ALTA 2014 National Update

Peter J. BirnbaumTreasurer - ALTA

President and Chief Executive OfficerAttorneys’ Title Guaranty Fund, Inc.

(312) 372-4375pjb@atgf.com

Agenda

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

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!

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

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

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

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

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

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

Best Practices

• Develop Elite Provider Program– Help title and settlement

companies implement the Best Practices

For more information, go to www.alta.org/bestpractices

Best Practices

Why You Should Implement Now

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)

Integrated Disclosures

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

Integrated Disclosures

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

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.

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

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

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

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.”

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

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

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

Advocacy Priorities

• National Association of Insurance Commissioners– Financial Reporting – Guaranty Fund – Consumer Shopping Tools– Escrow Theft and Title Insurance Fraud White

Paper

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

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

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.org

or Wayne Stanley at wstanley@alta.org

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

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

ALTA Study

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

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

ALTA Conferences

• Annual Convention– October 15-18, 2014 at the Westin in Seattle, Wash.

• Business Strategies Conference– March 18-20, 2015 at Sheraton Philadelphia Downtown

Philadelphia, Pa.

• Federal Conference and Lobby Day– May 18-20, 2015 at the Mandarin Oriental in Washington, D.C.

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

ALTA Membership

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

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)

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

Early Findings of Messaging Campaign

• DO provide more information to professionals (lenders, realtors and attorneys)

• DON’T assume they have an understanding of title insurance

• DO provide clear, plain and simple materials they can give to home buyers

• DON’T clutter explanations with data and stats

Early Findings of Messaging Campaign

• DO help people understand title insurance protects from defects that could come up (cite examples: fraud, missing heirs, unfiled liens, etc)

• DON’T say title insurance protects from “things that could be missed”

• DO use language about protection, peace of mind, and confidence for homeowner

• DON’T use slogans (“protects the American dream,” helps “stabilize the housing market”)

Thank You!