates save you the headaches and countless hours spent preparing your own ALTA Best Practice Manual and be vetted by a top CPA firm for being compliant with ALTA Best Practices. Contact us today!