ALTA Title Insurance & Settlement Company Best Practices

1. ALTA Title Insurance & Settlement Company Best Practices Presented by: William D. Himmelreich Eastern Pennsylvania & Delaware Agency Services Manager Stewart Title Guaranty Company 2013 Agency ServicesGroup Conference Date: May 16, 2013

2. ALTA Best Practices • ALTA recognized need for standards. • Stewart’s strategy – Stewart Trusted Provider Seal • Documenting procedures will be critical.

3. ALTA Best Practices • Why Now? • The CFPB’s Expectations. • To limit the potential for statutory or regulatory violations and related consumer harm, supervised banks and nonbanks should take steps to ensure that their business arrangements with service providers do not present unwarranted risks to consumers. These steps should 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 services 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;

4. ALTA Best Practices • Why Now? • CFPB Bulletin 2012-03 dated 4/13/2012. • The Consumer Financial Protection Bureau (“CFPB”) expects supervised banks and nonbanks to oversee their business relationships with service providers in a manner that ensures compliance with Federal consumer financial law, which is designed to protect the interest of consumers and avoid consumer harm. The CFPB’s exercise of its supervisory and enforcement authority will closely reflect this orientation and emphasis.

5. What are the ALTA Best Practices? Voluntary guidelines to help the industry illustrate to consumers and clients the best practices to ensure a positive and compliant real estate settlement experience.

6. Title Insurance and Settlement Company Best Practices • Comply with All State and Local Licensing • Procedures and Controls Regarding Escrow Trust Accounts Reconciliation • Physical and Network Security—Protecting Confidential Customer Information and Trust Accounts • Recording and Pricing Procedures • Title Policy Delivery, Premium Reporting and Remittance • Errors and Omissions Insurance / Fidelity Coverage • Dealing with Consumer Complaints

7. Establish and Maintain Current License(s) as Required • Purpose: Maintaining state mandated insurance licenses and corporate registrations (as applicable) ensures that the company remains in good standing with the state. • Meet continuing education requirements.

8. Does your company maintain appropriate written procedures and controls for escrow trust accounts? • Wiring capabilities? • Who is authorized? • Positive pay? • International wire blocks? • Background check & credit reports for new hires - are there periodic updates? • Continuing training? • What’s the procedure when employees quit or are fired?

9. Does your company maintain separate operating and escrow accounts? • Separate escrow accounts per state? • Properly identified?

10. Does your company perform monthly three-way reconciliation (checkbook, bank statement & • file) of its accounts? • Daily reconciliation of receipts and disbursements? • Segregation of duties? • Management review of reconciliations? • Reconciliation accessible to underwriter? • Immediate funding of debit files? • Outstanding checks? Why? How long?

11. Does your company have a “clean desk” policy requiring employees to close files containing non-public personal information when not at their desk? • File Disposal? • Shredding? • Procedure when security is breached? • Disaster management plan?

12. Does your company lock all documents, portable devices and electronic media containing non-public personal information in a desk, file cabinet or secure room overnight?

13. Does your company use strong passwords (8+ characters including numbers, symbols, upper & lower case) for its computers and require frequent password updates?

14. When emailing documents, does your company transmit non-public personal information via password protected attachments or other secure connections?

15. On average, how long after closing a transaction does it take your company to record documents? • If cannot record electronically, what are your procedures? • How do you track recording status?

16. Does your company have procedures to ensure that customers are charged the appropriate rates?

17. On average, how long after closing a transaction does it take your company to deliver title policies to customers?

18. Does your company remit title premiums to your underwriter by the last day of the month following the month in which the insured transaction was consummated?

19. Does your company carry errors and omissions insurance? • How much? • Escrow Security Bond (ESB)?

20. ALTA Best Practices • Written Procedures for Resolving Consumer Complaints • Define “Complaint.” • Complaint log and form. • Procedure for escalation to management. • Single point of contact. • Possible referral of claim to underwriter. • Records of complaints and resolutions.

21. ALTA Best Practices Getting Started Step #1 – Review current practices and policies. Step #2 – Be Compliant. Step #3 – Document policies and monitor compliance. Step #4 – Document monitoring and training.

22. ALTA Best Practices • Resources • ALTA • PLTA • Stewart Title – especially training.

23. ALTA Best Practices Questions?