The American Land Title Association (ALTA), founded more than 100 years ago, is the national trade association and voice of the title insurance and abstract industry. ALTA has created title insurance and settlement company “Best Practices” to help its member organizations define a strong set of procedures to follow to protect consumer information and ultimately make the title insurance and settlement process a smooth and efficient one. Through ALTA’s actions, title insurance and settlement companies join the ever growing cadre of professional associations that have implemented best practices to guide the way they do business.
Title insurance and settlement companies are key service providers to financial institutions across the country. There has been increased regulatory scrutiny for financial institutions, specifically focusing on the way they manage their risk in dealing with service providers. For example, on December 5, 2013, the Board of Governors of the Federal Reserve System released guidance surrounding, “Managing Outsourcing Risk,” and on October 30, 2013, the Office of the Comptroller of the Currency (OCC) released “Third-Party Relationships, Risk Management Guidance.” Recognizing that financial institutions share loads of customer data with title insurance and settlement companies that are subject to GLBA (Gramm-Leach-Bliley Act), ALTA has taken action.
The ALTA Best Practices are composed of seven Best Practice areas; each area comes with its own set of defined procedures so that organizations may implement them effectively. At a high level, the Best Practice areas are as follows:
- Establish and maintain current License(s) as required to conduct the business of title insurance and settlement services.
- Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.
- Adopt and maintain a written privacy and information security program to protect Non-public Personal Information as required by local, state and federal law.
- Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws as applicable to the Settlement process.
- Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance.
- Maintain appropriate professional liability insurance and fidelity coverage.
- Adopt and maintain written procedures for resolving consumer complaints.
If an organization decides to take on the ALTA Best Practices there is an ALTA Best Practices Assessment Program that essentially certifies title insurance and settlement companies. These assessment procedures are rigorous and there are strict PASS/FAIL guidelines for each assessment step within each Best Practice area. Should the organization pass the Assessment Program, there is a certification package. The standard ALTA Best Practices Certification Package includes a “Best Practices Certificate,” which will detail the results of the Assessment Program and this certificate may be provided to customers and business partners to illustrate compliance with the ALTA Best Practices.
Ultimately, this program will assist lenders in assessing third-party risk equally by providing a uniform program with which all title and settlement companies will be judged, and it is quickly becoming the standard in the title insurance and settlement company industry. If your organization would like to learn more about the ALTA Best Practices or would like to learn what it takes to undergo the Assessment Program, contact Eric Wright, Shareholder at 412-973-5354 or Dan Desko, Manager at 412-697-5285.
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