The financial industry was placed in the hands of the U.S. government in July 2010 when the Dodd-Frank Act was signed into law. This act gave birth to the Consumer Financial Protection Bureau (CFPB) to protect consumer interests. With the recent amendments to Regulation X (the Real Estate Settlement Procedures Act) becoming effective in January 2014, there has been increased regulatory pressure on banks and mortgage lenders to protect their customers’ non-public, personal information especially in the context of their relationships with third-party vendors, which includes title companies.
In response, the American Land Title Association (ALTA)—the title industry’s national trade association since 1907—stepped in to help its members and the title industry as a whole in 2013 by establishing a best practices framework to assist lenders in satisfying their responsibility to manage third-party vendors. These best practices are voluntary and designed to help title companies convey to customers and clients that they are meeting the industry’s minimum set of controls over their operations to ensure a positive and compliant real estate settlement experience. On March 6, 2014, Wells Fargo gave its support of ALTA’s Best Practices in its Settlement Agent Communications Newsletter.
Beyond just the establishment of a set of best practices, ALTA has proposed that title companies obtain certification. This involves an independent third party “certifying” that:
- The title company has adequately documented policies and procedures over operations.
- The policies and procedures cover all of the best practices.
- The title company is following its written policies and procedures.
ALTA has not specifically addressed who the independent third party should be. Discussions have focused around who has the ability to certify, are they truly independent, and would their certification be accepted by the lenders. This opens the door for CPA firms because they meet all of ALTA’s expectations. Be on the lookout for a PYA whitepaper on this topic in the near future.
If you would like more information about ALTA Best Practices or title company certification, contact Mike Shamblin at PYA, (800) 270-9629.