ALTA 2014 National Update

1. ALTA 2014 National Update Peter J. Birnbaum Treasurer - ALTA President and Chief Executive Officer Attorneys’ Title Guaranty Fund, Inc. (312) 372-4375 pjb@atgf.com

2. Agenda • Best Practices • Integrated Mortgage Disclosures • Improving the Closing Process • Advocacy Priorities • ALTA News • Messaging Campaign

3. ALTA Primer • 107 years old • Governed by 11 member board of AGENTS and UNDERWRITERS • Creates our policy forms and endorsements • Provides Educational Resources • Advocacy • ALTA IS about YOU and your business!

4. Market Forces • Federal Regulators Remind Lenders of Their Liability • CFPB Enforcement Actions • The Message • Lenders are responsible and liable for acts of third party providers that harm consumers

5. Best Practices • ALTA Response to Market Demands • Best Practices Framework • Title Insurance and Settlement Company Best Practices • Assessment Readiness Guides • Assessment Procedures • Certification Package • Policy and Procedures Creation Guidance www.alta.org/bestpractices

6. Best Practices • Title Insurance and Settlement Company Best Practices • Establish and Maintain Current License(s) as Required • Written Procedures and Controls for Escrow Trust Accounts • Written Privacy and Information Security Program to Protect Non-Public Personal Information • Adopt Written Policies Ensuring Compliance with Federal and State Consumer Financial Laws (recording and pricing procedures as applicable) • Adopt Written Procedures Related to Policy Production, Delivery, Reporting and Premium Remittance • Maintain Appropriate Professional Liability Insurance and Fidelity Coverage • Adopt and Maintain Written Procedures for Resolving Consumer Complaints

7. Best Practices • ALTA Board Motion • Encourages members to complete self assessment no later than September 2014 • Assessment Readiness Guides • Exclusively available to ALTA member • Separate guide available for each pillar • Take ownership of your future

8. Creation Guide • Policies & Procedures Creation Guide • Detailed instructions and tips on how to draft policies and procedures that fit a company’s practices • Example of what written policies and procedures should look like • Policy and procedure template • Important for each company to craft own policies and procedures as cookie-cutter policies not helpful • Member benefit

9. Lender Support • Wells Fargo Endorsement • Letter to its settlement agents network: “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.” • Wells said implementation can help companies prepare and be recognized as a top performer

10. Best Practices • Develop Elite Provider Program • Help title and settlement companies implement the Best Practices For more information, go to www.alta.org/bestpractices

11. Best Practices Why You Should Implement Now

12. Integrated Disclosures • Dodd-Frank Act • Created Consumer Financial Protection Bureau • Purpose: “Protect consumers by carrying out Federal consumer financial laws.” • Mandate on RESPA/TILA disclosures • Replace the existing disclosures required by RESPA and TILA with a single disclosure. Implementation: August 1, 2015 (no staggered start)

13. Integrated Disclosures • Loan Estimate • Three pages • Combines early two-page TIL and three-page GFE • Who provides? • Two options: lender or mortgage broker • When? • Within three days of application • Still subject to tolerances • Closing Disclosure • Five pages • Combines three-page HUD-1 and final two-page TIL • Who provides? • Two options: lender or combination of lender and settlement agent • When? • Three days before closing • Exceptions

14. Integrated Disclosures • Applicable Loans • Final rule applies to most consumer mortgages, EXCEPT: • Home-equity lines of credit • Reverse mortgages • Mortgages secured by a mobile home or dwelling not attached to land • No-interest second mortgage made for down payment assistance, energy efficiency or foreclosure avoidance

23. Integrated Disclosures

24. Integrated Disclosures • Uniform Closing Dataset • Joint effort by Fannie and Freddie to standardize the underlying data required by the new Closing Disclosure • Eliminates guesswork determining where data goes • Goal is to enhance the accuracy and quality of loan data • Agents, lenders need to verify systems can accept electronic information from each other • Lenders likely to demand this to meet three-day rule

25. Integrated Disclosures • Disclosure of Title Insurance • Owner’s Title Insurance Labeled as “Optional” • Lenders policy: • Services you can shop for category • How to calculate: Full premium without any adjustment that might be made for the simultaneous purchase of an owner’s title insurance policy. • Can use enhanced policy or endorsements if the lender knows that these products will be purchased. • Owners policy • Other category • Must be listed as “optional” • How to calculate: Full owner’s title insurance premium, adding the simultaneous issuance premium for the lender’s coverage, and then deducting the full premium for lender’s coverage.

26. Integrated Disclosures • What’s Not Included in the Final Rule • All-in APR • The Bureau did not adopt the proposed amendments adding additional costs (such as title insurance) to the finance charge. • Record Keeping • The Bureau did not adopt its proposed requirement that creditors maintain evidence of compliance in an “electronic, machine readable format.” • Final Closing Disclosure must be retained for five years after consummation by the creditor

27. What’s Next • ALTA will continue to work with CFPB and coalition partners to improve rule • Education and training material • www.alta.org/cfpb • Submit questions to ALTA about the rule • blog.alta.org • Follow ALTA’s blog for updates and analysis

28. Improving the Closing Process • CFPB Releases Report on Closing Process • Identifies Four “Pain Points” • Not enough time to review • Overwhelming stack of paperwork • Complexity of documents • Errors in documents • Two Potential Solutions • Simplifying closing package • Electronic closings • E-closing Pilot Program

29. Advocacy Priorities • Improve CFPB Transparency • ALTA President Rob Chapman Testifies Before Congress • Need for small business advisory panel • H.R. 4383 “ALTA’s relationship with the CFPB is good, but it could be better with the creation of a small business panel.”

30. Advocacy Priorities • Points and Fees • Fees paid to title companies affiliated with the creditor – 3% cap on points and fees under QM • Critics of the industry use the Congressional debate to attack the industry • Senate proposed CFPB study • House Committee hearings • Committee approves after mark-up

31. Advocacy Priorities • GSE Reform • Johnson/Crapo bipartisan proposal • Passed out of Senate Committee on Banking, Housing, and Urban Affairs • Communicate ALTA members’ interests on GSE reform • Preserve the 30-year fixed-rate pre-payable mortgages • Allow small businesses to compete • Ensure that consumers—whether they live in urban, suburban or rural communities—have equal access to credit and competitive interest rates • Preserve title insurance as an important underwriting risk management standard

32. Advocacy Priorities • Tax Issues • Mortgage Forgiveness Debt Relief Act • Called a “tax extender” • Forgiven debt is considered income • Foreclosures, short sales or a mortgage restructuring  • Estimated 9.7 million homes with mortgages, or 18.8% are still underwater • Subsidized rates for non-primary residences phased out now • Buying or selling a property could trigger rate increases

33. Advocacy Priorities • National Association of Insurance Commissioners • Financial Reporting • Guaranty Fund • Consumer Shopping Tools • Escrow Theft and Title Insurance Fraud White Paper

34. Title Action Network • Energized movement of land title professionals promoting industry’s value and protecting consumer rights • Quick and easy to join • Focused on ensuring state and federal legislators understand value of the land title industry • Won’t clog your email or take up your time • Easy-to-understand and provides brief advocacy updates on issues important to you • More than 7,500 members • All state land title associations but two have partnered with TAN • Join at www.titleactionnetwork.com • “Like” us on Facebook! www.facebook.com/titleactionnetwork

35. TIPAC The Title Industry Political Action Committee • Voluntary, non-partisan PAC of the America Land Title Association • 100% of your contribution to TIPAC helps elect and re-elect candidates who support our industry and understand our issues • 2013: Raised $420,326 (goal was $350,000) • 2014 goal: $425,000 • Your state’s 2013 contribution • Contact Jessica McEwen at jmcwen@alta.org

36. Liaison Program • Advocacy: If We Don’t Do it, Nobody Will • Important to identify and capitalize on relationships ALTA members have with members of Congress • Get involved with ALTA’s Policymaker Liaison initiative • Contact Madeleine Nagy at mnagy@alta.orgor Wayne Stanley at wstanley@alta.org

37. Market Share Analysis • Refi Drop Tightening Market • 2014 Q1 Title Premium Volume Down 16% • $2.4 billion during Q1 2014 compared to $2.9 billion during Q1 2013 • 49 states and D.C. all reported decreases • Only state to report increase: Texas • Top states • Texas ($361 million, up 3.7 percent from Q1 2013) • California ($279 million, down 25.9 percent) • Florida ($231 million, down 2.0 percent) • New York ($216 million, down 2.4 percent) and • Pennsylvania ($92 million, down 33.6 percent) • www.alta.org/industry/financial

38. ALTA Study • Economic Impact of Title Industry • The title insurance and real estate closing industry help consumers sell, purchase, and refinance nearly 10 million real estate transactions worth more than $2 trillion annually across the country • Title insurance and real estate closing industry generates nearly $7.9 billion in wages per year to 222,921 American workers • 65% of settlement agents are small businesses • Employ an average of three people • Generate $214,801 in revenue per year • The direct and indirect economic contributions of the industry to the U.S. economy include more than $50 billion in economic activities and nearly $12.7 billion in wages

39. ALTA Study

40. ALTA Growth • Record membership five consecutive years • More than 5,000 member companies • 90% increase over past decade • Diverse membership base, with majority of members being small-sized title agents • Also retain high percentage of members • Title professionals value advantages of being an ALTA member To join or renew membership: www.alta.org/membership

41. National Title Professional • Purpose – Designation recognizes professionalism and raises awareness of value nationally • Qualifications and requirements • State certification/designation coordination • Three-year renewal • 26 designations awarded in 2013 • www.alta.org/ntp

42. ALTA Conferences • Annual Convention • October 15-18, 2014 at the Westin in Seattle, Wash. • Business Strategies Conference • March 18-20, 2015 at Sheraton Philadelphia DowntownPhiladelphia, Pa. • Federal Conference and Lobby Day • May 18-20, 2015 at the Mandarin Oriental in Washington, D.C.

43. ALTA Member Benefits • Policy Forms License • free with membership • TitleNews • Digital edition now available • Education e-Kit • Tools to help members educate consumers, real estate agents, lenders, the media and others about the value of title insurance • www.alta.org/ekit • Title Topics • Monthly webinar in topics impacting the industry • www.alta.org/titletopics • UPS Savings • ALTA members can save up to 36% on shipping

44. ALTA Membership • Several Membership Options • www.alta.org/membership • membership@alta.org • 800-787-2582

45. Attorney Membership • Eligibility – individual real estate attorney who practices real estate law and provides title, closing and/or settlement services • Benefits • Title Law Quarterly focusing on key lawsuits affecting real property law • weekly email updates • Advocacy • Title Counsel meeting and CLE opportunities Cost $250 per year (includes license)

46. Messaging Campaign • Plan • Review current messaging and communications vehicles; what works and what doesn’t work • Audience • homebuyers, real estate agents, lenders and attorneys • Research • Focus groups and only surveys • Develop Integrated Messaging • Overarching theme, messages keyed to audience Expect to share results during ALTA’s 2014 Annual Convention

47. Early Findings of Messaging Campaign • DOprovide more information to professionals (lenders, realtors and attorneys) • DON’Tassume they have an understanding of title insurance • DOprovide clear, plain and simple materials they can give to home buyers • DON’Tclutter explanations with data and stats

48. Early Findings of Messaging Campaign • DOhelp people understand title insurance protects from defects that could come up (cite examples: fraud, missing heirs, unfiled liens, etc) • DON’Tsay title insurance protects from “things that could be missed” • DOuse language about protection, peace of mind, and confidence for homeowner • DON’Tuse slogans (“protects the American dream,” helps “stabilize the housing market”)

49. Thank You!