News Flash – Finally, Some Good News for the Title Agent’s Future

In reviewing the recent blogs I’ve published on topics surrounding Best Practices and the pressures imposed on title agents by lenders and federal regulators, I realize most were anything but uplifting.  For this reason, I wanted to share a blog highlighting a recent industry-related publication that contains some good news and indications that there may be more business in your future!

As we reflect on the real estate collapse of 2008, it’s clear that there is ample room to point fingers at a variety of players who significantly may have contributed to a host of bad practices which ultimately led to the industry meltdown.  Some will blame borrowers for buying more house than they reasonably should have expected they could afford, but this desire was not new.  In the period leading up to 2000, borrowers always attempted to secure loans for amounts beyond their ability to repay, but their attempts were kept in check by lenders who exercised conservative lending guidelines and simply refused to lend.  But over time, lenders’ emphasis on conservative lending guidelines steadily diminished as radical changes occurred in the expansion of the secondary market for loans.  With the development of new finance products like collateralized debt obligations, and a robust market to acquire subprime loans, lenders found there was an unending appetite to buy newly originated loans regardless of risk.  As a result, lenders were able to minimize their focus on credit risk and refocus on short-term loan profitability arising from origination fees.

For the years leading up to 2008, the lending industry’s business model quickly shifted to maximizing the number of loans that could be generated with the belief that lenders could always resell them in the ever expanding secondary market.  To meet these demands for more and more transactions, the use of independent mortgage brokers expanded. Read more

Whatcha Gonna Do When a Data Breach Happens to You — Part 3 – FTC’s “Data Breach Response” Guidance Booklet

data-breach-response

In a recent blog, I explored the importance of developing a damage-control plan in the event of a data breach.  Following that blog, I provided guidance for determining the applicable laws with which you must comply after a data breach has occurred.  Both blogs referenced industry experts who offered advice regarding what they thought was the “appropriate” response to a data breach.  However, whether or not an entity responds “appropriately” ultimately will be evaluated by the Federal Trade Commission (FTC), which has direct supervision over all cybersecurity issues, and acts as the final arbiter in determining whether the actions taken are enough.  It, therefore, is important to stay abreast of any guidance the FTC has offered on this topic. Read more

Is the Borrower’s Right to Choose a Closing Agent in Peril?

Growing a residential real estate practice as a title or settlement agent is not easy.  Every day, as you represent a buyer/borrower in the purchase/refinance of a home, you remain hopeful that your client, as well as the realtor and/or lender also involved in that transaction, will be impressed enough with your services to recommend your office to others.  It’s a constant push to develop new relationships that will yield business.  Over time, as you continue to provide high-quality, professional services, you strive to ensure that potential client referrals will increase and fuel the growth of your residential real estate title or settlement practice. Read more

CFPB Updates Guidance on Lender Supervision of Third-Party “Service Providers”

Trading Risk ManagementOn October 19, 2016, the director of the Consumer Financial Protection Bureau (CFPB) issued a new bulletin entitled “Compliance Bulletin and Policy Guidance; 2016-02, Service Providers.”  This bulletin is significant for the title industry because it reissues guidance from Bulletin 2012-03, which made it clear that financial institutions are obligated to ensure their business arrangements with service providers do not present unwarranted risks to consumers.  The requirements identified in the 2012-03 Bulletin are restated, word for word, in this newest bulletin.  The CFPB has reminded financial institutions that they are required to take specific steps that include, but are not limited to:

  • Conducting thorough due diligence to verify that the service provider understands and is capable of complying with federal consumer financial law.
  • Requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact or compliance responsibilities.
  • Including in the contract with the service provider clear expectations regarding compliance, as appropriate and enforceable consequences for violating any compliance-related responsibilities, including engaging in unfair, deceptive, or abusive acts or practices.
  • Establishing internal controls and ongoing monitoring to determine whether the service provider is complying with federal consumer financial law.
  • Taking prompt action to address any problems identified through the monitoring process, including terminating the relationship where appropriate.

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