Title professional’s responsibilities extend far beyond facilitating the lending and home-buying process, encompassing navigating the local, state, and federal regulations. Amidst these responsibilities, title industry professionals must navigate legal frameworks and engage directly with customers, adapting to evolving techniques and tools while safeguarding sensitive personal information.

The demands placed on title and escrow agents mean they have a continuous commitment to staying abreast of the latest industry best practices. A significant resource aiding professionals in their quest for excellence comes from the American Land Title Association (ALTA). ALTA’s Title Insurance and Settlement Company Best Practices publication serves as a comprehensive guide to ensure company’s put themselves in the best position to work lender partners. ALTA has updated its best practices to keep up with the ever-evolving industry. These practices have been revised to enable title agents and direct operations to continuously enhance their practices and procedures for ensuring financial, data security, and operational stability. These revisions are intended to provide lenders and other stakeholders with the assurance that their needs are being met through these efforts.

Pillar 1: Current Licensing

At the core of any title company is a commitment to ensuring that all licenses remain valid and up to date. This entails strict adherence to the array of state-mandated insurance licenses and corporate registrations, forming the foundation of the company’s operational legitimacy.

This isn’t simply a regulatory checkbox, it means operational credibility and alignment with standards. State-mandated insurance licenses are not static documents but dynamic instruments that mirror the company’s ongoing compliance with regulatory requirements. Also, the commitment to a confirmation listing in the American Land Title Association (ALTA) Registry is a smart move. It elevates the company’s standing within the industry. This best practice, pillar, is far from a bureaucratic formality—it is a pledge to uphold the highest standards of professionalism and excellence.

Pillar 2: Escrow Trust Accounts
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The second pillar of best practices, focusing on Escrow Trust Accounts, serves as the linchpin for companies and financial transactions. This set of procedures and controls is crafted to meet federal, state, and contractual requirements, safeguarding funds and minimizing the risk of financial loss. Adopting and maintaining these written procedures and controls is to instill effective safeguards. Loss of funds, not covered by the Title Agency’s Errors and Omissions insurance, could become the responsibility of the Title Agency. In recognizing this, settlement companies may opt to engage outside contractors for Escrow Trust Accounting duties, reinforcing the need for airtight controls.

Key procedures within this best practice encompass properly identifying Escrow Trust Accounts and maintaining them in federally insured financial institutions’ underwritten Escrow agreements. Ensuring funds are kept separate from the company’s operating account is fundamental, extending to any accounts held under fiduciary duty. This segregation of funds is critical to prevent commingling and to adhere to state law requirements.

Stringent measures are also in place for making disbursements from Escrow Trust Accounts. Compliance with state good funds laws and Title Insurer guidelines is mandatory, emphasizing the commitment to risk mitigation. Technological tools, such as Positive Pay or Reverse Positive Pay, are encouraged, with policies prohibiting risky transactions.

The people factor is equally critical. Authorized employees, defined by their authority to conduct bank transactions, undergo rigorous background checks, with ongoing training sessions ensuring awareness of digital fund transfer risks. A proactive approach includes establishing wire transfer procedures, tested annually for outgoing and incoming transactions.

To fortify the system, a wire fraud response procedure aligns with the ALTA Rapid Response Plan for Wire Fraud Incidents, offering defense against potential threats. Escrow Trust Accounts are not only tracked with detailed trial balances but are also subject to daily and monthly reconciliations. Segregation of duties adds an extra layer of reliability to these processes.

Finally, the word of the day is transparency. The results of these reconciliations are not merely conducted but are reviewed, approved, and shared with the contracted Title Insurer(s). For a more detailed breakdown and specific focus areas, companies can refer to ALTA’s Information Security page, ensuring a comprehensive approach to best practices.

Pillar 3: Information Security

In real estate, sensitive consumer information is being stored and transferred constantly, so adopting and maintaining a robust information security plan (“WISP”) and a privacy plan is not just a best practice—it’s a legal and ethical imperative.

Rooted in compliance with federal and state laws, including the Gramm-Leach-Bliley Act, which mandates title companies to have comprehensive plans safeguarding Non-Public Information (NPI), this is recognizing the dynamic nature of the industry. Companies must tailor their WISP to factors such as size, complexity, and the nature of their activities, ensuring it aligns with the sensitivity of the consumer information they handle. The evaluation and adjustment of these plans are ongoing processes, responsive to changes in business operations and the outcomes of security testing and monitoring.

Procedures to meet this pillar must be multi-faceted, covering various aspects of information security. From implementing multi-factor authentication and a stringent password management plan to ensuring timely software updates, companies are required to fortify their digital defenses. Physical security is equally emphasized, restricting access to authorized personnel and controlling the use of removable media. Network and cloud security protocols are to be maintained to protect NPI stored in various locations.

Preparedness and training require companies to establish and periodically test business continuity and disaster recovery plans. These plans outline procedures to recover and maintain information, business functions, and processes in case of disruptions. The ALTA Cybersecurity Incident Response Plan template is a valuable resource.

Acknowledging the potential risks posed by various systems that may inadvertently have access to NPI, companies are urged to review and adjust their security controls periodically. This includes security systems, climate control systems, smart home devices, and personal devices connected to the company network by employees or guests.

Every company should also adopt a privacy policy to ensure transparency in how data is collected and used. Companies are encouraged to publish this policy on their website(s) or provide it directly to consumers in a usable form, reinforcing a commitment to consumer privacy and compliance with relevant laws and regulations.

Pillar 4: Settlement Policies and Procedures

A set standard policy and procedures in the real estate settlement process not only meets federal and state consumer financial protection laws but also adheres to the contractual obligations of the settlement process.

These adopted policies and procedures and ongoing employee training equip the company to fulfill federal, state, and contractual obligations governing settlements. Recognizing the variability of consumer financial protection laws across states, companies are urged to tailor their procedures accordingly. This approach, bolstered by effective training, safeguards settlement documents, maintains accuracy, minimizes errors, and contributes to a positive consumer experience.

To meet this best practice, a series of procedures are outlined:

Framework for Timely Response

Staff must be trained to minimize errors in settlement processes and respond promptly to concerns raised by any involved parties, ensuring compliance with ALTA Best Practices.

Proper Pricing Procedures

Following legal and contractual requirements, written procedures should be established to charge appropriate title insurance premiums and fees. This includes utilizing rate manuals and online calculators to ensure accuracy, quality-checking settlement documents, and issuing timely refunds when necessary.

Disclosure of Affiliated Business Arrangements

Procedures must be in place to properly disclose affiliated business arrangements, in compliance with state and federal laws and regulations.

Accurate Document Preparation and Execution

Written procedures should guide the preparation and execution of settlement documents, aligning with state and federal laws, contractual obligations with title insurers, and agreements with consumers or lenders.

Overseeing Signing Professionals

Companies must establish procedures ensuring that signing professionals possess the required licensing and insurance. Background checks for employees, and third-party professionals must demonstrate compliance with applicable standards.

Selecting Remote Notarization Platforms

When utilizing remote notarization, companies must select authorized platforms, ensuring compliance with state regulations and Title Insurer approval. Proper procedures should be implemented for fee-charging and oversight.

Consistent Recording Procedures

Procedures should be established to record documents per legal and contractual requirements. This includes timely submission for recording, tracking deliveries, addressing rejections, and verifying proper recordation.

Escrow Trust Accounts and E-Recording

Companies must comply with written procedures and controls for Escrow Trust Accounts, including those related to e-recording accounts containing fees imposed by the state or municipality.

Pillar 5: Title Policy Production and Delivery

Implementing written procedures concerning title policy production, delivery, reporting, and premium remittance can effectively meet their legal and contractual obligations, fostering a smooth and compliant operational workflow.

To adhere to this best practice, specific procedures are outlined:

Title Policy Production and Delivery

Timely issuance and delivery of title insurance policies align with statutory, regulatory, and contractual obligations. Policies should be issued and delivered within thirty days of the later of the settlement date or the satisfaction of the terms and conditions of the title insurance commitment. Compliance with statutory or regulatory requirements necessitating earlier delivery is also emphasized.

Premium Reporting and Remittance

For effective compliance with statutory, regulatory, and contractual obligations, title insurance policies must be reported to the Title Insurer within 45 days of either the settlement date or the satisfaction of the title insurance commitment. This reporting should include a copy of the policy if mandated by the Title Insurer. Also, the remittance of title insurance premiums to the Title Insurer should be carried out within the same timeframe to ensure seamless adherence to regulatory and contractual obligations.

The timely production, delivery, reporting, and remittance of title insurance policies form the bedrock of a well-regulated and efficient title insurance process, underscoring the commitment to excellence.

Pillar 6: Insurance and Fidelity Coverage

By securing the right levels of professional liability insurance or Errors and Omissions (E&O) insurance, cyber liability insurance, and crime coverage, a company ensures it possesses the financial capacity to back its professional services. This pillar recognizes that specific types of insurance or coverage may not only be a prudent business decision but may also be mandated by legal, regulatory, or contractual obligations.

To meet this best practice, companies follow specific procedures:

Appropriate Insurance Coverage

Companies tailor their insurance portfolio to encompass professional liability insurance or E&O insurance, cyber liability insurance, and crime coverage in alignment with the size and settlement volume of the company. Customization ensures that the company’s insurance coverage is commensurate with its operational scale.

Compliance with Legal and Contractual Requirements

Companies adhere to the requirements stipulated by state laws or contractual obligations with Title Insurers concerning professional liability insurance, E&O insurance, fidelity coverage, or surety bonds. This ensures regulatory compliance and instills confidence in stakeholders regarding the financial integrity of the company.

Regular Review of Coverage Limits

Companies must conduct thorough annual reviews with their insurance broker/agent. This proactive approach allows them to stay abreast of coverage limits and exceptions changes, ensuring that their insurance portfolio remains aligned with industry standards.

Pillar 7: Consumer Complaint Resolution

The purpose of establishing a process for receiving and addressing consumer complaints is rooted in the assurance that instances of poor service or non-compliance are neither overlooked nor left unresolved. To effectively meet this pillar, companies implement procedures specifically designed for the intake, documentation, tracking, and resolution of consumer complaints. This systematic approach ensures that reported complaints are acknowledged and systematically addressed to enhance customer satisfaction and maintain compliance.

Key components of these procedures include:

Consumer Complaint Intake and Documentation

Standardized procedures are implemented for logging and resolving consumer complaints, guaranteeing that comprehensive information is gathered to understand the nature and scope of each complaint. This involves the development of a standardized consumer complaint form that captures pertinent details connecting the complaint to a specific transaction.

Single Point of Contact

Companies establish a designated single point of contact for consumer complaints, streamlining the communication process and ensuring that complaints are efficiently directed to the appropriate personnel for resolution.

Procedures for Complaint Forwarding

Clear procedures are implemented to facilitate the forwarding of complaints to the personnel best equipped to address the specific issues consumers raise.

Follow-Up and Periodic Review

Companies must systematically follow up on complaints until they are resolved or officially closed. In addition, periodic reviews are conducted, encompassing both unresolved/open complaints and closed complaints.

Comprehensive Log Maintenance

A detailed log of consumer complaints is maintained, documenting the resolution or closure of each complaint. This serves as a valuable record, offering insights into the company’s responsiveness, consumer concern patterns, and the resolution process’s effectiveness.

Adopting and maintaining written procedures for resolving consumer complaints is not merely a regulatory necessity; it is a commitment to customer satisfaction and operational excellence. By implementing these procedures, companies demonstrate their dedication to promptly, transparently, and effectively addressing consumer concerns, fostering trust and goodwill within their client base.

Adherence to ALTA’s best practices is not merely a checklist but a commitment to excellence. These best practice pillars form the backbone of secure, compliant, and customer-centric operations. As the industry evolves and new challenges emerge, embracing these practices is not just a matter of compliance; it’s a strategic move toward unlocking excellence in every facet of real estate operations.