december 2, 2017 honolulu, hawaii · december 2, 2017 honolulu, hawaii ... said the financial...

2017 Fall National Meeting

© 2017 National Association of Insurance Commissioners

Title Insurance (C) Task Force

December 2, 2017 Honolulu, Hawaii

© 2017 National Association of Insurance Commissioners 1

Date: 12/2/17

2017 Fall National Meeting Honolulu, Hawaii

TITLE INSURANCE (C) TASK FORCE Saturday, December 2, 2017

1:30 – 2:30 p.m. Hilton Hawaiian Village and Hawaii Convention Center—313C - Convention Center—Level 3

ROLL CALL

Larry Deiter, Chair South Dakota Michigan David Altmaier, Vice Chair Florida Minnesota Lori K. Wing-Heier Alaska Missouri Dave Jones California Nebraska Marguerite Salazar Colorado

Patrick M. McPharlin Jessica Looman Chlora Lindley-Myers Bruce R. Ramge Barbara D. Richardson Nevada

Stephen C. Taylor District of Columbia John G. Franchini New Mexico Ralph T. Hudgens Georgia Jillian Froment Ohio Gordon I. Ito Hawaii John D. Doak Oklahoma Jennifer Hammer Illinois Kent Sullivan Texas Stephen W. Robertson Indiana Todd E. Kiser Utah Ken Selzer Kansas Michael Pieciak Vermont Nancy G. Atkins Kentucky Jacqueline K. Cunningham Virginia James J. Donelon Louisiana Mike Kreidler Washington Al Redmer Jr. Maryland

NAIC Support Staff: Jennifer Gardner/Aaron Brandenburg

AGENDA

1. Consider Adoption of its Oct. 16 Minutes—Director Larry Deiter (SD) Attachment One

2. Consider Adoption of the Report of the Title Insurance Financial Reporting (C) Working Attachment Two Group Report—Aaron Brandenburg (NAIC)

3. Hear a Presentation from States Title Regarding the Use of Predictive Analytics in Attachment Three Underwriting for Title Insurance—Adrienne Harris (States Title)

4. Hear an Update Regarding Title Insurance Education Course Materials—Jean Boven (MI) Attachment Four

5. Hear an Update on Federal Activities—Aaron Brandenburg (NAIC) Attachment Five

6. Discuss Any Other Matters Brought Before the Task Force—Director Larry Deiter (SD)

7. Adjournment

W:\National Meetings\2017\Fall\Agenda\TitleTF.dotx


Attachment One Oct. 16 Meeting Minutes

Attachment Title Insurance (C) Task Force

12/02/17


Draft: 10/20/17

Title Insurance (C) Task Force Conference Call October 16, 2017

The Title Insurance (C) Task Force met via conference call Oct. 16, 2017. The following Task Force members participated: Larry Deiter, Chair (SD); David Altmaier, Vice Chair, represented by Matthew Guy, Tami Bossart and Jeffrey Joseph (FL); Dave Jones represented by Kim Hudson, Emma Hirschhorn and Ken Allen (CA); Marguerite Salazar represented by Neil Derr (CO); Stephen C. Taylor represented by Philip Barlow (DC); Stephen W. Robertson represented by Jonathan Handsborough (IN); James J. Donelon represented by Warren Byrd (LA); Nancy G. Atkins represented by Robin Coombs (KY); Al Redmer Jr. represented by Stephanie Palmer (MD); Patrick M. McPharlin represented by Robert Lutton, Michael Draminski and Jean Boven (MI); Mike Rothman represented by Paul Hanson (MN); Chlora Lindley-Myers represented by Win Nickens (MO); Bruce R. Ramge represented by Krystle Ledvina Garcia (NE); Jillian Froment represented by Michelle Rafeld (OH); Todd E. Kiser represented by Brett Barratt and Suzette Green-Wright (UT); Michael S. Pieciak represented by Karen Murphy (VT); and Mike Kreidler represented by Eric Slavich and Jim Tompkins (WA). Also participating were: Amanda Gibson (AR); Wes Chance (MS); and Donna Stewart (WY). 1. Adopted its Summer National Meeting Minutes Mr. Byrd made a motion, seconded by Mr. Barratt, to adopt the Task Force’s Aug. 6 minutes (see NAIC Proceedings – Summer 2017, Title Insurance (C) Task Force). The motion passed unanimously. 2. Adopted its 2018 Proposed Charges Mr. Byrd suggested adding, “about the role of title insurance in the real estate transaction process” to the charge, “consult with the Consumer Financial Protection Bureau (CFPB) and other agencies responsible for information, education and disclosure for mortgage lending, closing and settlement services.” Director Deiter said Gordon Hay (NE) suggested that the reference to the Title Agent Statistical Data Plan Implementation Guideline (#1650) and the deadline for results be stricken from the charge under the Title Financial Reporting (C) Working Group. The Task Force agreed to the changes proposed. Mr. Byrd made a motion, seconded by Mr. Barratt, to adopt the Task Force’s 2018 proposed charges (Attachment XX). The motion passed unanimously. Having no further business, the Title Insurance (C) Task Force adjourned. W:\\National Meetings\2017\Fall\TF\Title\10_16 minutes


Attachment Two Title Financial Reporting (C) Working

Group Report


12/--/17


Draft: 9/25/17

Title Insurance Financial Reporting (C) Working Group Conference Call

September 7, 2017 The Title Insurance Financial Reporting (C) Working Group of the Title Insurance (C) Task Force met via conference call Sept. 7, 2017. The following Working Group members participated: Gordon Hay, Chair (NE); Kim Hudson (CA); Neil Derr (CO); and Jennifer Wu (TX). 1. Discussed Comments Received on the Proposal Related to the Statement of Actuarial Opinion Mr. Hay said the Working Group recently received comments from the American Academy of Actuaries (Academy) Committee on Property and Liability Financial Reporting (COPLFR) regarding the proposal to include known claims reserve (KCR) within Exhibit A of the Statement of Actuarial Opinion. Dave Heppen (Risk & Regulatory Consulting—RRC) said the Academy’s view is that the benefits to implement the proposal do not outweigh the costs. He said the time actuaries would spend opining on KCR and booking additional reserves that might not be needed were costs. He said if the overall goal of regulation is reviewing solvency, then looking at an individual component of the balance sheet, as opposed to the totality of the liability, does not help to evaluate solvency. He also said when thinking of the rest of the property/casualty (P/C) world, guided by Statement of Statutory Accounting Principles (SSAP) No. 55—Unpaid Claims, Losses and Loss Adjustment Expenses, development of case reserves is an accepted component of incurred but not reported (IBNR) reserves. He said there may be a contradiction, as SSAP No. 57—Title Insurance references SSAP No. 55 for the development of case reserves as part of IBNR, but SSAP No. 57 says case reserves need to be adequate and there should not be development of case reserves. He said the NAIC might want to consider bringing more agreement between the title standard and the rest of the P/C world. He also said there would be a financial statement impact through increases in reserves that are not necessarily warranted because reserves in total are adequate. Mr. Hudson said he is in agreement with the opinions expressed by Mr. Heppen and does not believe the proposed change is necessary. He said the current structure of the reserves with the KCR and the statutory premium reserves (SPR), in addition to the supplemental reserves mandates, that the company books an adequate overall reserve. He said any needed amount would be put in the supplemental reserve, so it is not necessary to have a separate opinion. He said no regulatory purpose is being served by the proposal. Mr. Hay asked how the Academy came up with the estimated impact of $500 million or higher in the title industry. Mr. Heppen said the Academy wanted to avoid portraying it as a projection; it is an observation of the development in the overall title industry and not a precise projection. Mr. Hay asked whether the Academy took into account differences between state laws. Mr. Heppen said the Academy did not, noting that the figure was a broad indicator. Mr. Hay asked whether the Academy considered that of the $441 million cited in the Academy’s comments, $261 million resulted from one company, and of the $590 million, $279 million was from that same company. Mr. Heppen said the Academy is aware that there are significant players in the industry, noting that the intent was to show potential impacts that could be significant. Mr. Hay said close to 50% of the title industry written premium is domiciled in Florida. He said Florida law almost prohibits the use of bulk reserve within the KCR. In order to include bulk reserve, the company would have to get prior approval and take a decrease in the SPR. He said the estimate should have excluded Florida. Mr. Heppen said that goes to the point; i.e., that some states might have a dollar-for-dollar reduction in SPR while others would not. He said differences in regulations would be a better thing to address than the proposal. Mr. Hay asked whether the Academy would suggest that regulators look at SSAP No. 55 and SSAP No. 57 and try to make SSAP No. 57 comport better with SSAP No. 57. Mr. Heppen agreed that it should be considered. Mr. Hay said regulators proposed making SSAP No. 55 comport better with the more specific title insurance guidance in SSAP No. 57, but got a lot of pushback. Mr. Birnbaum (Center for Economic Justice) said the financial statement is an important tool that needs to be an accurate presentation of a company’s financial condition. He said the Academy suggests that there are significant variations in how companies address these financial statements. He said the Academy said total reserves would be the same under the proposal, yet argues there would be a financial statement impact. He also said the Academy indicates there is inconsistency between accounting practices, but the proposal would address these inconsistencies. He asked whether the Academy was saying the


12/--/17


proposal does not make a difference because it does not affect reserves or it would make a difference in how companies present reserves. He said if it is the latter, it is worthwhile to pursue the proposal. Mr. Heppen said, in SSAP No. 55, development on case reserves is acknowledged to be part of IBNR, while in title insurance, KCR is on the balance sheet. He said implementing the proposal, which says the actuary needs to opine on whether the KCR as a stand-alone balance sheet item is adequate, would have an impact on the financial statement. He said this item was previously just a subset. He said reserves as a whole are being evaluated currently without this proposal. Mr. Hudson agreed. He said the current structure requires the total actuarial reserve to be booked by the company and, if it is not booked in the KCR and the SPR, it has to be booked in the supplemental reserve. He said the regulator is already getting an actuarial opinion on the total reserve. He said regulators are trying to determine if a company has established liabilities to cover the actuarial determined reserve. He said he does not see a need for additional actuarial opinion on KCR. Mr. Hay asked if there was any change since 2007 in the current requirement. Mr. Hudson said any Schedule P reserve not booked in KCR and SPR is in the supplemental reserve. Mr. Hay said he took the 2016 Schedule P, Part 2 showing incurred as of 2007 and calculated a nine-year development industrywide and compared it to the 2007 reported surplus. He said industrywide development was 73%. He did not look at which companies were in financial trouble, but he suspects there were some. He also looked at indicated bulk reserves and thought they were a leading indicator of adverse Schedule P development. He said big parts of the industry missed this. He asked what regulators should do if they do not look more closely at the KCR. Mr. Hudson said actuaries missed the reserve, but that is the case no matter what system is implemented. Actuarial analysis needs to be accurate. There is always a risk when making an actuarial determination. He said this is not required for P/C companies, which could have the same issues. Mr. Hay said it is somewhat analogous to asbestos and environmental, where it has taken a long time for estimated ultimate to settle down. Mr. Hudson said a lot of lines of business have long development patterns. He said the issue is whether regulators would know more if they have two opinions. He said companies are already required to book the actuarially determined number. Mr. Hudson said he does not support the proposal. Ms. Wu said she was not sure, as KCR plus SPR is generally greater than Schedule P reserves in good years, but, in bad years, the reserve may not be adequate. Mr. Hay said it is not clear at all that this proposal carries with it increased bulk reserves. He said he may revisit the proposal after trying to incorporate the objections to address ambiguities. He said he would like support from the Working Group before doing this. Ms. Wu said a study of reserve development around the bad years to see how deficient reserves were in bad years would help. Mr. Hay said he has done this but did not publish it. He said it could be shared with the Working Group. Ms. Wu made a motion for Mr. Hay to study the reserve development. Mr. Derr said he was comfortable with the way reserves are calculated. There was no second to the motion. The motion failed. Mr. Hay concluded that the proposal for appointed actuaries to include the KCR within their Scope has no future within the Working Group. Mr. Heppen asked whether regulators would look at the fact that the opinion now has explicit commentary on the Schedule P, Part 3 development. Mr. Hay said he hesitates to go further down that road. He said the two-year development is not enough, as two-year development is usually below the 20% threshold. He said, in the title business, there is a potential for stringing out reserve development. He would prefer actuaries look for leading indicators to anticipate adverse reserve development. 2. Discussed Aggregate Industry Reports Aaron Brandenburg (NAIC) said the NAIC has created aggregated title reports created from the exhibits in the title insurance annual financial statement. He said some of the aggregated data was sent to the regulators on the Working Group. Mr. Hay asked regulators to review the data distributed and be prepared to provide guidance on what could be produced by the NAIC. He also asked whether the reports were redundant with what the American Land Title Association (ALTA) produces. Having no further business, the Title Insurance Financial Reporting (C) Working Group adjourned. W:\National Meetings\2017\Fall\TF\Title\TitleInsFinReporting\9-TitleFinRepWGmin.docx


Attachment Three States Title Presentation

States TitleCorporate Overview

every homeowner needs it

Everybody needs it~10M POLICIES WRITTEN IN 2015

(US)

A Consolidated Market with Extraordinarily Low Loss Ratios

$2.7

$5.4

$8.2

$10.9

$13.6

2010 2011 2012 2013 2014 2015

Fidelity

First American

Old Republic

Stewart

Other

Total Industry Revenues

$13.6 Billion6%

Net Income5%Claims

89%OpEx

Proprietary & Confidential

A Slow, Expensive Process for All Involved

Mortgage Bank Title Insurer Title Policy Home Buyer

Hires To Issue Paid for by

Which Covers



Preliminary Title Report

A Slow, Expensive Process for All Involved

Armies of Title Searchers

Public Records ABC Bank $600KMortgage

H. Solomon $300KBorrower

A. Contractor $10KProperty Lien

B. Contractor $25KProperty Lien


Property Database Other Records



ABC Bank $600KMortgage




Title policies often don’t cover items unearthed in the title report.

Title Policy Covers: Preliminary Title Report







5–10 days of negotiation 15%of MB OpEx

We’d like you to cover these things.

Sorry.

You need to cover these things.

...OK.





Title Policy Covers: Preliminary Title Report






Analytics-PoweredMortgage Bank Title Insurer Title Policy Home Buyer

5–10 Seconds

Public Data

Paid Data

PartnerData

Analytics Engine

100% Mortgage $600K

100% Borrower $300K

98% ±2 Prop. Lien ~$10K

88% ±12 Prop. Lien ~$25K

12% ±4 Prop. Lien ~$5K

It’s Time for Automated, Data-Driven Underwriting

Predicts

Generates


OUR TITLE PACKAGE LOOKS AND FEELS EXACTLY LIKE YOU ARE USED TO SEEING

INNOVATING THE EXPERIENCE, NOT THE FORMS…

WE GENERATE AN INDUSTRY STANDARD TITLE PACKAGE

ALTA Loan Policy (2006)

ALTA Loan Commitment (2016)

and innovate only where it delivers you value …

so we generate a ALTA® standard title package

Our goal is to make the transition for you familiar and seamless ….

Proprietary and Confidential

OUR PROCESS ELIMINATES THE SLOW, ITERATIVE PROCESS OF “CLEARING” TITLEBY DELIVERING INSTANTANEOUS, CURATIVE-FREE TITLE COMMITMENTS

RADICALLY IMPROVED UNDERWRITING

ORD E R T ITLE

RIS K AS S E S S M E NT

Instant

INS TA NT C OM M ITM E NT

<1 minute

2-3 interactions with States Title

I S S UE P RE L IM INA RY RE P ORT

2-3 days

NE GOTIATE /C URE RE QUIRE M E NTS

3-5 days

F INALIZE C LOS ING P AC K AGE

1-2 days

C LOS ING

As scheduled

10+ interactions with the Title Company

Commitment OutcomeTRAD IT IONAL T ITLE C OM P ANY

<1 minto “final” (curative-free) commitment

5-10 daysto “final” commitment

Instantaneously underwrite 75%+ of properties

C LOS ING

As scheduled

Proprietary and Confidential


Attachment Four Title Insurance Education Course

Materials

Title InsuranceBasics forRegulators

Title Insurance (C)Task Force

National Association ofInsurance Commissioners2017

1

CourseObjectivesIdentify the who, what, where, when, why and how oftitle insurance.Define the covered risks, product (policy) types andcoverage options available.Explain the difference between title insurance and othertypes of property casualty (P/C) insurance.Explain the claims process for title insurance.Describe how current market trends may impactregulation of title insurers and title agents.Understand the issues that regulators need to knowregarding title insurance in order to regulate it.

2

What isTitle Insurance?Title insurance is a form of indemnity insurance thatinsures owners of real property against financial lossor damages from defects in title (ownership interest)to the real property and additionally for lenders fromthe invalidity or unenforceability of mortgage loans.Plus defense of insured in litigation of covered claims.Basic forms of title insurance include owner’s policiesand loan policies.

3

Why doesTitle Insurance Exist?A brief history...Title insurance was created to provide indemnityin the case of a loss or damages, with relativelylow risk.Iowa is the only state which still maintains the oldsystem, where title insurance is not an approvedline of insurance.

4

What are the Basic Forms ofTitleInsurance?

Owners Policy – protects the owner’s interest in the propertyup to the policy amount for the entire time the owner retainsan interest in the property. An interest may be retained byownership or warranties of title.Loan Policy – protects the lender’s interest in the property upto the loan amount for the life of the loan.As the principal ispaid down, the policy amount is adjusted down accordingly. Ifproperty is foreclosed, the loan policy converts to an owner’spolicy in favor of the lender.

Buyer is not protected by Loan Policy; buyer may purchaseseparateOwner’s Policy.EnhancedCoverage/Endorsements – covers additional risksfor additional costs. Availability differs among states.

5

How is a Person’sOwnershipInterest Established?

ConveyanceInterestDeedsRecording

Race State Priority

6

How Does a PersonGetTitleInsurance?

Order through Policy ProcessOrderUnderwriting“ClearingTitle”Closing theTransactionPost Closing

7

OrdersReverse CompetitionPoint of Sale ReferralRegulatory Concerns

8

UnderwritingTitle Search/Abstract

Public RecordsChain of TitleTitle Plant

ExaminingTitleUnderwriting Standards

Perfecting v. Marketable v. UnmarketableInsuringOverUpdating

Preparing theTitle CommitmentConstruction Considerations

9

Underwriting

ScheduleADatePolicies to be issuedand Proposed InsuredInsuranceCompanyAgentLegal Description

Schedule BBI & BIIRequirements thatneed to bemet priorto closingWho is currentlyvested in titleItems that will beexceptions to policy

Prepare theTitle Commitment

10

ClearingTitleLien andMortgage Payoffs and ReleasesHandling Probate IssuesObtaining Deeds orQuietingTitleCorrecting Recorded DocumentsPreparing Closing DocumentsChallenges

11

Closing theTransaction:Closing and Escrow

Attorney statesClosing processSatisfaction/waiver of contingenciesPrepare closing documents (Integrated Disclosure)In person or e signWho can perform the closingReceive borrower fundsDisburse funds in accordance with written instructionsProvide copies of documents to buyer and seller

12

Closing theTransaction:Closing and Escrow

Good fundsClosing protection lettersDefalcationsStrict liability statutesBifurcated closingsGap coverage

13

Post ClosingRecording DocumentsPolicy IssuancePost Closing Issues

Final DisbursementsRecordingsPolicy IssuanceRecord RetentionClaims

14

Who NeedsTitle Insurance?

Lenders in the processof extending credit

New purchase moneyhome LoanRefinanceHome Equity Line ofCredit (HELOC)

Lenders in the processof foreclosure

Buyers in the processof purchasing anexisting propertyBuyers in the processof building a newhomeConsumers who haveinherited property

Consumers Lenders

15

Who Pays forTitle Insurance?Owner’s Policy

Buyer or Seller/NegotiableMay be split or paid by concession

Loan PolicyBorrower

There is no restriction on who pays.Only the named insured can file a claim.Payment of the premium by one party does not meanthe policy provides any benefits for that party.

16

Where Should ConsumersGetTitleInsurance?

Industry Relationships Rule!Title InsuranceAgent/AgencyTitle Insurer Local DirectOfficeAttorneyConsumer Resources

17

When Should ConsumersObtainTitle Insurance?

As SoonAs Possible!GovernmentAccountability Office (GAO) 2007Report

Point of concern

Point of SaleTitle InsuranceSettlement Services

18

PolicyTypes andCoverageOptionsProduct (Policy) Types

Owner’s PolicyLoan PolicyResidential v. CommercialCoinsurance and Reinsurance

CoverageOptionsHomeowner’s PoliciesEndorsements

19

Difference between title insuranceand other types of P/C insurance

Coverage PeriodPremium PeriodMono lineReferral BusinessExceptionsPrecariousRelationshipsCommitments

ConstructionconsiderationsPremium Reserves andReleasesPremiumUseExpense and LossRatios

20

Title Insurance Expense and LossRatios

Combined Ratio 2016 2015 2014 2013 2012

Property/Casualty 100.7% 97.9% 97.3% 95.9% 103.2%Title 99.5% 99.1% 102.2% 101.5% 104.3%

2016 2015 2014 2013 2012

Property/Casualty 72.2% 69.3% 69.0% 67.2% 74.4%

Title 4.9% 5.3% 6.5% 6.6% 7.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Perce

ntag

e

Loss Ratio

2016 2015 2014 2013 2012

Property/Casualty 27.8% 28.0% 27.6% 28.0% 28.2%

Title 94.6% 93.9% 95.7% 94.9% 96.7%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Perce

ntag

e

Expense Ratio

21

Claims

Definition: Another person or entity asserts aninterest in the insured property that is enumeratedas a covered risk in the policy.Who canmake claim

Only the named insured canmake a claim on thepolicyThird parties are not eligible for coverage or directpolicy payments

22

Coverage for ClaimsCoveredmatters

Covered risks vary bypolicy formTypically listed onfront part of policyjacketLimitations inScheduleA

ExamplesExclusionsConditions andStipulationsExceptions

Schedule BPre printedProperty Specific

23

What are typical claims?Search/Examination ErrorPrior lienMechanic’s LienGapCoverageBoundary disputes (Overlaps, encroachments, Survey Errors)AccessEasementsFraud (false origination/release mortgage, identity theft)ForgeryMissing interestVesting issuesDocument Preparation Errors (Incorrect Legal Description, deed/mortgage, nonotary signature, etc.)Recording ErrorsTaxesDefalcations

24

Claim ResponsibilitiesInsurer Duty

Duty to IndemnifyDuty to Defend

Insured DutyProvide PromptWritten Notice to InsurerCooperate with investigation, litigation, settlementObtain insurer approval prior to settlementMitigate

25

How areClaims ResolvedTitle Defect is CuredPayment of Loss

Diminution ofValuePayment of policy limits

Defense of LitigationInsurer right to decide to appeal unfavorable rulingChoosing of counsel

Letter of IndemnityPermits sale of property to move forward without delay

Insuredmay not be satisfied with result

26

Difference BetweenTitle Claims andOther P&CClaims

Typically take longer to investigate and resolveLoss may bemore difficult to determine

I.e. No blue book value to determine decrease invalue due to undisclosed easement

Most states require title insurers to adhere toUnfairTrade Practices Act or Unfair ClaimsSettlement Practices ActPolicies encourage claims to bemade to insurerrather thanAgent

27

Claim Differences (Continued)Any loss payment made toOwner will decreasepolicy amount by amount of loss paymentInsurer will not come onsite or send adjuster toproperty to review claimNo increase in premium or risk that insurer will“drop coverage due to claim” because titleinsurance is only paid once.

28

Settlement Services/EscrowConsiderations

Policy does not coverLicensing of Escrow officers variesStates still may regulate

Administrative action/market conduct/fineDisbursement of fundsClosing Protection Letters (CPL)Strict Liability (Ex. Neb. Rev. Stat. § 44 1993(8)(a))

29

Current MarketTrends andRegulatory Concerns

Industry RelationshipAgreementsReal Estate Settlement Procedures Act (RESPA)Affiliated Business Arrangements (AfBA)MSA

TILA RESPA Integrated Disclosure and other CFPBrulingsBifurcated (“Split”) ClosingEnforcementActions (States &CFPB)Fraud andCyber Security

30

Cybersecurity and FraudSchemes and Events

Major SchemesPhishing/Whaling

Gather Non Public Personal Information (NPPI)Revise wire transfer instructions

Cybersecurity EventsMalwareRansomware

31

Cyber Security and FraudRed Flags and Security Measures

Red FlagsStale dated checksUndisbursed fundsOutstanding depositsNegative file balances

Security MeasuresOrganizationalAdministrativeNetwork

32

Cybersecurity and FraudCompliance

Compliance MeasuresPositive payDaily three way reconciliationDedicated standalone computer for bank useMalware protectionAutomatic updatesStrong authenticationDual controls

33

Cybersecurity and FraudBest Practices andAwareness

Best PracticesLicensing standardsWritten policies and procedures

Escrow accounts (regular audits)SettlementPolicy production, deliver and reporting premium remittanceConsumer complaints

Maintain appropriate coverageProfessional liabilityFidelity

AwarenessConsumer educationPublic service announcements

34

State Regulation andVariancesLicenseesLicense andAppointment RequirementsDataCallsRates and FormsAttorneysConfidentiality RequirementsDefalcation LiabilityTitle Plant Requirement/AllowancesClosing Protection Letters RegulationsSurety/Fidelity RequirementsAfBA Requirements/Allowances/ProhibitionsGuaranteeAssociationReferences

35

WhereCan Regulators FindTools to InformConsumers?

GovernmentAccountabilityOffice (GAO) ReportThe NAIC developed a consumer shopping guide as atemplate for states to utilize for informing consumersin their state.

http://naic.org/documents/committees_c_title_tf_related_shopping_too_template.pdf

Several states have developed online consumer ratingtools.

EXAMPLESNevada http://titlerates.doi.nv.gov/Indiana http://www.in.gov/idoi/2876.htm

36

Where to go for more information –NAIC Resources

Follow theTitle Insurance (C)Task Force.Visithttp://naic.org/committees_c_title_tf.htm tocheck out what they’re working on. ContactJennifer Gardner at [email protected] to beadded to the distribution list.State laws vary. Check out the NAIC Survey ofState Insurance Laws RegardingTitle Data andTitle Matters here:http://naic.org/documents/committees_c_title_tf_related_title_survey.pdf

37

Where to go for more information –Outside Resources

Real Estate Settlement Procedures Act (RESPA) 12U.S. Code § 260112USC 2602 – Definitions –AfBA12USC 2607 – Prohibition against Kickbacks andUnearned Fees (Section 8)12USC 2608 –Title Companies; liability of seller (Section 9)12USC 5565 – Relief Available (penalties)12 CFR 1024 –Use of HUD 1 or HUD 1A settlement statement12 CFR 1024.14 – Prohibition against Kickbacks and Unearned Fees (Section8)12 CFR 1024.15 –AfBA12CFR 1024.16 (Section 9)

The American Land Title Association provides a wealth of informationregarding title insurance. Check out the information they have to offerat www.alta.org and http://www.homeclosing101.org/

38


Attachment Five Hear an Update on Federal Activities

H. R. 3978

To amend the Real Estate Settlement Procedures Act of 1974 to modify requirements related to mortgage disclosures, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 5, 2017

Mr. HILL (for himself and Mr. KIHUEN) introduced the following bill; which was referred to the Committee on Financial Services

BILL

To amend the Real Estate Settlement Procedures Act of 1974 to modify requirements related to mortgage disclosures, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the “TRID Improvement Act of 2017”.

SEC. 2. AMENDMENTS TO MORTGAGE DISCLOSURE REQUIREMENTS.

Section 4(a) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603(a)) is amended—

(1) by striking “itemize all charges” and inserting “itemize all actual charges”;

(2) by striking “and all charges imposed upon the seller in connection with the settlement and” and inserting “and the seller in connection with the settlement. Such forms”; and

http://uscode.house.gov/quicksearch/get.plx?title=12&section=2603

(3) by inserting after “or both.” the following new sentence: “Charges for any title insurance premium disclosed on such forms shall be equal to the amount charged for each individual title insurance policy, subject to any discounts as required by State regulation or the title company rate filings.”.

BACKGROUND FOR ITEM (2)

2603. Uniform settlement statement (a) Disclosure for mortgage loan transactions

The Bureau shall publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which includes the disclosure requirements of this section and section 2604 of this title, in conjunction with the disclosure requirements of the Truth in Lending Act [15 U.S.C. 1601 et seq.] that, taken together, may apply to a transaction that is subject to both or either provisions of law. The purpose of such model disclosure shall be to facilitate compliance with the disclosure requirements of this chapter 1 and the Truth in Lending Act, and to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures. Such forms shall conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement and and the seller in connection with the settlement. Such forms shall indicate whether any title insurance premium included in such charges covers or insures the lender's interest in the property, the borrower's interest, or both. The Bureau may, by regulation, permit the deletion from the forms prescribed under this section of items which are not, under local laws or customs, applicable in any locality, except that such regulation shall require that the numerical code prescribed by the Bureau be retained in forms to be used in all localities. Nothing in this section may be construed to require that that part of the standard forms which relates to the borrower's transaction be furnished to the seller, or to require that that part of the standard forms which relates to the seller be furnished to the borrower.

http://uscode.house.gov/view.xhtml?req=(title:12%20section:2603%20edition:prelim)#2603_1_target