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What makes Best Practices so great, anyway?

Wed, Feb 04, 2015 at 3:05PM

You may have heard about Best Practices, but what exactly does that mean?

The term Best Practices has been bandied about in terms of mortgage loans and real estate closings since the mortgage meltdown, but what does it actually mean . . . and what is the benefit of selecting a title company that is compliant with Best Practices?

A little background:
The Consumer Financial Protection Bureau, which was created by the Dodd-Frank Act of 2010, has both rule making and supervisory authority over mortgages, as well as the student loans, consumer lending and credit cards.

In 2012, the CFPB issued a bulletin to supervised banks and nonbanks (including mortgage lending) that the Bureau expects them to perform due diligence in selecting third party service providers, which includes title agents who close the loans they issue. At minimum, this includes verifying that the title agency owners:
• Are capable of complying with the law (UDAAP, RESPA, TILA, GLBA and the ESign Act among others)
• Have written policies and procedures governing regulatory compliance and risk management protocols 
• Have internal controls to provide appropriate oversight of employees
• Have written employee training materials, and
• Have proof that the agency conducts appropriate training of employees who have consumer contact or compliance responsibilities.

In order to help title companies demonstrate their ability to comply with the requirements stipulated in this bulletin, the American Land Title Association (ALTA) released its Title Insurance and Settlement Company Best Practices Guide for independent agents. These 7 “Pillars” of Best Practices outline performance standards that meet CFPB Compliance requirements and have been developed to assist lenders in satisfying their responsibility to manage third party vendors.

When selecting a title company, be sure they are ALTA Best Practices Compliant and have been vetted by their underwriter(s) who have completed due-diligence screening, and continue to rigorously monitor title agency performance.

Southern Title is proud to be ALTA Best Practices Compliant and has successfully completed the intensive vetting process to earn and maintain the Seals of Approval from their roster of underwriters. For more information on the vetting process or view our Best Practices Manual, please contact us.

You may have heard about Best Practices, but what exactly does that mean?

The term Best Practices has been bandied about in terms of mortgage loans and real estate closings since the mortgage meltdown, but what does it actually mean . . . and what is the benefit of selecting a title company that is compliant with Best Practices?

A little background:
The Consumer Financial Protection Bureau, which was created by the Dodd-Frank Act of 2010, has both rule making and supervisory authority over mortgages, as well as the student loans, consumer lending and credit cards.

In 2012, the CFPB issued a bulletin to supervised banks and nonbanks (including mortgage lending) that the Bureau expects them to perform due diligence in selecting third party service providers, which includes title agents who close the loans they issue. At minimum, this includes verifying that the title agency owners:
• Are capable of complying with the law (UDAAP, RESPA, TILA, GLBA and the ESign Act among others)
• Have written policies and procedures governing regulatory compliance and risk management protocols 
• Have internal controls to provide appropriate oversight of employees
• Have written employee training materials, and
• Have proof that the agency conducts appropriate training of employees who have consumer contact or compliance responsibilities.

In order to help title companies demonstrate their ability to comply with the requirements stipulated in this bulletin, the American Land Title Association (ALTA) released its Title Insurance and Settlement Company Best Practices Guide for independent agents. These 7 “Pillars” of Best Practices outline performance standards that meet CFPB Compliance requirements and have been developed to assist lenders in satisfying their responsibility to manage third party vendors.

When selecting a title company, be sure they are ALTA Best Practices Compliant and have been vetted by their underwriter(s) who have completed due-diligence screening, and continue to rigorously monitor title agency performance.

Southern Title is proud to be ALTA Best Practices Compliant and has successfully completed the intensive vetting process to earn and maintain the Seals of Approval from their roster of underwriters. For more information on the vetting process or view our Best Practices Manual, please contact us.


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