ALTA Best Practice #6

ALTA Best Practice #6 is Maintaining the correct professional insurance and fidelity bond coverage.

The correct levels of professional insurance and fidelity coverage allow for companies and settlement companies to maintain the financial capacity to guarantee their professional services.  In some states laws have been created which require a certain level of professional insurance and fidelity coverage, as well as errors or omissions insurance and surety bonds.  This could also be found in some insurance underwriting agreements.

Your agency should keep up to date with all professional liability insurance and errors and omissions insurance

Make sure your company follows state laws and obligations of insurance underwriting agreements by having the correct levels of professional insurance, fidelity coverage, errors and omissions insurance and surety bonds.

Learntitle has worked with Streamline consulting to develop a continuing education course that explains all of the ALTA Best Practices.  Click here to enroll and learn more.

ALTA Best Practice #6

ALTA Best Practice #5

Alta Best Practice #5 deals with Policy Production. It says:

Keep up to date procedures regarding title policy production, delivery, reporting and premium remittance.

The reason for this is to Eestablish and keep up to date procedures for the production, delivery, reporting and remittance of title insurance policies which will allow title companies to meet all legal and contractural obligations.

Steps for achieving compliance with Best practice #5

1. All title insurance policies are issued and delivered to clients in a timely manner, within 30 days of the date of settlement, in order to meet state, regulatory and contractual obligations.

2. Title insurance policies are ALWAYS reported and remitted to an underwriter in a timely fashion, in order to satisfy state, regulatory and contractual obligations.

3. You must report and remit policies to an underwriter, with copies, the last day of the month after the settlement of an insured transaction.

Learntitle has collaborated with Streamline Consulting to develope an overview of all the Best Practices. We expect that course to be available soon for continuing education credit.

ALTA Best Practice #5

ALTA Best Practice #3: Protecting NPI

This particular Best Practice seems to be creating the most buzz. What exactly is NPI? What is the best way to protect it? What is it going to take to be compliant? What are your thoughts.

Non-public Personal Information (NPI)

Personally identifiable data, for example: information provided by a customer on a form or application, information about a customer’s transactions, or any other information about a customer which is otherwise unavailable to the general public. NPI includes first name or first initial and last name coupled with any of the following: Social Security Number, driver’s license number, state-issued ID number, credit card number, debit card number, or other financial account numbers.

Best Practice

Adopt and maintain a written privacy and information security program to protect NPI as required by law.

Reason

Federal and state laws require title companies to develop a written information security program that explains how NPI is protected.

For more information about all the ALTA Best Practices and also 1 credit of title insurance continuing education, enroll in the ALTA Best Practice course at Learntitle. Click Here to Enroll

ALTA Best Practice #3: Protecting NPI

Alta Best Practice #2

This is the second installment of ALTA Best Practices.  It concerns Escrow Accounting.

Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.

Purpose: Appropriate and effective escrow controls and staff training help title and settlement companies meet client and legal requirements for the safeguarding of client funds. These procedures help ensure accuracy and minimize the exposure to loss of client funds. Settlement companies may engage outside contractors to conduct segregation of trust accounting duties.

Procedures to meet this best practice:

• Escrow funds and operating accounts are separately maintained.
  
  
  
  • Escrow funds or other funds the Company maintains under a fiduciary duty to another are not commingled with the Company’s operating account or an employee or manager’s personal account.
  
  
  
  


• Escrow Trust Accounts are prepared with Trial Balances.
  
  
  
  • On at least a monthly basis, Escrow Trust Accounts are prepared with Trial Balances (“Three-Way Reconciliation”), listing all open escrow balances.
  
  
  
  


• Escrow Trust Accounts are reconciled.
  
  
  
  • On at least a daily basis, reconciliation of the receipts and disbursements of the Escrow Trust Account is performed
  
  
  • On at least a monthly basis, a Three-Way Reconciliation is performed reconciling the bank statement, check book and Trial Balances.
  
  
  • Segregation of duties is in place to help ensure the reliability of the reconciliation and reconciliations are conducted by someone other than those with signing authority.
  
  
  • Results of the reconciliation are reviewed by management and are accessible electronically by the Company’s contracted underwriter(s).
  
  
  
  


• Escrow Trust Accounts are properly identified.
  
  
  
  • Accounts are identified as “escrow” or “trust” accounts. Appropriate identification appears on all account-related documentation including bank statements, bank agreements, disbursement checks and deposit tickets.
  
  
  
  


• Outstanding file balances are documented.


• Transactions are conducted by authorized employees only.
  
  
  
  • Only those employees whose authority has been defined to authorize bank transactions may do so. Appropriate authorization levels are set by the Company and reviewed for updates annually. Former employees are immediately deleted as listed signatories on all bank accounts.
  
  
  
  


• Unless directed by the beneficial owner, Escrow Trust Accounts are maintained in Federally Insured Financial Institutions.


• Utilize Positive Pay or Reverse Positive Pay, Automated Clearing House blocks and international wire blocks, if available.
  
  
  
  • Background Checks are completed in the hiring process. At least every three years, obtain Background Checks going back five years for all employees who have access to customer funds.
  
  
  
  

Ongoing training is conducted for employees in management of escrow funds and escrow accounting

Alta Best Practice #2

N.J. District Court Upholds FTC Authority to Regulate Data Security

A decision by the U.S. District Court for the District of New Jersey upheld the Federal Trade Commission’s authority to regulate data security practices.

This is directly related to ALTA Best Practice #3 about Non Public Information.

The court denied Wyndham Worldwide Corporation’s motion to dismiss challenging the FTC’s authority to pursue unfair and deceptive trade practices claims arising from a cyber breach.

The FTC sued Wyndham and three subsidiaries in 2012 after hackers from Russia allegedly broke into its computer network and property management systems from 2008 to 2010. The hackers allegedly stole names, Social Security numbers and account numbers of over half a million of consumers. Fraudulent charges on the compromised accounts totaled over $10 million.

The commission alleged that Wyndham failed to employ reasonable data-security measures to protect the information from theft. It alleged there were several information-security problems at Wyndham hotels, including wrongly configured software, weak passwords and insecure computer servers. The complaint also said that Wyndham’s published online privacy policy was “deceptive.”

Is your information secure?

N.J. District Court Upholds FTC Authority to Regulate Data Security

ALTA Best Practice #1 - Licenses

Over the next few weeks I will be discussing the ALTA Best Practices.  #1 is about licensing.

– Title Agent or Producer license or registration or any other business licensing requirement as by state law, or a license to practice law , where applicable.

Best Practice

– Establish and maintain all current licenses that are required to conduct title and insurance settlement services business.

Reason

– Keeping up to date with all applicable state mandated licenses and corporate registrations, helps to establish and maintain a healthy and happy relationship between your company and the state.

For more information about ALTA Best Practices, take Learntitle’s Ethics course.  Enroll Here.

ALTA Best Practice #1 - Licenses