All You Wanted To Know (or didn t) About Audits

Transcription

1 All You Wanted To Know (or didn t) About Audits Tate Wyatt, Agency Auditor Katy Albrecht, Agency Representative

2 Why Audit? Title Insurers Act to 44-19,105 Reduce Risk and Exposure Preventative Maintenance/Well Check Marketability 2

3 Why Audit? 3

4 Why Audit? 4

5 What Do We Audit? Escrow Account Is a Three-Way Reconciliation performed monthly? Book Balance, Bank Balance and Trial Balance must all equal Why does a file have a negative balance? If so, has the file been funded? Are all deposits made before disbursing funds? Are all escrow accounts properly identified, i.e. Escrow/Premium/Recording? Are there an excessive amount of outstanding checks and retained funds? Are escrow duties segregated to the best capabilities of the agency? Are safeguards to block or prevent ACH debits/credits and international wires set? 5

6 What Do We Audit? Inventory Can the underwriter account for all policy numbers assigned to the agent? Are policies reported in a timely manner to the underwriter? 6

7 What Do We Audit File Content Are underwriting guidelines followed? Are copies of all pertinent information kept in the file? Files examined during the review should at the minimum include the following documents: a. Title Policy b. Title Commitment c. Copy of recorded Deed and Deed of Trust (Page with time stamp, legal description and signature page only) d. Signed Seller & Buyer/Borrower/Consumer affidavits. e. Copies of any documents required on the Commitment, i.e. Trust Certifications, operating agreements, etc. f. Escrow instructions (sales contract, lender s instructions, etc.) g. Signed ALTA Settlement Statement or similar form that your agency uses and signed Closing Disclosure Form (Seller and Consumer CDF). All statements applicable to the closing must be in file. h. Receipts and Disbursements page i. Copy of the check(s) or wire confirmation(s) for all funds from parties to the transaction j. Copy of mortgage payoff letter and/or recorded Deed of Trust. k. Title examination or search sheet l. Date of delivery of final policy to the insured 7

8 What Do We Audit File Content Retention Requirements 15 years Title Insurance 10 Years Escrow Pursuant to 210 Neb. Admin. Code

9 What Do We Audit Forms Do the forms used by the agent match the form filed with the Nebraska Department of Insurance by the underwriter? Commitments, Policies, Endorsements, Closing Protections Letters, Standard Exceptions Nebraska Statute

10 What Do We Audit Policies and Procedures Are policies and procedures set forth by the underwriter followed? i.e. agency agreement, agency manual, underwriting guidelines / bulletins. Are Nebraska State Statutes and Directives set forth by the Department of Insurance followed? Licensed Agents Nebraska Statute (4) Within thirty days after executing or terminating a contract with a title insurance agent, a title insurer shall provide written notification of the appointment or termination and the reason for termination to the director. Notices of appointment of a title insurance agent shall be made on a form prescribed or approved by the director. (6) A title insurer shall have on file proof that each title insurance agent is licensed by this state. Contact your underwriter when a licensed employee is hired or the employee is no longer employed. Your underwriter will need their date of birth to appoint or terminate. 10

11 Audit Tools Nebraska Title Insurer s Statutory Onsite Review Report Pursuant to Neb. Rev. Stat (3) and 210 Neb. Admin. Code to Note: If the insurer s onsite review indicates the title insurance agency is deficient in any of the areas listed in 210 Neb. Admin. Code to , the insurer shall notify the Department within five (5) business days if the agency has not remedied or cannot remedy the deficiency within that time as required by 210 Neb. Admin. Code

12 Audit Tools Agency Agreement Duties of title insurers utilizing the services of title insurance agents; liability. (1) A title insurer shall not accept title insurance business from a title insurance agent unless there is in force a written contract between the parties which sets forth the responsibilities of each party and, when both parties share responsibility for a particular function, specifies the division of responsibilities ,114. Required provisions of underwriting contract with title insurer. (1) A person, firm, association, or corporation acting in the capacity of a title insurance agent shall not place title insurance business with a title insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party and, when both parties share responsibility for a particular function, specifies the division of such responsibilities subject to the requirements of subsections (2) through (16) of this section. 12

13 Audit Tools ALTA Best Practices 1. Establish and maintain appropriate licenses as required to conduct title business 2. Adopt and maintain appropriate written procedures and controls of Escrow Trust Accounts allowing for electronic verification of reconciliation. 3. Adopt and maintain a written privacy and information security program to protect non-public personal information as required by local, state and federal law 4. 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. 5. Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance. 6. Maintain appropriate professional liability insurance and fidelity coverage. 7. Adopt and maintain written procedures for resolving consumer complaints. 13

14 Audit Tools NDOI Bulletins 14

15 Audit Tools Underwriting Memos & Directives 15

16 How To Ace Your Audit! Reconcile and examine your escrow account monthly a. Ensure book balance, bank balance and trial balance match. b. Research negative file balances and fund accordingly. c. Determine why there are retained funds in a file and make notes. d. Determine why a deposit or check is still outstanding. e. Escheat funds to the state is accordance with Nebraska Statutes. Note: A file with a negative balance must be funded immediately by the agent. An agent can then collect reimbursement from the respective party. 16

17 How To Ace Your Audit! Compare your forms to the forms filed by your underwriter(s) Forms may differ from underwriter to underwriter Software updates have caused forms to be out of compliance Report and Remit premiums due to your underwriter(s) within the parameters set out in your agency agreement. Conduct your own file reviews periodically throughout the year. Address the required actions and recommendations made by the auditor at your annual audit. 17

18 How To Ace Your Audit! Questions? Thank you! 18