What are ALTA’s “Pillars of Best Practices”?

Lately, there is a lot of discussion about the “Pillars of Best Practices” proposed by the American Land Title Association (ALTA).  What is meant by the “pillars” and what exactly are the “best practices”?

For the background of how the title insurance industry arrived at this point, please click here. Thankfully, ALTA worked with the banking industry and the regulators at the Consumer Financial Protection Bureau to avoid the expensive and invasive “vetting” companies some lenders were starting to use. Instead, ALTA came up with the concept of seven “Pillars of Best Practices” which are:

• Pillar No 1: Establish and maintain current license(s) as required to conduct the business of title insurance and settlement services.
• Pillar No. 2: Adopt and maintain appropriate written procedures and controls for escrow trust accounts allowing for electronic verification of reconciliation.
• Pillar No. 3: Adopt and maintain a written privacy and information security program to protect non-public Personal Information as required by local, state and federal law.
• Pillar No. 4: 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.
• Pillar No. 5: Adopt and maintain written procedures related to title policy production, delivery, reporting, and premium remittance.
• Pillar No. 6: Maintain appropriate professional liability insurance and fidelity coverage.
• Pillar No. 7: Adopt and maintain written procedures for resolving consumer complaints.

The Pillars of Best Practices are just the starting point. Lenders want to be sure that their settlement agents are familiar with the Pillars and, more importantly, have policies and procedures in place to carry-out each of the Pillars.

Settlement agents are encouraged to implement the Pillars of Best Practices through a written manual documenting your company’s specific policies and practices relating to each of the Pillars. That’s where Best Practices Solutions can help – we work with title companies and law firms to document their practices and procedures into a customized manual which demonstrates their adherence to the Pillars of Best Practices. Our experience, coupled with effective use of technology, allows us to efficiently prepare your manual in a fraction of the time your staff would spend preparing a manual on their own.

Several lenders are already requiring their settlement agents to produce a Best Practices Manual before handling closings. That number is growing by the day and it is anticipated that all residential lenders will require proof of “best practices” by the end of the year.

Don’t wait until your lender asks for your manual and then waste hours or days “recreating the wheel” – call us today!