ALTA's Best Practices Maturity Model is a resource to help companies identify areas of their policies and procedures that can be enhanced to better meet the Best Practices.
To use the Maturity Model, a company must first undergo a Best Practices assessment that tests the company’s policies and procedures to the ALTA Title Insurance and Settlement Company Best Practices and the Best Practices Assessment Procedures. The Maturity Model in no way changes the work that must be performed as part of the Best Practices assessment. Rather, the Maturity Model offers an alternative method of reporting the results of a Best Practices assessment.
After the company undergoes a Best Practices assessment, the company may plot its assessment results on the Maturity Model. Rather than focusing on a pass or fail designation, the Maturity Model features a spectrum of compliance levels that range from having no policies and procedures in place (“Ad Hoc”) to having policies and procedures that are fully compliant with the ALTA Best Practices (“Optimized”).
The Maturity Model allows companies to determine how their procedures measure against the ALTA Best Practices. If a company is fully compliant with the Best Practices, it should be in the “Optimized” category of the Maturity Model for each Best Practice. Using the Maturity Model as an assessment report helps companies identify ways to improve their policies and procedures to meet the Best Practices.
To learn more about the different compliance levels featured within the Maturity Model, check out the graphic below:
You may view Maturity Model and its accompanying Maturity Model Explainer, which details how to use this new tool, by visiting www.alta.org/bestpractices. As a reminder, the Best Practices Maturity Model is subject to an open comment period that closes on Friday, July 29, 2016. You may submit comments or feedback to firstname.lastname@example.org.
Defect, fraud and misrepresentation risk is falling across the United States, and decreasing to very low levels in some markets, according to First American’s latest Loan Application Defect Index.
Data shows that the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications decreased 1.4 percent in September as compared with August. Since last year, the defect index has decreased by 14.8 percent.
“The widespread implementation of data- and technology-enabled loan manufacturing processes is benefiting consumers across the country,” says Chief Economist Mark Fleming. “The mortgage finance industry continues to improve, producing loans with fewer defects and producing those loans right the first time.”
According to Fleming, more data-driven evidence is mounting that the Millennial first-time homebuyer is playing an increasingly important role in the housing and mortgage finance markets.
“The market is in transition toward a greater volume of riskier purchase loans, away from a market dominated by lower risk refinance loans,” Fleming added. “Yet, overall the defect index continues to decline, which is a testament to the effort the mortgage finance industry is making to improve the loan production process.”
The Defect Index reflects estimated mortgage loan defect rates over time, by geography and by loan type. It’s available as an interactive tool that can be tailored to showcase trends by category, including amortization type, lien position, loan purpose, property and transaction types, as well as state and market comparisons of mortgage loan defect levels.
The five states with the highest year-over-year increase in defect frequency are
The five states with the highest year-over-year decrease in defect frequency are
With so many consumers obtaining information on their phones and through social media, make sure to take advantage of the member-exclusive content provided by ALTA in the Hombuyer Guide. The guide includes nearly 70 items that title professionals can use to explain the benefits of title insurance.
One in three targeted cyberattacks over the past 12 months results in a security breach, according a new survey from Accenture.
Despite this alarming number of incidents, 75 percent of respondents were “confident” they were doing the right things with their security strategies, and a similar number said security is “completely embedded” in their cultures, with support from the highest-level executives. Disconnect between the number of incidents and feeling confident about security strategies, according to Accenture, highlights the need for a “reboot” and for companies to “embrace an end-to-end approach to recognizing threats and minimizing exposure.
In the report titled "Building Confidence: Facing the Cybersecurity Conundrum," Accenture surveyed 2,000 enterprise security practitioners representing companies with annual revenues of $1 billion or more in 15 countries about their perceptions of cyber risks, the effectiveness of current security efforts and the adequacy of existing investments. The survey reveals that the length of time taken to detect these security breaches often compounds the problem, as more than half of executives (51 percent) disclose that it takes months to detect sophisticated breaches, and as many as a third of all successful breaches are not discovered at all by the security team.
“Cyberattacks are a constant operational reality across every industry today and our survey reveals that catching criminal behavior requires more than the best practices and perspectives of the past,” said Kevin Richards, managing director, Accenture Security, North America. “There needs to be a fundamentally different approach to security protection starting with identifying and prioritizing key company assets across the entire value chain. It is also clear that the need for organizations to take a comprehensive end-to-end approach to digital security—one that integrates cyber defense deeply into the enterprise—has never been greater.”
Additionally, the survey found that internal security teams discover only 65 percent of effective breaches, with employees, law enforcement and “white hats” (e.g., “ethical” hackers) finding most of the rest.
Part of the security challenge is prioritizing where to focus resources to effectively protect the organization. More than 50 percent of survey respondents say internal breaches made by malicious insiders have the greatest cybersecurity impact. Even so, two out of three respondents say they lack confidence in their organizations’ abilities to monitor internally for breach activities.
During ALTA ONE earlier this month, two member companies were recognized for their creative use of the Homebuyer Outreach Program (HOP).
HOP was developed to help ALTA members easily communicate the benefits of owner’s title insurance with homebuyers, real estate agents and others.
Receiving a complimentary registration to ALTA ONE was Boone Central Title Company in Columbia, Mo.
Inspired by the force-field flyer in the HOP material and the animated movie Incredibles, Boone Title developed a “Protectables” theme and created a flyer telling homebuyers that the company is the protective shield for Missouri’s property rights. The company also held an open house where employees put on three separate skits that represented their processes of research, closing and policy using the “Protectable” theme.” Because of their efforts using the HOP material, the company was recognized as a finalist for Small Business of the Year in Columbia.
Also recognized and receiving a free registration to one of ALTA’s 2017 Innovation Boot Camps was Olympic Peninsula Title in Port Angeles, Wash. Olympic Title used the We Are ALTA Manifesto as inspiration for a radio advertisement that ran in their market. You can listen to Olympic Peninsula Title's ad here:
During the unveiling of ALTA ONE—the association’s new live-event experience—attendees received $1 bills. Pointing to the words “E Pluribus Unum” on the dollar bill, ALTA CEO Michelle Korsmo said that as a group the industry is strong and as one united association “we stand tall and resilient, and most importantly, we succeed when and because we work together.”
She continued by saying that others can benefit as well by the title industry coming together as ONE.
“Many of you have favorite charities where you spend your time and your money. Giving to food banks is one way to make a big different in a person’s life,” Korsmo said.
With more than 1,100 attendees (which sets an all-time record for ALTA meetings), a total of $1,902 was donated. The donation will help the food bank provide 13,314 meals for individuals and families struggling with hunger during the holidays and beyond. Kerri Cole, corporate giving officer at St. Mary’s, thanked ALTA and its members for the support.
As the world’s first food bank, St. Mary’s Food Bank partners with nearly 500 agencies to distribute 250,000 meals to individuals and families every day.
St. Mary's Food Bank
Since rolling out the TILA-RESPA Integrated Disclosures (TRID) rule, the Consumer Financial Protection Bureau has said the goal of the new mortgage disclosures was to make the process of getting a mortgage is easier and to help consumers understand the key features, costs and risks of a loan.
When the CFPB proposed its amendments to the rule in July, bureau Director Richard Cordray reinforced this message saying the “rules are designed to make sure consumers have the information they need, in a form they can easily understand and use, before making the decision.”
Unfortunately, results of an online consumer survey conducted by ALTA over the summer reveal the CFPB’s mortgage disclosures are not meeting this objective and working as intended. In July, ALTA partnered with Survata, a leading national research firm that works with Fortune 500 companies on obtaining consumer opinions, to collect data on consumer’s experience around shopping for title insurance and the TRID disclosures. Those surveyed included 2,000 current (93 percent) and prospective homeowners (7 percent)—those who planned to purchase a home in the next year. Of the current homeowners who were surveyed, more than 61 percent were owners for more than a decade, while 18 percent were in their home between five and 10 years. Newer homeowners (less than five years) made up 20 percent of those surveyed.
The survey posed 14 questions about preferences for learning about title insurance. During the survey, consumers were shown compliant Closing Disclosures, which displayed title insurance premiums according to the CFPB's rule. Respondents were then informed of the actual cost of title insurance. The survey measured their reactions.
The data showed that a plurality of the people surveyed find the rule confusing and deceptive. After showing the CFPB’s disclosures and presented with the true cost of title insurance, the most popular response from consumers at 31 percent was “I’m confused.” While this confusion is disconcerting, it is not the most troubling finding from the survey. The most disconcerting data point is that 10 percent of consumers felt that they were being taken advantage of by not being told the true cost of title insurance on the disclosure.
“Frankly, this is 10 percent too many,” said Michelle Korsmo, ALTA’s chief executive officer. “The purpose of the CFPB is to protect consumers by ensuring markets are fair, transparent and competitive. However, the bureau’s decision to require the inaccurate disclosure of title premiums is having the opposite effect and is not providing consumers understandable information to help them make responsible decisions about financial transactions.”
Meanwhile, roughly 27 percent of respondents felt that the CFPB disclosure was positive because it was good to know the marginal cost of buying an owner's policy.
ALTA has informed the CFPB that amending the Official Interpretations for §1026.37(f)(2), §1026.37(g)(4) and §1026.38(g)(4) is the best way to correct the rule and allow title insurance fees to be disclosed the same way as every other fee.
The survey also asked consumers to rank the factors they care about when trying to understand their transaction. Topping the results was getting a detailed breakdown of all the costs for a service, followed by the ability to easily compare estimates to final figures and comparing the disclosure to the actual costs. At the bottom of the rankings is providing marginal cost of optional products and seeing bottom-line amounts like cash-to-close.
“These findings show that consumers would find more value in the mortgage disclosures if they showed accurate costs for title insurance instead of the incremental costs,” Korsmo said.
Additionally, survey results reinforced the continued need to educate consumers about the benefits of title insurance earlier in the transaction. More than half of those surveyed indicated they either received information about title insurance at the closing table or didn’t know about the product.
“ALTA members must remain committed to educating consumers about how title insurance provides peace of mind by protecting their property rights,” Korsmo said. “An equal commitment from the Bureau is needed to ensure that confusion over the price of title insurance does not undercut these efforts.”
ALTA created the Homebuyer Guide to help members easily communicate the benefit of owner’s title insurance. The Homebuyer Guide includes more than 60 marketing resources available for direct-to-consumer communication. These materials are available exclusively to members.
In this post, we focus on how you can use the various marketing one-pagers that are available. These can be given to consumers and business partners:
When to Use: Closing agents can use this with the “Why Every Homebuyer Needs Owner’s Title Insurance” PowerPoint. It can also be displayed at the closing office.
When to Use: This one-pager can be displayed at the closing or real estate office, or used in a homebuyer meeting at any point in the process. The earlier in the purchasing process, the better.
When to Use: This one-pager can be displayed in the closing office or real estate office, and be provided as a value-added resource when meeting with homebuyers in person.
When to Use: This one-pager can be shared at team trainings or one-on-one meetings.
When to Use: Title professionals should share this with their real estate agent partners, or real estate agents can share it with their colleagues to better equip them to talk about owner’s title insurance with homebuyer clients.
Click here to view all the material available in the Homebuyer Guide.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) verbally provided on Sept. 7 answers to frequently asked questions by title companies on compliance with the Geographic Targeting Order (GTO). These questions were selected from those asked during webinars hosted by ALTA and the California, New York and Texas land title associations. For questions about specific transactions, ALTA and FinCEN recommend calling the FinCEN Resource Center at 800-767-2825. Most transaction specific questions are answered within one to two business days.
Q – Multiple buyers. If a purchase is being made by an individual buyer and a corporate entity as tenants in common and would otherwise meet the GTO thresholds is it a covered transaction? Does this answer change if the legal entities portion of the equity in the real estate is less than the reporting threshold?
A – Yes it is a covered transaction. The GTO defines a covered transaction as one in which a legal entity is involved in any manner as a purchaser or real estate in a covered location at or above the covered price. This is true even if the legal entity will own a minority or de minimis stake in the property.
Q – Business Trusts. Is a business trust considered legal entities for purposes of the GTO?
A – No. All trusts, no matter the purpose, are outside the definition of a legal entity under the GTO. The type of trustee, individual or corporate, does not change this result.
Q - Refunded checks/deposits. If an entity pays their earnest money in a business check but this check is not deposited and later returned to the purchaser who then wires the entirety of the purchase price at closing is this a covered transaction?
A – Yes. If a one of the covered payment methods (checks, money orders, cash) is used as part of the transaction by any of the parties then it is covered by the GTO. This includes situations where those funds are later refunded and the entirety of the purchase price is wired.
Q - 1031 exchanges. Does the GTO cover residential properties that are obtained as part of a 1031?
A – Yes. The mere fact it’s a 1031 transaction does not impact the determination on whether a transaction is covered by the GTO.
Q – Vacant lots. Does the GTO cover the purchase of a vacant lot? What if it is going to be used in the construction of a home?
A – It depends. The answer hinges on whether the vacant land would be considered residential under the GTO definition. A good rule of thumb is to consider whether the sale would be covered by TILA or RESPA (requiring the issuance of TRID forms) if it was being purchased using a loan. As a reminder, if you have a question about a specific transaction, it is best to reach out to FinCEN directly for guidance.
Click here for more information about the GTOs.
If you have additional questions about FinCEN and the GTO, you may email Steve Gottheim, ALTA’s senior counsel.