Title & Escrow Companies

In April 2012, the Consumer Financial Protection Bureau (CFPB) issued Bulletin 2012-03 titled “Service Providers”. The CFPB bulletin included expectations around supervised banks and non-banks (i.e. lenders) to oversee business relationships, including compliance initiatives, with their service providers. The bulletin was meant to ensure practices were in place to meet Federal consumer financial law, which is designed to protect the interests of consumers and avoid consumer harm.

The title and escrow marketplace has been baffled on the best way to demonstrate adherence to the new CFPB guidance. Amid the fog of uncertainty, the SSAE 16 (SOC 1) audit is the prevailing compliance vehicle of choice when meeting the CFPB requirements. In response to the CFPB bulletin, many title and escrow companies have been in search of specific guidance to follow to come into compliance. One of the more popular sources of guidance has come from the American Land Title Association® (ALTA®). ALTA® has created the Title Insurance and Settlement Company Best Practices. To test compliance with these best practices, many in the title and escrow industry are using the SSAE 16 audit as the “go-to” compliance vehicle of choice.

The ALTA Best Practices Framework

The ALTA Best Practices Framework has been developed to assist lenders in satisfying their responsibility to manage third party vendors. The ALTA Best Practices Framework consists of the following seven pillars:

1. Licensing;
2. Escrow Trust Account Controls;
3. Information and Data Privacy;
4. Settlement Policies and Procedures;
5. Title Policy Production, Delivery, Reporting and Premium Remittance;
6. Professional Liability Insurance and Fidelity Coverage; and
7. Resolving Consumer Complaints.

EIC Model Policies and Procedures

In addition to ALTA Best Practices Framework, the National Affairs Committee of the Escrow Institute of California embarked upon an effort to develop the “Model Policies and Procedures”. This compliance standard is meant specifically for escrow/settlement companies and provides an overview of the legal and regulatory requirements under state and federal laws and regulations. The Model Policies and Procedures, along with the control framework to meet the requirement, may be used with any response or communication with real estate professionals, lenders, title/settlement providers, and consumers.

The EIC Model Policies and Procedures is made up of the following six sections:

1. Licensing;
2. Insurance & Bonding;
3. Personnel/Employment;
4. Trust Accounting/Funds Handling Procedure;
5. Privacy Policy; and
6. Consumer Complaints.

Conclusion

While some title and escrow companies may find these requirements mirror their existing standard operating procedures, there are many more companies that find this entire process not only daunting, but also extremely confusing. SSAE 16 Professionals has a devoted Financial Services Group to serve the needs of title and escrow companies. Our goal is to take the pain and suffering out of the audit so you can get back to what you do best – Grow Your Business.

If you missed our SSAE 16 Professional’s webinar titled “SSAE 16 Audit: CFPB Requirements for the Title & Escrow Industry”, we have included the archived version below.

Contact Us

SSAE 16 Professionals has assembled top tier leadership to help our clients through the SSAE 16 (SOC 1) and SOC 2 audits.  For further information regarding SSAE 16 reports or to request a fee proposal from SSAE 16 Professionals, please visit our Contact Us page  to submit an informational form or call 866.480.9485 today.  We look forward to hearing from you!