NORTH CAROLINA ALTA BEST PRACTICES 2.0 APPROVED ATTORNEY. Resources, Policies & Procedures

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1 NORTH CAROLINA ** ALTA BEST PRACTICES 2.0 ** APPROVED ATTORNEY Resources, Policies & Procedures February

2 HISTORY May 24, 2000 July 21, 2010 January 4, 2011 April 13, 2012 January 2, 2013 June 25, 2013 July 19, 2013 October 30, 2013 December 5, 2013 January 16, 2014 March 6, 2014 Gramm Leach Bliley privacy regulations Dodd Frank Act CFPB created $450MM budget, 1400 employees CFPB press release re supervision of providers of consumer financial products and services CFPB Bulletin Banks 5 step supervision of service providers requires effective process for managing risks ALTA announced Best Practices CFPB Bulletin self policing is responsible conduct ALTA Best Practices 2.0, Assessment Procedures & Certification Package OCC Bulletin , Risk Management Guidance Federal Reserve Board Guidance on Managing Outsourcing Risk OCC Guidelines Establishing Heightened Standards Wells Fargo announces it supports ALTA s Best Practices 3 What CFPB expects of lenders: To limit the potential for statutory or regulatory violations and related consumer harm &make sure that their business arrangements with service providers do not present unwarranted risks to consumers. STEPS (include, but are not limited to): Conducting thorough due diligence to verify that the service provider understands and is capable of complying with Federal consumer financial law; Requesting and reviewing the service provider s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact or compliance responsibilities; Including in the contract with the service provider clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance related responsibilities, including engaging in unfair, deceptive or abusive acts or practices; Establishing internal controls and ongoing monitoring to determine whether the service provider is complying with Federal consumer financial law; and Taking prompt action to address fully any problems identified through the monitoring process, including terminating the relationship where appropriate. CFPB Bulletin (April 13, 2012) 4

Summary of 7 ALTA Best Practices Best Practice 1 Licensing Best Practice 2 Escrow Trust Account Controls Best Practice 3 Information and Data Privacy Best Practice 4 Settlement Policies and

3 Summary of 7 ALTA Best Practices Best Practice 1 Licensing Best Practice 2 Escrow Trust Account Controls Best Practice 3 Information and Data Privacy Best Practice 4 Settlement Policies and Procedures Best Practice 5 Post Closing; Title Production Best Practice 6 Malpractice, Errors & Omissions and Fidelity Coverage Best Practice 7 Consumer Complaints 5 ALTA Best Practices Process FOCUS: Written policies & procedures Staff training (from receptionist to senior partner) Tracking & Monitoring Compliance laws and procedures 6

4 Wells Fargo supports ALTA's Best Practices, and considers them to be guidelines for sound business practices that should ideally already be in place for businesses providing title and closing services for our customers. We understand that for some there will be transition time needed to enhance current practices and fully implement the Best Practices. If your company is not yet following the ALTA Best Practices do you have a plan in place for adoption? If your company is already following the ALTA Best Practices do you have written policies and procedures in place to document it and inspection processes to validate it? 7 SunTrust [You] have been selected to be considered for approval as one of our lender recommended Title/Settlement agents. As you re aware, 2015 will bring many significant changes and challenges for our industry as well as changes regarding third party oversight responsibilities for lenders like SunTrust Mortgage. Attached is a list of items we will require to begin the approval process. In addition to these items ALL candidates for approval will be required to provide a ALTA best practices self evaluation. If you have questions regarding the best practices evaluation you should contact American Land Title Association: (202) or You may also contact your underwriters directly. to NC closing attorney, January

5 Misc Lenders: Secure Settlements, Inc. ( SSI ) SSI has been hired to conduct vendor management services on behalf of the mortgage lender for whom you are handling funds and documents. Firm certifies: Comply with applicable state and federal consumer protection statutes, data privacy and protection mandates Staff trained regularly in consumer protection and data privacy and security controls All hard copies files are locked file drawers No personal data is taken home Risk management policies reviewed and tested regularly 9 Where Can I Get HELP? 10

USING THE CHICAGO TITLE NORTH CAROLINA HANDBOOK &

Practice Pillar & Purpose ALTA Best Practices

Should Know Issues to Consider & Discuss Resources

& Opinions Sample Checklists Forms Sample Policies

7 USING THE CHICAGO TITLE NORTH CAROLINA HANDBOOK & WEBSITE Each Best Practice Page Includes: ALTA Best Practice Pillar & Purpose ALTA Best Practices Resources & Documentation NC Attorneys: What You Should Know Issues to Consider & Discuss Resources Articles, Contacts, Websites, Statutes, Ethics Rules & Opinions Sample Checklists Forms Sample Policies and Procedures

8 titleblawg.blogspot.com 15 ecpurchasing.com 16

9 Tools: ALTA Membership for Attorneys 17 Where are you and your firm with the Best Practices? Take our Questionnaire to find out if you are on the road to Best Practices compliance. SHARE YOUR SUCCESSES! 18

10 Tools: Questionnaire 19 North Carolina Attorney Best Practices Task Force NC Bar Assoc. Real Property Section (RPS) Real Estate Lawyers Assoc. of NC (RELANC) NC Land Title Assoc. (NCLTA) 20

11 LICENSING Establish and maintain current license(s) as required to conduct settlement services. 21 Best Practice 1: Licensing Law Licenses (www.

11 11 LICENSING Establish and maintain current license(s) as required to conduct settlement services. 21 Best Practice 1: Licensing Law Licenses ( Directories Business Licenses / Filings Secretary of State Department of Revenue State Bar Local Notary Commissions Paralegal Certifications 22

12 2 TRUST ACCOUNT CONTROLS Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation. 23 Trust Accounting Tips Controls & Procedures e file Segregation of Duties MUST be in place List of accounts, authorized signers, ACH block, international wire block Positive Pay Reconciliation must include: complete reconciliation daily 2 way/daily and monthly 3 way reconciliation exception summary with explanation outstanding item checklist deposit in transit bank statement(s) transaction reports trial balance Sequential list of checks (including voided ) approval document Management must review, address issues and approve Document who, what, when, where and how 24

13 GENERAL LEDGER/ CHECKBOOK REGISTER BALANCE: $ 0 3 WAY RECONCILIATION Statement Ending Balance: $666, LESS: Checks not cleared: $666, BALANCE: $ 0 BANK STATEMENT CLIENT / CLOSING LEDGERS 25 Best Practice #2: Procedures to meet this best practice Escrow Trust Accounts are reconciled. DAILY: receipts and disbursements MONTHLY, if not daily: 3 Way Management Review Imbalances or open issues corrected. Outstanding file balances are documented. 26

14 Tools: NC State Bar Trust Account Reconciliation Sheet 27 3 INFORMATION & DATA PRIVACY Adopt and maintain a written privacy and information security program to protect Non public Personal Information as required by local, state and federal law. 28

29 NC Data Breach Notification Law: GS 75 60, Identity Theft Protection Act Person's first name/initial + last name + identifying information:

(3) Checking account numbers. (4) Savings account numbers. (5) Credit card numbers. (6) Debit card numbers.

NOT public or governmental directory (8) Electronic identification numbers, electronic mail names or addresses, Internet account numbers, or

15 29 NC Data Breach Notification Law: GS 75 60, Identity Theft Protection Act Person's first name/initial + last name + identifying information: (1) Social security or employer taxpayer identification numbers. (2) Drivers license, State identification card, or passport numbers. (3) Checking account numbers. (4) Savings account numbers. (5) Credit card numbers. (6) Debit card numbers. (7) Personal Identification (PIN) Code as defined in G.S (6). NOT public or governmental directory (8) Electronic identification numbers, electronic mail names or addresses, Internet account numbers, or Internet identification names. (9) Digital signatures. (10) Any other numbers or information that can be used to access a person's financial resources. (11) Biometric data. (12) Fingerprints. (13) Passwords. (14) Parent's legal surname prior to marriage. 30

NC Data Breach Notification Law: GS 75 60, Identity Theft Protection Act LEGAL RESPONSIBILITIES PREVENT BREACH: Implement/follow policies & procedures: Burn or shred paper Destroy or erase electronic

16 NC Data Breach Notification Law: GS 75 60, Identity Theft Protection Act LEGAL RESPONSIBILITIES PREVENT BREACH: Implement/follow policies & procedures: Burn or shred paper Destroy or erase electronic / non paper media Publicize policies & procedures Monitor third party providers: Independent review of disposal business Trade association, references or reliable sources TRAINING, SUPERVISION & MONITORING OF ALL EMPLOYEES 31 NC Data Breach Notification Law: GS 75 60, Identity Theft Protection Act LEGAL RESPONSIBILITIES IF POSSIBLE BREACH: 1. Notification to all potentially affected in case of breach (statutory form GS 75 65) 2. Notification to NCAG 3. Potential criminal liability, Classes E, F or G 4. Restitution of financial loss 5. Damages Great of: $500 $5,000 penalty 3X actual damages 32

4 SETTLEMENT POLICIES & PROCEDURES Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial

17 4 SETTLEMENT POLICIES & PROCEDURES 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. 33 Closing and Recording Parties Notaries Legal descriptions Authority documents Entities Estates Trusts Minors e Recording 34

18 Recording Comply with Good Funds Settlement Act! 35 The new Integrated Disclosure is COMING! Are you and your staff getting the training you need? 36

37 Post closing Submit final title opinions, documents and premiums ASAP to assure policies

19 5 POST-CLOSING; TITLE PRODUCTION Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance. 37 Post closing Submit final title opinions, documents and premiums ASAP to assure policies can issue within 30 days following closing. Follow up to obtain recorded satisfactions of paid items: Deeds of trust Judgments Taxes 38

20 RE QUIRE Tracking Services Corporate Woods Dr., Suite 225 Virginia Beach VA RS Release Tracking 2765 E. Eldorado Pkwy Little Elm, TX 39 6 MALPRACTICE, E&O & FIDELITY COVERAGE Maintain appropriate professional liability insurance and fidelity coverage. 40

21 Malpractice E&O for independent searchers Fidelity Bonds Cyber coverage 41 7 CONSUMER COMPLAINTS Adopt and maintain written procedures for resolving consumer complaints. 42

Consumer complaints Standard consumer complaint form

to a specific transaction understand the nature and

Single point of contact ( Contact Us ) Management

Procedures for forwarding to appropriate personnel.

22 Consumer complaints Standard consumer complaint form with sufficient information to: connect the complaint to a specific transaction understand the nature and scope of the complaint. Single point of contact ( Contact Us ) Management oversight. Procedures for forwarding to appropriate personnel. Maintain a log Resolution. TRAINING TRAINING TRAINING!!! 43 GO TO: Get started today!! 44

NORTH CAROLINA ALTA BEST PRACTICES 2.0 APPROVED ATTORNEY. Resources, Policies & Procedures. February 2015

NORTH CAROLINA ** ALTA BEST PRACTICES 2.0 ** APPROVED ATTORNEY Resources, Policies & Procedures February 2015 1 2 HISTORY www.northcarolina.ctt.com/bestpractices/resources.asp May 24, 2000 July 21, 2010