Mortgage Compliance Considerations That Title Agents Should Know



VIEW BLOG: Questions about eligibility for a mortgage can be a significant cost to the lender and / or provider, regardless of whether the loan is insured.

Lenders tend to work indirectly in an attempt to fix issues that are already being addressed by the relevant underwriter or title agent. This is one of the reasons it is important to attract a good title agent throughout the mortgage process as it ensures a smooth closure and helps reduce stress while giving the lender and investor peace of mind.

The job of the title agent is to ensure that the lender’s and borrower’s investments are protected and each credit situation is taken into account, i.e. the proper title deeds and insurance coverage are purchased. This will ultimately protect the investment from any losses that might arise from hidden defects in ownership. Therefore, it is extremely important that the title agent has a scalable ecosystem that can absorb and keep up with ever-evolving processes.

Many of these measures are initiated by industry bodies such as the American Land Title Association (ALTA) and regulatory bodies such as the Consumer Financial Protection Bureau (CFPB).

ALTA and CFPB are committed to minimizing compliance risk and helping companies adapt to a safer environment.

There are several important practices that title agents should consider with regard to mortgage and / or maintenance compliance requirements.

Support for current and updated licenses

It is essential that all title agents have the necessary insurance, company registration and other licenses as required by their state. They are also required to comply with the ALTA Policy Forms licensing rules to ensure a good reputation in the jurisdiction in which they operate.

Securing all escrow trust accounts

Title agents must have adequate controls for escrow and trust accounts. This means that accounts must have a tab that can easily provide quick and efficient daily reconciliation. In addition to these best practices, every agent, as well as any employee responsible for processing funds, must undergo regular background checks to ensure that escrow funds are safe.

Privacy protection

Protecting confidential consumer information is one of the top regulatory compliance priorities in the title industry, as in any other industry. All best practices require a written privacy and information security program to protect non-public personal information. Legal agents are encouraged to develop a single national standard to uniformly and consistently protect consumer privacy while maintaining an effective home buying and selling experience.

Only authorized employees who have passed background checks should have access to restricted information. Legal agents as well as lenders are required to ensure that the personal data of consumers and investors remains safe.

Ensuring proper documentation recording procedure

Lenders rely on front-line agents to provide closure services with clear and written procedures that comply with federal state and local guidelines and requirements for the closure and settlement process. This includes checking that the records to be recorded are properly prepared and sent to the appropriate district registrar in a timely manner. In addition, title agents must ensure that documents are correctly recorded, respond promptly to rejections, and resolve issues arising from gaps.

Another requirement that title agents must fulfill for their creditor clients is to verify the compliance of third parties and suppliers they engage in the closure process, to verify that notaries are properly licensed and have the necessary insurance and collateral to cover their services.

ALTA has advised on best practice that requires written procedures for the production and delivery of title insurance policies, and for the dispatch of premiums to insurers. Some of these include the time frame for the issuance and delivery of the title insurance policy to the client, which should be reported to the insurer, the time frame for the transfer of premiums to the insurer, etc.

Handling consumer complaints

It is imperative that front-line agents have proper processes for handling consumer complaints and resolving them. This means that agents will have to establish appropriate procedures so that the relevant employees are aware of complaints. Once this is done, the specific person charged with the complaint should become the contact person until the issue is resolved.

Lenders need to find a title agent who complies with applicable laws and regulations and follows appropriate procedures. By partnering with a compliance-driven title company, lenders can protect their customers’ information and minimize the potential risks associated with their transactions.

Finally, when choosing a service provider, it is important to choose someone who is susceptible to growing cyber fraud. They must take into account practices, culture and certifications that increase the security levels of data and personnel.

Dinesh Valeha leads the strategy and sales department and also manages customer relations in FUGO, provider of title and settlement services


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