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ABOUT USA Letter from our Sponsor

Technology is continuously evolving and creating an impetus for change in our industry. Change is “thick” these days and you can just feel it. We are less than a month away from one of the biggest changes our industry has seen in decades. Thankfully, technology exists TODAY to aid all of us in formalizing our best practices and workfl ows – from workfl ow automation systems such as ResWare to more streamlined and automated title searches, to eRecording and eClosings and beyond. Our ResWare team at WINDWARD and Adeptive is passionately ready for TRID and we are already greatly impacting our clients’ operations and cultures with focus on implementing ResWare tools to increase their sales, profi tability, compliance, workfl ow repeatability, and automation, to maximize and guarantee TRID and other regulatory compliance.

Hopefully, you and your team are already implementing procedures, workfl ow, automation, software and change management to ensure survival and longevity in this changing marketplace. We hope that you are already synergizing people, process, automation, security, software, adoption of paperless procedures, CFPB compliance and best practices, and technology within your respective businesses.

Automated Action Lists, building “control points” into your processes and workfl ows for each of your Transaction Types, injecting repeatable Transactional Automation™, and implementing ALTA Best Practices and new CFPB/TRID requirements within ResWare is YOUR REAL SOLUTION. Moving now towards implementing these changes (and continuous, ongoing improvement) within your organization will help you maintain and sustain its competitive advantage, even with all these new compliance, process and security requirements. Isn’t it time now to make the leap forward and embrace automation inside ResWare like so many of your respective peers across the nation?

WINDWARD is honored to sponsor this Title Technology Special Report for the sixth straight year, and we look forward to continuing to help you passionately embrace automation and manage change within your organizations.

After over 11 years of business and phenomenal growth and the blessings of hundreds of new national, regional, and state or county-specifi c clients and underwriters, we feel grateful and thankful for our success. We are also grateful that our expertise, enthusiasm, knowledge and software implementation has also brought success to our elite and growing client list that use ResWare. We wish to convey a sincere and heartfelt “THANK YOU” to everyone who has helped us become the elite provider of software and services in the industry. We encourage you to contact us at www.windwardrevolution.com or www.getareswaredemo.com so we can prove why Transactional Automation™ inside ResWare Changes Everything. As WINDWARD has explosively grown in the last decade, one thing has remained constant – no one has more passion for your success and moving this industry forward.

When you look to the future, we encourage you to see WINDWARD as the pioneer of innovation and automation in this industry. We are the automation, effi ciency, workfl ow, virtualization and technology experts. It is no coincidence that WINDWARD Consulting | Software™ has chosen its slogan as Leading the Effi ciency Revolution™. It is no coincidence that ResWare is the fastest-growing software platform in the industry. We are YOUR TRUSTED PARTNER!

Again, I wish you, both personally and professionally, a tremendously enriching and profi table 2015, 2016 and beyond. As I always say, may this year be another pivotal year of steadfast, positive change and automation within your life, business and our industry…Godspeed and good luck!

My best personal and professional regards,Curt Szymanski, President

WINDWARD Consulting | Software™, LLC - www.windwardrevolution.com Leading the Effi ciency Revolution™ - Phone: 608-850-5170 or 608-513-2580 - E-mail: curt@windwardrevolution.com

©Copyright 2015. All Rights Reserved. WINDWARD Consulting | Software™, LLC DBA WINDWARD Consulting | Software™, LLC, A Wisconsin Limited Liability Company. WINDWARD, the WINDWARD Logo, Leading the Effi ciency Revolution, CHANGES EVERYTHING, Transactional Robotics, Title Robotics, Transactional Automation, SalesFlow, SailsFlow, The New Industry Standard, and The New Real Estate Industry Standard are registered trademarks of WINDWARD. ResWare, the ResWare Logo, Action Lists, Adeptive, the Adeptive Logo are registered trademarks of Adeptive Software Corporation.

Ernst Publishing Co., a provider of technology and closing cost data for the real estate and home fi nance industries, rolled out a collaborative fee management system to accommodate the TILA-RESPA Integrated Disclosure (TRID) rule going into effect Oct. 3.

President and CEO Gregory Teal said it wasn’t a diffi cult expansion. The new offering uses similar technologies and methodologies as the company’s previous offerings. It was just a matter of tweaking it to comply with TRID. He said it was a natural progression for the company.

“A lot of the largest banks and fi nancial institutions in the country were handling this information on spreadsheets and notepads,” Teal said. “Taking that and putting it into a technological solution is never easy, but it was necessary because of what the CFPB (Consumer Financial Protection Bureau) is requiring with the settlement agent and the fees associated with them. It (the CFPB) is trying to hone the process to make it accurate upfront for the consumer.”

The new software enables local agents of any size to provide all of their fees to any lender who invites them to join their settlement agent network. The agent logs into a specifi c lender’s settlement agent portal, downloads or enters their fees and the accuracy is certifi ed in minutes. The fees can be updated at any time. The lender is then able to approve the fees and migrate them to their production environment, either automatically or manually.

Several clients already are leveraging the power of this tool, according to Teal, and the response has been overwhelmingly favorable. It can be utilized by businesspeople and requires no technical expertise or handholding by a tech fi rm.

Ernst is integrated with many loan origination systems and closing systems and can work with software such as Closing Insight. Generally fees are quoted early in a transaction, then updated through a portal at closing.

“Ernst’s systems help ensure the fees the lender provides into closing portals is accurate from the onset,” Ernst Vice President of Sales and Marketing Jan Clark said. “We have the ability to alert both the lender and the settlement agent if the settlement agent fees, recording fees, transfer taxes, inspection fees and other fees managed by Ernst have changed during the life of a specifi c loan transaction automatically. Lenders and settlement agents can then determine if the fees that are visible in a closing portal require updating for any reason.”

The technology will begin to be used in earnest Oct. 3.

“The industry fi nally decided it can’t fi ght this and has to make peace with it,” Teal said. “It has taken great strides to accommodate what the CFPB has asked them to do with TRID reform. Oct. 3 is not the end date. That’s justthe beginning.”

Ernst expands offerings with TRID solution

Page 4: Ernst expands offerings with TRID solutionPage 5: MISMO creating common language for mortgage industryPage 6: Technology helping eClosing progress, more work to be donePage 8: LodeStar adapting and growing in TRID worldPage 10: The last two years toward TRID, from the underwriter perspectivePage 11: Pavaso announces new identifi cation productPage 12: CRM technology in the title worldPage 13: GIS is a helpful tool for title, surveyorsPage 14: FTC tells businesses to Start with Security

TABLE OF CONTENTS

To get title and mortgage technology platforms to talk with each other, they needed to fi rst speak a common language. The Mortgage Industry Standards Maintenance Organization (MISMO) is helping provide that.

Jan Davis, vice president of MISMO responsible for managing the daily operations of MISMO, said the purpose of MISMO is to provide standards for the exchange of information across the mortgage industry.

“We provide a common language to the industry for doing business,” she said. “It was developed by hundreds of industry professionals over the course of years. As a result of their hard work, industry participants can collaborate, execute transactions and solve business problems using a single set of terms and formats.”

MISMO is built upon the XML standard, according to Steve Acker, owner of Closergeist, LLC and a member of the Title Insurance Workgroup. This is a very common fi le format that virtually all information technology providers can work with.

He said by using these standards, companies can take advantage of more than 15 years of work by dedicated professionals from companies working in all phases and aspects of mortgage and real estate transactions.

“This can ease the process of integrating systems with partners, improve the quality of data as it moves through the mortgage life cycle, and hopefully improve consumer experiences as an end result,” Acker said. “The advantages of MISMO transcend technology, however. In addition to being a data standard, MISMO is also an organization and a forum for people representing all perspectives on mortgage to come together and work to solve common problems.

“One of the main benefi ts to come out of MISMO is the use of common terminology, which makes communication between business analysts and technologists much easier. The current effort to standardize fee names is an example of this kind of work.”

MISMO’s Residential Standards Governance Committee recently announced it was deferring the release of Version 3.4 of the MISMO Reference Model to November 2015. It was due to be released at the end of July, but was postponed to November to include enhancements specifi c to Fannie Mae and Freddie Mac’s Uniform Loan Application Dataset (ULAD); the CFPB’s proposed Home Mortgage Disclosure Act (HMDA) Rule, and evidence of compliance with the CFPB’s national servicing rule; fee types in support of the TILA-RESPA Integrated Disclosure (TRID) rule; HUD document types; minor updates in support of Fannie and

Freddie’s Uniform Closing Dataset (UCD); foreclosure and bankruptcy data; and credit reporting liability trend and credit score category version information.

“Although TRID has been the main focus recently, many lenders are also actively working to improve the post-closing process by accepting documents such as lender title insurance policies in a standard, electronic format, rather than using paper and fax,” Acker said. “In an effort to meet these lender needs, the MISMO Title Insurance Workgroup has enhanced the upcoming MISMO version 3.4 so that all pieces of a title policy or commitment can be electronically represented and transmitted within MISMO fi les. These pieces of information include property information and legal description, commitment additional requirements, endorsements and exceptions among others.”

“We’ve evolved in the past year, and that evolution will continue going forward,” MBA Vice President of Industry Technology Richard Hill said. “Our releases will be oriented around major initiatives such as TILA-RESPA and HMDA. Things that are very pervasive. We want to make sure the standards fully support the regulations and have releases of the standards in a timely manner.

“MISMO is not static. There is never a belief that it’s done. We know post-Oct.3 we’re going to learn some things.”

MISMO creating common language for mortgage industry

• The Mortgage Industry Standards Maintenance Organization (MISMO) was founded in 1999 as an independent affi liate of the Mortgage Bankers Association.

• The mission of MISMO is to develop, promote and maintain voluntary electronic commerce standards for the mortgage industry.

• MISMO has 15 residential and commercial workgroups that further the organization’s mission, along with about 150 subscribers.

• Workgroups consisting of volunteer industry practitioners develop each standard. All MISMO standards are available to industry participants, subscribers and non-subscribers, as free downloads from the MISMO site.

• MISMO partners include: American Land Title Association, Appraisal Institute, CRE Finance Council, Federal Housing Administration, Ginnie Mae, Property Records Industry Association and USDA Rural Development.

MISMO IN A NUTSHELL

The Consumer Financial Protection Bureau (CFPB) shined a bright light on eClosings this year and is encouraging broad adoption in the industry. In a recent public forum discussing the agency’s recent eClosing pilot program, Director Richard Cordray said the use of technology at the closing table can help create more knowledgeable consumers and a much better process for everyone involved.

“eClosings hold much promise of greater effi ciency and accuracy for the mortgage industry, at potentially lower cost,” he said at the time. “Many in the industry have been pressing for years to move in this direction; it is important for you to know that we at the Consumer Financial Protection Bureau are strongly supportive of these efforts and see them as a win-win for consumers and industry alike.”

One of the CFPB’s eClosing pilot participants, DocMagic Director of eServices Tim Anderson, said eClosings can be a helpful tool for the implementation of the bureau’s Know Before You Owe mortgage disclosure rule (TRID rule). He said before the pilot program and the attention from the bureau, people considered TRID and eClosings as two unrelated projects. Now, within the context of the three-day delivery rule and electronic evidence requirement, people are seeing eClosings as a TRID solution.

“They now see this as a better way to implement TRID, vs. the paper mailbox delivery rule where lenders are tacking on additional six to 10 days to ensure delivery,” he said. “There’s been a huge change in just one year.”

Anderson went on to say the non-notarized documents in the closing package can be executed online prior to the closing date. Three days later, on the actual closing date, those documents become “view only” and the consumer only needs to either eSign or wet sign the remaining collateral documents. The early delivery of closing documents in the eClosing process offered received a positive response from consumers polled in the eClosing pilot program, and closings done electronically were executed in half the time as traditional paper closings.

Agents now interested in adding eClosings to their service-offerings can do so rather easily. Anderson said for the popular hybrid eClosing transaction, where all but the notary documents can be eSigned, all the agent and consumer need is Internet access and a secure password. For a fully electronic (paperless) closing, a signing pad may be needed to apply an electronic signature, and the capability to use an eNotary is necessary.

“Title companies are excited; they want to offer this service to their bank clients as a market and service differentiator,” he said. “A lot of banks and credit unions concerned about consumer service and experience have been talking about doing this for a while. This is about delivering a superior member experience. Mortgage companies have been slow to adopt (eClosings) because they don’t retain the loan or client relationship. They sell that off to the secondary market players.”

The secondary market is one of three areas impeding the progress of eClosings today. Here is a look at each:

Technology helping eClosing progress, more work to be done

DATA SECURITY

There are concerns about the security of the eNote after an eClosing transaction.

“Let’s say you’re doing a closing and selling that note and it’s going into someone’s hands; you have to have a vault where these notes are kept,” said Home Surety Title and Escrow, LLC Managing Member Jeff McEvoy. “There needs to be uniformity between the lenders and the industry itself that that is where the note is. Anyone can go there and know who the owner of that digital note is. I think that has caused the industry some concern. Additional problems are potential fraud and management of the supply chain of the eNote and money.”

DocMagic Director of eServices Tim Anderson said because you are dealing with “SMARTDocs” Fannie and Freddie require

the use of an eVault to ensure the data, document and signature integrity of the loan package. Secure storage of the XML data (SMART documents), eSignature, MERS eRegistration and a tamper evident seal are required.

Ellie Mae Vice President of eStrategies Harry Gardner noted that concerns about security are common but not truly valid, because security and fraud prevention actually are superior with eNotes.

“At the moment of signing, the eNote is wrapped with a tamper-evident seal and registered on the MERS eRegistry. This eliminates the potential for shot-gunning loans that exist in the paper world, and the eNote can be electronically re-validated at any point downstream to ensure that it hasn’t been altered. You can’t do that with paper,” he said.

1.1.

SECONDARY MARKET

The secondary market is another of the kinks that keeps the industry from full adoption of eClosings. Although Fannie Mae and Freddie Mac have stated their acceptance of the eNote, many of the other secondary market players have not. DocMagic Director of eServices Tim Anderson said the majority of investors banks and credit unions sell to, such as Wells, Bank of America, Chase, etc. aren’t buying eNotes. He said if lenders do eClosings, they have to be able to sell the loans to an investor. If investors don’t buy them, the banks and credit unions are at risk of holding that note without a secondary market take-out.

Ellie Mae Vice President of eStrategies Harry Gardner said Fannie and Freddie were pioneers in the early days of eMortgage, and accepted pilot eNotes way back in the early 2000s. Fannie developed the initial technical framework that later became the SMART Doc, and donated it to MISMO to develop as an open industry standard and to promote broader adoption.

“Fannie and Freddie both recognized the potential value and cost savings of the eNote process, and made early commitments to offer that channel to their customers,” Gardner said. “Other investors seem to have taken one of two different approaches. Some exercised extreme caution – their legal teams wanted to avoid any perceived risk of a new technology (and often, held eSignature technology to a higher standard than what was already

accepted in their paper processes). Others have taken the ‘boil the ocean’ approach and tried to develop an eSignature framework that spans every aspect of their large banking and investment enterprises, which can easily result in paralysis by analysis.”

Gardner said the secondary market needs to think of eSignatures as just another way of signing a legal document, and not as something completely different.

“Looking at case law may help them become more comfortable,” he said. “Some investors are wary of their ability to foreclose on an eMortgage, or of what will happen if an eNote must later be converted to paper. Today, eMortgages have been successfully foreclosed without issue, and there is an established procedure for taking an eNote that’s registered on the MERS eRegistry and ‘dropping back’ to paper.”

There has been some movement in the investor community in this regard, and Gardner thinks this momentum will continue to build, and more forward-thinking investors will embrace eMortgage technology even within the coming year. Lenders should be having this conversation with their investors and educate them about how eNotes can improve their business processes, by eliminating the risk of tampering or of lost Notes.

EDUCATION KEY TO ADOPTION

Overcoming these obstacles won’t move the needle, however, if title and settlement agents are reluctant to adopt eClosings. At the CFPB’s eClosing forum, the panelists said title agents and Realtors, in general, were hesitant.

Frank Pellegrini, president and CEO of Prairie Title, and former president of the American Land Title Association, disagrees.

“I do not think that title agents who have been made familiar with eClosings are at all hesitant,” he said. “Of course, for those with limited awareness and understanding, there is always fear of the unknown. That fear manifests itself as resistance.

“Once eClosing platforms, procedures and processes are adequately demonstrated, fear is alleviated and the advantages become evident.”

He went on to say that taking advantage of opportunities to see demonstrations of eClosings and the ability to participate “hands-on” would go a long way to getting title and settlement professionals comfortable.

“There seems to be a great deal of interest and momentum

already building in this direction on the part of our customers (and obviously the CFPB),” Pellegrini said. “Professionals who insist on the status quo may be left behind. Once that realization sets in, there will be more interest in learning about and adapting to a new closing environment.”

Home Surety Title and Escrow, LLC Managing Member Jeff McEvoy said once these issues are addressed there will be a broad adoption of eClosings.

“It makes sense for everyone whether you’re commercial or residential,” he said. “I don’t see any reason why anyone wouldn’t do it. Industry leaders are really trying to come up with ways to help the consumer and help the industry. It’s all about giving them that comfortable feeling.”

“The consumer is already there,” DocMagic Director of eServices Tim Anderson said. “They want to do business with an institution that can support this digital online world. You’re seeing them drive a lot of their banking relationships and consumer experience to online banking and a mortgage should be done the same way. If you want to capture the consumers out there, you have to get there.”

2.2.

3.3.

Earlier this summer 2-year-old Lodestar Software Solutions introduced a Loan Estimate calculator and mobile app for the title industry. It’s designed to quote settlement costs, title insurance premiums and municipal taxes for all 50 states to lenders, Realtors and consumers.

LodeStar CEO and founder Jim Paolino said the need to get accurate fees early in the loan life cycle is increasing greatly in this regulatory environment.

“Lenders now have less time to provide the Loan Estimate form and are held to a greater level of accuracy, all while assuming more risk than ever before,” Paolino said. “LodeStar’s Loan Estimate calculator assists lenders in managing this risk while giving the consumer the ability to compare various service providers for a given transaction.”

To adapt to this regulatory environment, the tool was designed with tracking capabilities. It collects metadata regarding any quotes ran on the system and then displays them using the company’s Title Sales Manager CRM software. This data allows LodeStar to show clients who ran a quote on their system, where they ran it, how much it was for and how frequently they run similar deals. Ultimately it gives title agents and lenders more useful information about their potential deals than they can easily get right now.

“With this new product, a lender can onboard their preferred title agents, get immediate and the accurate quotes they need for a Loan Estimate and can also order title through a

particular title agent securely on the site,” Paolino said. “We have partnered with other vendors in the industry, to offer a portal where the title agent and the lender can collaborate on a transaction. All parties can send documents back and forth while continuing to work in their own title production or LOS systems.”

One such partner vendor is BeesPath, a provider of secure communication and collaboration tools. The company recently launched ClosingBridge, a system using electronic fi le delivery and communication tools to help lenders and settlement agents work together on the preparation and delivery of the TILA-RESPA Integrated Disclosures (TRID).

“What I like about Closing Bridge is that it’s not tied to any existing software, anyone can use it,” he said. “It’s an easy sell when I’m talking to lenders or title agents because they don’t have to change much of what they’re doing. It’s a great product, and the integration with LodeStar adds a lot of value to both companies. All portals need a fee engine behind them.

“With TRID coming up, there’s a big need for collaboration between lenders and title agents, more so than there’s been in the past,” Paolino continued. “You’re seeing the vendors that are supporting these groups collaborating a lot ahead of that and I think it is wonderful.”

Post-TRID, Paolino said the Lodestar team will continue to integrate with other platforms using the Uniform Closing Data Set, and then turn its attention toward eClosings.

LodeStar adapting and growing in TRID world

There have been a lot of questions over the past two years from title agents. They want to know what will happen to their business processes and if their technology would be able to create the new forms required by the TILA-RESPA Integrated Disclosure (TRID) rule. To ease these concerns, Stewart, like many other underwriters, immediately began modifying its technology to help its agents succeed in their market.

Stewart’s AIM+, the latest version of its proprietary title and escrow production system, was updated to account for the new Closing Disclosure. Stewart CFPB Program Manager, Senior Vice President, Business Integration Marvin Stone said some software companies had to develop a completely different module to allow for the added data that is required because there are dozens of additional fi elds they don’t collect today.

“In 2010 you had an existing form from an existing regulator change slightly,” Stone said. “This is a lot trickier. The Closing Disclosure is a completely new form, down to font and shading requirements. You had a lot of new requirements to take into account and variability of where items can be located on the form. That was a major issue.”

Stewart’s SureClose transaction management software also came into play for TRID systems. The system allows agents to communicate with their lenders, Realtors and consumers. Everything in SureClose is date and time-stamped, which makes it a perfect solution for document retention and evidence of compliance. This is going to be critical as the industry moves forward in the TRID world, according to Vice President of Marketing Programs and Media Relations Jennie Craig.

“Our GFExpressQuote portal, provides detailed fee estimates today. However, it has now been updated for TRID and will show both the actual fees for simultaneous issue alongside the CFPB’s new required calculations. While it does not create the Loan Estimate form, it does provide all of the necessary fees and calculations from a title and settlement perspective,” Craig said. “GFExpressQuote will now be called LenderExpress Quote since the Good Faith Estimate is going away for most transactions. We are excited

about the changes to our quoting systems, and see these as an advantage to our agencies as they market themselves to their lender customers.”

Stewart also formed a few partnerships in the industry, including one with Zixmail.

“We want to make sure we’re offering the best of the best solutions for our agents, and and that we are getting that reputable third party where that’s really their specialty,” Craig said. “Zixmail is used by many lenders, big and small, as well as some industry regulators. They are known as one of the best email encryption systems, and we want to make sure we’re going with partners to give Stewart’s agents something they may not necessarily be able to get on their own.”

Stewart Group President of Agency Operations Pat Beall said it can be challenging to fi nd an affordable solution, particularly for small to medium-sized independent agents. “We spent a lot of time researching other vendors to make sure they provided a quality product at a reasonable cost,” Beall said. “We’re in the title insurance business, so it doesn’t make sense for us to develop some of these ancillary products.”

This is a relatively new trend, according to Stone. In the past, third-party technology solutions often were not as sophisticated, but recent developments have changed the buy-versus-build equation in many areas. He said Stewart is forming working relationships with these partners because Stewart’s Trusted Providers are

The last two years toward TRID, from the underwriter perspective

“The lenders are out there adopting new closing collaboration portals. We’re taking the approach we feel is the most responsive to the lender customers out there. We are working with the technology providers to share information about their offerings to the Stewart network.”

Marvin Stone, CFPB Program Manager, SVP, Stewart

out there trying to serve their lender customers and the changing regulatory environment.

“The lenders are out there adopting new closing collaboration portals,” Stone said. “We’re taking the approach we feel is the most responsive to the lender customers out there. We are working with the technology providers to share information about their offerings to the Stewart network.”

Like many others in the industry, Stewart has taken these two years to ensure all its technical tools conform to MISMO. Many in the industry are choosing to improve the latest releases of their systems by aligning with MISMO standards and facilitating adoption of the Uniform Closing Dataset. According to Stone, support for MISMO initiatives seems to be higher than ever.

Also, Stewart has taken the delay in the TRID implementation dates from Aug. 1 to Oct. 3 to fi nalize

the addition of the ALTA Settlement Statements into its system for its agents.

This is required, Stone says, to comply with many states’ requirements. Stone further stated that the ALTA Settlement Statements provide numerous benefi ts to both lenders and settlement agents.

“ALTA led the charge to provide an easy-to-use, standardized set of settlement statements and Stewart’s AIM+ will provide full support,” Stone said.

When asked how their agents have reacted to all these changes, Craig said once they understood the new processes, they were excited. Beall agreed.

“Anytime you’re trying to make something more transparent for the consumer, it’s not a bad thing,” he said. “It’s just how well those processes will work when you get them into place.”

Pavaso, a technology company known for its Digital Close solution, has put a new product on the market, ID MAXX. It was created as a tool for identity validation as well as for character reference.

“We’ve lost the persona of individuals, and it’s too easy for people to become numbers,” CEO Mark McElroy said. “When I look at the way the mortgage business was done 30-40 years ago, it was reliant upon an individual’s character, how much of an upstanding citizen they were, and how fi nancially responsible this person was before banks decided to do business with them. It wasn’t just based off a credit score number. It was based on what kind of person you were.”

To utilize this tool, consumers begin by sending notifi cations out to their network of friends and colleagues. These contacts act as references, validating the identity of the person who sent the request, and rating that person, as a series of questions are presented that provide different aspects of the consumer’s character. ID MAXX collects the submitted scores and provides an average for each category. Lenders can use the information provided when considering a loan, and Realtors and title agents use it to validate the identity of the consumer.

“We do not draw that score into one single score, like a credit score, because each lender will be subjective on the type of character reference they think is the

most important,” McElroy said. “It allows me to establish a better proof of identity through a broad network of people. As we proceed through the mortgage process, and get to a face-to-face communication likea Realtor or a title company at a closing, I can utilize that information to validate their identity and prove that the person that showed up is actually the person I expected to show up.”

A variety of tools are also in place to prevent fraud. The consumer has the option of providing a driver’s license number, but ID MAXX does not collect Social Security numbers.

“It would be diffi cult to create a valid network that would attest to your identity and character and fool people out there,” McElroy said. “Could it be done? Yeah, there are bad people on this earth that try very hard to cheat. But we’re putting in a variety of tools to provide checks and balances to ensure that doesn’t happen.”

“It takes people an amount of time to understand (new technology) and the value proposition it brings to the table,” he continued. “I think a lot of people in the industry will remember what they used to do and be able to relate to it quickly. There’s a chance it could be adopted very quickly, but I expect just like every other piece of technology, it requires fi ne-tuning in the marketplace and answering a lot of questions.”

Pavaso announces new identifi cation product

There are many more moving parts to customer engagement than in the past, but less time to string together enough meaningful interactions to create full-blown relationships. Customer relationship management (CRM) tools seem to be gaining in popularity in the industry to help sales teams stay ahead of leads and prospects and turn them into customers.

“Since the economy became troubled in 2007-2008 companies are trying to do more with less headcount,” Optifi Now’s CEO John McGee said. “We are all tasked with working a little harder than we were. I’m working on managing more leads, more contacts, more prospects and more customers than in the past. A lead or prospect can fall through the cracks because you haven’t talked to them in 10 days, 30 days or 45 days. Unintentionally, sales people will lose leads because they slip through the cracks.”

LodeStar CEO and founder Jim Paolino said another reason CRM technology is gaining in popularity in the industry is a shift in the dynamics of the title offi ce.

“Title agents no longer view themselves as just lawyers, they are becoming business people and marketers as well,” he said. “Now that title agencies are getting larger, and there’s going to be fewer of them, the need for them to market and embrace technology is really getting to the forefront and I think title agents are getting better at looking at tools like this and seeing the value that they can bring. The industry is becoming more sophisticated slowly but surely.”

Optifi Now entered the title insurance sector in the early 2000s doing mostly marketing collateral management and providing web portals for fl yers, newsletters and all the materials agents would want at their fi ngertips. McGee said the company’s CRM modules have gained in popularity to help title companies manage relationships.

Its software alerts users (the sales team) to follow up or pitch their customers or prospects a new service. It also can be used to automatically communicate pre-approved, brand and legal compliant personalized messages to a lead.

“Our intuitive sales tools not only identify lead opportunities, they inform brokers and agents what type of follow-up to make with a lead, when to do it, how to do it, what content to use, what to post on social platforms, all of the guesswork is eliminated and the sales process is streamlined,” McGee said.

The software alerts the team when there are potential cross-over opportunities, such as a customer getting

a home loan, may need home insurance as well. Also, Optifi Now provides a library with brand- and legal-compliant social media messages that can be personalized and sent out to different social media platforms with the push of a button.

LodeStar’s Title Sales Manager uses a similar approach but it’s tailored specifi cally for title agents.

“It’s similar to a CRM, but specifi c to the title industry in a way that’s unique,” Paolino said. “Every time a title agent gives out a price quote, through the TSM, we can see who is asking for it and if that person eventually sends in the title order. That’s important because any loan offi cer running a quote is a potential deal for a title agent. It’s integrated with our Loan Estimate calculator so anytime someone gives out a quote via LodeStar tools on the title agent’s website or branded mobile app, they get to see that lead. It’s very data-driven.”

Some of that data is about the sales team members themselves. The system can monitor when a sales person is doing something, or not doing something.

“Contact management is key to any organization,” McGee said. “You need data to know who your customers are and to track and measure your results. Having a sales-centric CRM as a baseline is a good fi rst step.

“However, not just in the title industry, but in all industries, CRMs tend to become the hammer sales managers use to measure the individual sales of a member of the team,” McGee continued. “It tends to become a reporting tool instead of a sales tool. Is he meeting his sales quotas or not? Sales people tend not to enjoy them because it comes down on their heads in sales meetings. They aren’t motivated to use the tool because it just brings negative results.

“We realized a CRM has to help the sales person sell more,” McGee concluded. “If we help them sell more, they become excited by it. It becomes not just a management tool, but a sales tool.”

CRM technology in the title world

“Contact management is key to any organization. You need data to know who your customers are and to track and measure your results.”Marvin Stone, John McGee, CEO, Optifi Now

It’s diffi cult to come up with one defi nition of Geographic Information Systems (GIS). Some have described it as an electronic method of indexing land records. Some say it’s a tool to fi nd and view documents by geographically grouping all related documents in one location.

Mark Ladd, president of the Property Records Industry Association (PRIA) and vice president of regulatory and industry affairs for Simplifi le, defi ned GIS as a computerized system for tracking potentially anything related to land.

“Traditionally, we think of GIS at the county level as mapping of parcels within the county and then tracking the ownership of those parcels,” he said. “Some GIS systems cover road center lines and where fi re hydrants are, different hazardous materials, building footprints and maybe aerial photos emergency responders can use when responding to any kind of emergency — associating anything with the land and keeping track of it, with a computerized, uniform system.”

“That’s the nice thing about where technology is taking us,” PRIA Vice President and Washoe County, Nevada, Recorder Larry Burtness said. “We’re starting to add a lot more layers to it, whether it’s the school district or safety like 911, locations of septic tanks or water wells. I think there is really no limitation to what can become a layer if there’s a need. Another benefi t is the convenience and speed of access to a broad amount of information. You don’t have to necessarily contact a whole bunch of different departments to get the information.”

This tool provides information to the public and different agencies that can be used by homebuyers looking at a potential purchase, by agents refi ning a title search, or by surveyors working on a piece of land.

How they have that set up varies by jurisdiction. In larger areas, there is usually a separate GIS department. This department may be attached to the county executive or to a separate department where county offi cials feed information to or retrieve information from. In smaller counties the GIS department may be part of the registrar of deeds offi ce. In other counties the treasurer or clerk may be responsible for it.

“You’re going to need some high-powered PCs,” Ladd said. “The databases, obviously, can get pretty large, so you’re probably going to need a larger server for maintaining the databases. Counties are used to having to maintain a good-sized server; GIS is just one more server plug-in for them to make sure they can manage the database.”

He also suggested investing in a large-format plotter for printing out these maps.

“Washoe County has had a robust GIS for about 15 years,” Burtness said. “It provides layers with links to all the data we’ve been referring to. The response I’ve heard is very favorable. Not only do the professionals use it, but the public uses it as well. Whether it’s an individual that wants to move into Washoe County and learn about the different neighborhoods or professionals including title companies, real estate agents and appraisers. If they’re taking their clients on tours, they can pull this information up instantaneously and share it with their prospective client.”

Wisconsin was an early adopter of a funding mechanism for GIS that supports both larger and smaller counties. The state implemented a fee of $6 and added it to its recording fees – $4 of that stayed in the county to fund GIS and technology enhancements in the county and $2 went to a statewide fund to help smaller jurisdictions implement GIS.

Some jurisdictions allow free access to basic information and charge a fee for more detailed information.

“I don’t think anyone has gotten to where GIS is a profi t-center yet,” Ladd said. “I think they’re still reliant on some tax dollars here. It’s hard to measure the return on investment when one of those returns is when emergency responders show up and already know about a propane tank on a piece of land, and those kinds of benefi ts are harder to quantify.”

The biggest consumers are probably professional, whether they are government agencies or surveyors, and Ladd said more jurisdictions are adopting the technology.

“That’s one of the reasons PRIA decided to stand-up its GIS workgroup,” he said. “More and more of our members were asking us about GIS. They were seeing it happen in their counties. When agents are searching title and run into something they see in the documents, and it’s just not really clear how this plays out in real life, you go to the GIS offi ce and look at that parcel. It’s another set of eyes and a lot of data in one location helps supplement that title search. It’s another tool they can use to make sure they get their title search right the fi rst time.”

GIS is a helpful tool for title, surveyors

According to the Federal Trade Commission (FTC), sound security is no accident. In its Start with Security: A Guide for Business Lessons Learned from FTC Cases, the FTC said companies considering security should assess their options and make reasonable choices based on the nature of their business and the sensitivity of the information involved.

In the guide, the FTC offers advice, gathered from its investigations, to businesses wanting to improve their cybersecurity. The specifi c cases mentioned are settlements. No fi ndings have been made by a court, and the specifi cs of the orders apply just to those companies. Many of these alleged practices, according to the guide, involve basic, fundamental security missteps.

“Savvy companies think through the implication of their data decisions,” it said. “By making conscious choices about the kind of information you collect, how long you keep it and who can access it, you can reduce the risk of a data compromise down the road.”

“This is a prime example of government at its best,” Real Estate Data Shield CEO Christopher Gulotta said. “Bringing its historical and current experience in dealing with information security compliance and safeguarding personal information from the growing cyber and traditional fraudsters is invaluable. Their publications and education seminar series offer individuals and business owners (especially those such as title and settlement companies who traffi c in a disproportionately high amount of private consumer information and mortgage disbursement funds) access to current and emerging threats to the non-public information and disbursement funds that we possess.

“While much of their educational messaging includes sound information security principals, my guess is that hearing it from a regulator will bring a new sense of urgency and awareness that can help save companies and individuals from a crippling security breach.”

The fi rst question to consider is, is it really necessary for the company to collect and keep the data at all? The FTC says businesses could avoid that risk by simply not collecting sensitive information in the fi rst place. It’s unwise to keep the information longer than needed. Businesses can limit their risk by securely disposing of the fi nancial information once they no longer had a legitimate need for it.

“In the Accretive (Health) case, the FTC alleged that

the company used real people’s personal information in employee training sessions, and then failed to remove the information from employees’ computers after the sessions were over,” the guide said. “Similarly, in foru International, the FTC charged that the company gave access to sensitive consumer data to service providers who were developing applications for the company. In both cases, the risk could have been avoided by using fi ctitious information for training or development purposes.”

Another main principle referred to in the guide is control of access to data. Not everyone, even employees on the staff, needs unrestricted access to the network and the information stored on it. Controls should be put in place to make sure employees have access only when necessary. If employees don’t have to use personal information as part of their job, there’s no need for them to have access to it.

Also, companies should require secure passwords and authentication.

“If you have personal information stored on your network, strong authentication procedures – including sensible password ‘hygiene’ – can help ensure that only authorized individuals can access the data,” the guide said. “Passwords like 121212 or qwerty aren’t’ much better than no passwords at all. That’s why it’s wise to give some thought to the password standards you implement.”

These passwords also should be stored securely, according to the guide. Risks can be reduced if companies have policies and procedures in place to store credentials securely. Also, by not adequately restricting the number of tries someone has to enter the correct passwords, the companies place their companies at risk.

“These brute force attacks work by typing endless combinations of characters until hackers luck into someone’s password,” the guide said.

It’s also important to test the system for well-known security fl aws and vulnerabilities, including one called “predictable resource location.” Here, a hacker could predict patterns and manipulate URLs to bypass the web app’s authentication screen and gain unauthorized access to the company’s databases.

Securing the data is important during storage as well as in transmission. The people designated to these tasks need to understand how the company uses sensitive data

FTC tells businesses to Start with Security

and have the know-how to determine what’s appropriate for each situation.

But experts already may have developed effective standards for the business. The guide said savvy companies don’t start from scratch when it isn’t necessary. Unlike widely accepted encryption algorithms extensive tested, one company used a simple alphabetic substitution system subject to signifi cant vulnerabilities. The company could have avoided the risk by trying a more established and industry-tested method for securing its data.

The guide also says to segment a network and monitor who’s trying to get in and out. Companies should consider using tools such as fi rewalls to limit access between computers on the network and between computers and the Internet.

Another useful safeguard it recommends is the use of intrusion detection and prevention tools to monitor the network for malicious activity.

“Not every computer in your system needs to be able to communicate with every other one,” it said.

The sixth lesson mentioned in the guide advises businesses to secure remote access to the network. It says network security is only as strong as the weakest security on a computer with remote access to it. And not everyone who might occasionally need to get on the network should have unlimited access.

“In the Dave & Buster’s case, for example, the FTC charged that the company failed to adequately restrict third-party access to its network,” the guide said. “By exploiting security weaknesses in the third-party company’s system, an intruder allegedly connected to the network numerous times and intercepted personal information. What could the company have done to reduce that risk? It could have placed limits on third-party access to its network — for example, by restricting connections to specifi ed IP addresses or granting temporary, limited access.”

When developing new products, it’s critical to apply sound security practices, as well. In some cases investigated by the FTC, companies failed to train their employees in secure coding practices. Other companies turned off the SSL certifi cate validation in the mobile apps, leaving the sensitive information consumers transmitted through those apps open to interception through man-in-the-middle attacks. If a new product offers a privacy or security feature, verify the feature works as advertised.

Once the company itself is secure, it has to become aware of the practices of its service providers — companies hired to process personal information collected from customers or to develop apps.

These tasks aren’t a “one-and-done” deal according to the guide. Security is an ongoing process. Outdated software needs to be replaced or updated regularly, and it’s important to implement third-party patches. Companies need a process in place to receive and address security vulnerability reports.

Everything, including paper, physical media and devices, needs to be stored securely. When there is a legitimate need to travel with confi dential information, those responsible should keep it out of sight and under lock and key whenever possible. Finally, paperwork needs to be shredded, burned or pulverized to make it unreadable and companies should use available technology to wipe devices no longer in use.

The title insurance and mortgage industries are moving at a faster pace than ever before and undergoing change, and technology and digital interconnectedness are central requirements to facilitate these changes, according to Gulotta.

“The emerging technology tools, many specifi c to our industry, are developing and evolving at a rapid pace in an effort to keep up and simplify the process. Every major industry vendor is spending enormous sums of capital and time in meeting these demands, and the ones who offer the most affordable and most easily implemented solutions will emerge as the winners,” he said.

Gulotta had some advice for agents considering adopting new technology. He said before making any commitments, sample a few options for any specifi c technology solution. Then make sure you’re dealing a trusted and verifi ed vendor who can prove to you that the product or service will not increase your security risk profi le. Request evidence of their security and best practice certifi cations and designations. Before implementing it, test it in an isolated and safe environment. And as part of the company’s change management policies and procedures, have a plan “B” in the event you need to remove the solution and return to your prior platform or technology.

“Technology and the emerging solutions will be the backbone of the ‘New World’ for title and settlement agents,” Gulotta said. “The national providers are already there. What’s unique about our current and imminent situation is that now, the small to mid-sized service provider has these tools available to them and can, for the fi rst time, compete on a level playing fi eld. But in the rush to become more technology capable, you cannot lose sight of the potential increased security risks. Remember to ensure that each step forward technologically, is also a step forward in terms of information and escrow fund security.”

For more information on the Start with Security initiative or the business guide, visit www.ftc.gov.

Copyright 2013. All Rights Reserved. WINDWARD CONSULTING, LLC DBA WINDWARD CONSULTING | SOFTWARE, LLC, A Wisconsin Limited Liability Company. WINDWARD, the WINDWARD Logo, Leading the Efficiency Revolution, CHANGES EVERYTHING, Samurai Reporting, Transactional Robotics, Title Robotics, Transactional Automation, SalesFlow, SailsFlow, and The New Industry Standard, and The New Real Estate Industry Standard are registered trademarks of WINDWARD. Resware, the Resware Logo, Action Lists, Adeptive, the Adeptive Logo are registered trademarks of Adeptive Software Corporation.

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