Banks and mortgage lenders are under increased pressure by regulators to protect their customers’ non-public personal information (NPI)—especially within the context of their relationships with third-party vendors, including title companies and attorneys. This pressure has resulted in lenders conducting due diligence on title companies and attorneys. The means of approaching due diligence has been inconsistent within the industry, with some lenders asking vendors to complete questionnaires, others asking vendors to submit their policies and procedures and still others conducting interviews and on-site visits. Lenders have struggled to find the “right” solution to conduct this due diligence.
The American Land Title Association (ALTA) responded to this industry concern by developing a Best Practices Framework (ALTA Best Practices or the Best Practices). By choosing to pursue ALTA Best Practices, a title company or attorney can demonstrate to its mortgage lenders, underwriters and customers that it is following the industry’s established practices. This demonstration extends beyond just the protection of NPI. As lenders have learned about the Best Practices, this guidance has quickly become their preferred method of conducting CFPB due diligence.
The Best Practices include seven areas of guidance known as pillars:
- Escrow Accounting Procedures
- Privacy & Information Security
- Settlement Procedures
- Title Policy Production & Delivery
- Professional Liability Insurance Coverage
- Consumer Complaints
When a company elects to pursue Best Practices, it must first develop policies and procedures to address each of the seven pillars. Once an organization has fully implemented its ALTA-compliant policies and procedures, it can then elect to work toward becoming certified. The certification must be performed by a qualified, independent third party that evaluates the title company’s compliance with its Best Practices policies and procedures.
ATA assists clients with:
- The development of policies and procedures consistent with ALTA Best Practices.
- Evaluation of previously prepared policies and procedures for compliance with the seven pillars of the Best Practices Framework.
- Certification by providing an independent assessment of your organization’s operational processes, written policies, & procedures.
Contact partner and financial institutions expert Jack Matthis, CPA, CBA today at firstname.lastname@example.org or by calling (731) 686-8371.