Should a Settlement Agency Be Considered a Daycare for Customer Data?

Protect Computer DataAll too often, title and settlement agents give little more than a passing thought to the importance of protecting highly sensitive customer data.  But to the lenders we service, the care and protection of the customer data with which we’re entrusted is extremely important.  That’s because the law unequivocally requires customer data to be protected and, on at least an annual basis, various federal regulators are going to conduct multi-day, in-office assessments of lenders’ policies, procedures, and actual practices to ensure lenders are effectively protecting that data, even when it is in the hands of settlement agents.  Lenders realize that if they fail to protect the data, it can cost millions of dollars in fines, and even more importantly, the incalculable damage associated with the loss of customer confidence.  Title agents need to be more aware of the lender’s perspective on the importance of protecting customer data.

Title agents should think of lender data as the lender’s child and their role in protecting it as that of the lender’s daycare agency.  I think lenders would agree that this is an appropriate analogy.  The care of one’s child and the care of customer data are both of paramount importance.  In this analogy, lenders want to be sure their “sons or daughters” are cared for in a safe and secure “daycare facility” while out of their direct control.  They would want to be assured that while their “child” is at the daycare, it’s protected from a whole variety of rare, but very possible occurrences.  For example, as a parent evaluating a daycare facility, you would likely want to be assured that:

  • No one can randomly walk into the facility and leave with your child.
  • If there was a fire or a tornado, the daycare has a pre-established exit plan to ensure everyone stays safe.
  • During the day, your child’s growing mind is properly nurtured, and you are kept advised about the positive ways the daycare staff is handling those responsibilities.
  • If the daycare takes your child on field trips, there are policies and procedures in place to ensure there will always be enough chaperones, and they are properly trained to watch over the children when they are away from your secure facility.
  • The daycare is regularly inspected by a daycare licensing agency, it has a comprehensive manual outlining processes for carrying out day-to-day responsibilities, and it has an unrestricted offer to allow you to stop by anytime to personally inspect the high degree of care your child is receiving.

Read more

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


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