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Best Practices

AMBASSADOR TITLE CORPORATION

 

Title Insurance and Settlement Company Best Practices

(August, 2014)

 

Mission Statement

 

  • The American Land Title Association (ALTA) seeks to guide its membership on best practices to protect consumers, promote quality service, provide for ongoing employee training, and meet legal and market requirements. These practices are voluntary and designed to help members illustrate to consumers and clients the industry’s professionalism and best practices to ensure a positive and compliant real estate settlement experience. These best practices are not intended to encompass all aspects of title or settlement company activity.

 

  • ALTA is publishing these best practices as a benchmark for the mortgage lending and real estate settlement industry. ALTA seeks comments from stakeholders as the Association seeks to continually improve these best practices. A formal committee of ALTA members will regularly review and make improvements to these best practices seeking comment on each revision.

 

Definitions

Background Check: A background check is the process of compiling and reviewing both confidential and public employment, address, and criminal records of an individual or an organization. Background checks may be limited in geographic scope. This provision and use of these reports are subject to the limitations of federal and state law.

 

Company: Ambassador Title Corporation which is the entity implementing these best practices.

 

Escrow: A transaction in which an impartial third party acts in a fiduciary capacity for the seller, buyer, borrower, or lender in performing the closing for a real estate transaction according to local practice and custom. The escrow holders have fiduciary responsibility for prudent processing, safeguarding and accounting for funds and documents entrusted to them.

 

Escrow Trust Account: An account to hold funds in trust for third parties, including parties to a real estate transaction. These funds are held subject to a fiduciary capacity pursuant to written instructions.

 

Federally Insured Financial Institutions: A financial institution that has its deposits insured by an instrumentality of the federal government, including the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA).

 

Licenses: Title Agent or Producer License or registration, or any other business licensing requirement as required by state law, or a license to practice law, where applicable.

 

Non-public Personal Information: Personally identifiable data such as information provided by a customer on a form or application, information about a customer’s transactions, or any other information about a customer which is otherwise unavailable to the general public. NPI includes first name or first initial and last name coupled with any of the following: Social Security Number, driver’s license number, state-issued ID number, credit card number, debit card number, or other financial account numbers.

 

Positive Pay or Reverse Positive Pay: Any system by which the authenticity of a check is determined before payment is made by the financial institution against which the check is written.

 

Settlement: In some areas called a “closing.” The process of completing a real estate transaction in accordance with written instructions during which deeds, mortgages, leases and other required instruments are executed and/or delivered, an accounting between the parties is made, the funds are disbursed and the appropriate documents are recorded.

 

Trial Balance: A list of all open individual escrow ledger record balances at the end of the reconciliation period.

 

Three-Way Reconciliation: A three-way reconciliation is a method for discovering shortages (intentional or otherwise), charges that must be reimbursed or any type of errors or omissions that must be corrected in relation to an Escrow Trust Account. This requires the escrow trial balance, the book balance and the reconciled bank balance to be compared. If all three parts do not agree, the difference shall be investigated and corrected.

  1. BEST PRACTICE: ESTABLISH AND MAINTAIN CURRENT LICENSE(S) AS REQUIRED TO CONDUCT THE BUSINESS OF TITLE INSURANCE AND SETTLEMENT

Purpose:    Maintaining   state mandated   insurance   licenses   and   corporate   registrations (as applicable) helps ensure the Company remains in good standing with the state.

Procedures to meet this best practice:

 

  • Establish and maintain applicable business License(s).
  • Establish and maintain compliance with Licensing, registration, or similar requirements with the applicable state regulatory department or
  • Establish and maintain appropriate compliance with ALTA’s Policy Forms Licensing

 

Ambassador Title Corporation Compliance Statement For Best Practice Number 1

 

Ambassador Title Corporation is compliant with Best Practice Number 1.

 

  1. The Company maintains licenses to do business in the State of Wisconsin.
  2. Sharon Lopez and John U. Schneider are licensed in accordance with the licensing and regulatory requirements of the State of Wisconsin.
  3. Ambassador Title Corporation maintains a license to use the ALTA forms in conjunction with its membership in the ALTA

 

 

  1. BEST PRACTICE: ADOPT AND MAINTAIN APPROPRIATE WRITTEN PROCEDURES AND CONTROLS FOR ESCROW TRUST ACCOUNTS ALLOWING FOR ELECTRONIC VERIFICATION OF

 

Purpose: Appropriate and effective escrow controls and staff training help title and settlement companies meet client and legal requirements for the safeguarding of client funds. These procedures help ensure accuracy and minimize the exposure to loss of client funds. Settlement companies may engage outside contractors to conduct segregation of trust accounting duties.

Procedures to meet this best practice:

 

  • Escrow funds and operating accounts are separately
    • Escrow funds or other funds the Company maintains under a fiduciary duty to another are not commingled with the Company’s operating account or an employee or manager’s personal
  • Escrow Trust Accounts are prepared with Trial
    • On at least a monthly basis, Escrow Trust Accounts are prepared with Trial Balances (“Three-Way Reconciliation”), listing all open escrow
  • Escrow Trust Accounts are
    • On at least a daily basis, reconciliation of the receipts and disbursements of the Escrow Trust Account is performed

 

  • On at least a monthly basis, a Three-Way Reconciliation is performed reconciling the bank statement, check book and Trial
  • Segregation of duties is in place to help ensure the reliability of the reconciliation and reconciliations are conducted by someone other than those with signing
  • Results of the reconciliation are reviewed by management and are accessible electronically by the Company’s contracted underwriter(s).
  • Escrow Trust Accounts are properly
    • Accounts are identified as “escrow” or “trust” Appropriate identification appears on all account-related documentation including bank statements, bank agreements, disbursement checks and deposit tickets.
  • Outstanding file balances are
  • Transactions are conducted by authorized employees
    • Only those employees whose authority has been defined to authorize bank transactions may do so. Appropriate authorization levels are set by the Company and reviewed for updates annually. Former employees are immediately deleted as listed signatories on all bank
  • Unless directed by the beneficial owner, Escrow Trust Accounts are maintained in Federally Insured Financial
  • Utilize Positive Pay or Reverse Positive Pay, Automated Clearing House blocks and international wire blocks, if
  • Background Checks are completed in the hiring process. At least every three years, obtain Background Checks going back five years for all employees who have access to customer
  • Ongoing training is conducted for employees in management of escrow funds and escrow

 

       Ambassador Title Corporation Compliance Statement for Best Practice Number 2

 

Ambassador Title Corporation is compliant with Best Practice Number 2.

 

  • The Company maintains separate operating and escrow accounts.
  • Escrow accounts are prepared with trial balance.
  • Escrow trust accounts are reconciled at least monthly using DacEasy and Softpro software.
  • Duties are segregated so that employees with signing authority are not involved in reconciliation. Management reviews each electronically stored reconciliation report.
  • Each escrow account is labeled as “Custodial Escrow Account” or “Trust account”.
  • Positive and negative file balances are documented.
  • Only authorized employees can conduct closing settlements and former employees are immediately removed as signatories on all accounts.
  • Escrow accounts are established only at Federally Insured Financial Institutions.
  • ACH blocks and international wire transfer blocks are in place on all escrow accounts.
  • Only those employees who have satisfactory credit reports and background checks are authorized
  • Closing/Settlement employees receive periodic training in person and by teleconference.

 

  1. BEST PRACTICE:  ADOPT AND MAINTAIN A WRITTEN PRIVACY AND NFORMATION SECURITY PROGRAM TO PROTECT NON-PUBLIC PERSONAL INFORMATION AS REQUIRED BY LOCAL, STATE AND FEDERAL LAW.

 

Purpose: Federal and state laws (including the Grarnm-Leach-Bliley Act) require title companies to develop a written information security program that describes the procedures they employ to protect Non-public Personal Information. The program must be appropriate to the Company’s size and complexity, the nature and scope of the Company’s activities, and the sensitivity of the customer information the Company handles. A Company evaluates and adjusts its program in light of relevant circumstances, including changes in the Company’s business or operations, or the results of security testing and monitoring.

Procedures to meet this best practice:

 

  • Physical security of Non-public Personal
    • Restrict access to Non-public Personal Information to authorized employees who have undergone Background Checks at
    • Prohibit or control the use of removable
    • Use only secure delivery methods when transmitting Non-public Personal
  • Network security of Non-public Personal
    • Maintain and secure access to Company information technology
    • Develop guidelines for the appropriate use of Company information o Ensure secure collection and transmission of Non-public Personal Information.
  • Disposal of Non-public Personal
    • Federal law requires companies that possess Non-public Personal Information for a business purpose to dispose of such information properly in a manner that protects against unauthorized access to or use of the
  • Establish a disaster management
  • Appropriate management and training of employees to help ensure compliance with Company’s information security
  • Oversight of service providers to help ensure compliance. with a Company’s information

security program.

  • Companies should take reasonable steps to select and retain service providers that are capable of appropriately safeguarding Non-public Personal
  • Audit and oversight procedures to help ensure compliance with Company ‘s information

security program.

  • Companies should review their privacy and information security procedures to detect the potential for improper disclosure of confidential
  • Notification of security breaches to customers and law

 

  • Companies should post the privacy and information security program on their websites or provide program information directly to customers in another useable format. When a breach is detected, the Company should have a program to inform customers and law enforcement as required by

Ambassador Title Corporation Compliance Statement for Best Practice Number 3

                                   

Ambassador Title Corporation is compliant with Best Practice Number 3.

 

  • Non-public personal information, if physically maintained at Ambassador Title Corporation, is accessible only by authorized employees.
  • Non-public personal information, if electronically maintained, is done so on secure servers with access restricted to only authorized employees.
  • Storing data on removable media, such as smart phones, USB drives and disks is controlled and often prevented by management.
  • Documents containing non-public personal information is transmitted from Ambassador Title Corporation using Citrix Sharefile, a vendor specializing in safe delivery of documents using encryption and password protection.
  • Ambassador Title Corporation maintains its own document shredder and contracts service to a shredding vendor to ensure safe disposal of non-public personal information.
  • Ambassador Title Corporation maintains and tests its written Disaster Recovery Plan on an annual basis.
  • All existing and new employees are trained on information security.

 

4.    BEST PRACTICE: ADOPT STANDARD REAL ESTATE SETTLEMENT PROCEDURES AND POLICIES THAT ENSURE COMPLIANCE WITH FEDERAL AND STATE CONSUMER FINANCIAL LAWS AS APPLICABLE.

 

Purpose: Adopting appropriate policies and conducting ongoing employee training helps ensure the Company can meet state, federal, and contractual obligations governing the Settlement

Procedures to meet this best practice:

 

  • Recording
    • Review legal and contractual requirements to determine Company obligations to record documents and incorporate such requirements in its written
      • Submit or ship documents for recording to the county recorder (or equivalent) or the person or entity responsible for recording within two (2) business days of the later of (i) the date of Settlement, or (ii) receipt by the Company if the Settlement is not performed by the
      • Track shipments of documents for
      • Ensure timely responses to recording
      • Addressing rejected recordings to prevent unnecessary
      • Verify that recordation actually occurred and maintain a record of the recording information for the document(s).
    • Pricing
      • Maintain written procedures to help ensure that customers are charged the correct title insurance premium and other rates for services provided by the Company. These premiums and rates are determined by a mix of legal and contractual
        • Utilize rate manuals and online calculators, as appropriate, to help ensure correct fees are being charged for title insurance policy premiums, state­ specific fees and
        • Ensure discounted rates are calculated and charged when appropriate, including refinance or reissue
        • Quality check files after Settlement to help ensure consumers were charged the

Company’s established rates.

  • Provide timely refunds to consumers when an overpayment is

 

Ambassador Title Corporation Compliance Statement for Best Practice Number 4

 

Ambassador Title Corporation is compliant with Best Practice Number 4.

 

  • Ambassador Title Corporation’s policy requires its closing/settlement employees to submit documents for recording within two business days of disbursement and tracking the documents through the recorder’s office.
  • Ambassador Title Corporation maintains records of the title insurance rates which are filed with the State of Wisconsin by each of its underwriters. Employees are trained in the use of these records to ensure that customers are being charged the appropriate premiums.

 

5.    BEST PRACTICE: ADOPT AND MAINTAIN WRITTEN PROCEDURES RELATED TO TITLE POLICY PRODUCTION, DELIVERY, REPORTING AND PREMIUM REMITTANCE.

 

Purpose: Adopting appropriate procedures for the production, delivery, and remittance of title insurance policies helps ensure title companies can meet their legal and contractual obligations.

Procedures to meet this best practice:

 

  • Title policy production and
    • Title insurance policies are issued and delivered to customers in a timely manner to meet statutory, regulatory or contractual
      • Issue and deliver policies within thirty days of the later of (i) the date of Settlement, or (ii) the date that the terms and conditions of title insurance commitment are
    • Premium reporting and
  • Title insurance policies are reported and premiums are remitted to the underwriter in a timely manner to meet statutory, regulatory or contractual

 

  • Report policies (including a copy of the policy) to underwriter by the last day of the month following the month in which the insured transaction was
  • Remit premiums to underwriter by the last day of the month following the month in which the insured transaction was

 

Ambassador Title Corporation Compliance Statement for Best Practice Number 5

 

Ambassador Title Corporation is compliant with Best Practice Number 5.

 

  • Ambassador Title Corporation issues and delivers policies to its customers in a timely manner often electronically to meet the demands of lenders and consumers.
  • Ambassador Title Corporation reports policies and payments for those policies to its underwriters in a timely manner to meet statutory, regulatory and contractual obligations.

 

6.    BEST PRACTICE: MAINTAIN APPROPRIATE PROFESSIONAL LIABILITY INSURANCE AND FIDELITY COVERAGE.

 

Purpose: Appropriate levels of professional liability insurance or errors and omissions insurance help ensure title agencies and settlement companies maintain the financial capacity to stand behind their professional services. In addition, state law and title insurance underwriting agreements may require a company to maintain professional liability insurance or errors and omissions insurance, fidelity coverage or surety bonds.

Procedures to meet this best practice:

 

  • The Company maintains professional liability insurance or errors and omissions
  • The Company complies with requirements for professional liability insurance, errors and omissions insurance, fidelity coverage or surety bonds, as provided by state law or title insurance underwriting

 

Ambassador Title Corporation Compliance Statement for Best Practice Number 6

 

Ambassador Title Corporation is compliant with Best Practice Number 6.

 

  • Ambassador Title Corporation maintains appropriate levels of Errors & Omissions insurance, Fidelity coverage and Surety coverage to meet state law and contractual obligations.

 

7.    BEST PRACTICE: ADOPT AND MAINTAIN PROCEDURES FOR RESOLVING CONSUMER COMPLAINTS.

 

 

Purpose: A process for receiving and addressing consumer complaints is important to ensure that any instances of poor service or non-compliance do not go undiscovered.

 

Procedures to meet this best practice:

 

  • Consumer complaint intake, documentation and
    • Standard procedures for logging and resolving consumer complaints helps ensure consumers provide the company with sufficient information to understand the nature and scope of the
      • Develop a standard consumer complaint form that identifies information that

connects the complaint to a specific transaction.

  • Set a single point of contact for consumer complaints .
  • Establish procedures for forwarding complaints to appropriate Maintain a log of consumer complaints that includes whether and how the complaint was resolved.

 

 

Ambassador Title Corporation Compliance Statement for Best Practice Number 7

         

Ambassador Title Corporation is compliant with Best Practice Number 7.

 

  • Ambassador Title Corporation has a written policy to deal with customer complaints that allows the office manager to settle the complaint; or if unable to do so, to transfer the issue to the Company President.