By Paul Roberts, Director, Aprio’s ComplianceSuccess Program
ALTA released Version 2.1 of its Best Practices Framework Assessment Procedures in November 2014. Often we are told that these are guidelines and not measurable standards. Is that really the case? And was that the intent when Best Practices were developed for the title industry?
Guidelines are subjective and are considered to be options one could consider adopting if they felt the need. If ALTA Best Practices were truly a guideline and not a body of standards by which title agents measure their policies, procedures and internal controls for purposes of certifying compliance, then what would that certification really mean and how would the industry define it?
ALTA Best Practices are a body of standards for the title insurance industry to allow agents the opportunity to upgrade their policies, procedures and internal controls for the purpose of mitigating business risk. ALTA’s Best Practices Committee members drafted and issued the Best Practices Assessment Procedures to serve as the basis by which title agents can be consistently measured for the purpose of demonstrating an industry standard of internal control assurance to stakeholders. To view Best Practices as a set of optional business considerations, as opposed to a set of reliable core internal control standards, would minimize their value and continue to expose the industry and consumers to an unacceptable level of risk in the marketplace.
A methodology for standard compliance testing is new to the title industry. Never before have title agents been asked to adopt industry-wide standards of this kind and the reflex reaction varies depending on one’s circumstances.
“With the advent of the Consumer Financial Protection Bureau (CFPB), service providers for mortgage lenders are now required to demonstrate how consumers are protected in terms of financial/non-financial controls, information security and insurance protection,” said Marx Sterbcow, managing partner at Sterbcow Law Group, LLC. “Ultimately, the purpose of ALTA Best Practices is to serve and protect consumers involved in the home buying process as a body of standards, not an optional guide”, added Sterbcow.
In its mission statement within the Best Practices framework, ALTA states that its intent is “to guide its membership on best practices to protect consumers, promote quality service, provide ongoing employee training, and meet legal and market requirements.”
From a marketing perspective, an ALTA Best Practices certification based on CPA attestation standards is an indicator of compliance and integrity on which lenders can rely upon. With the TILA-RESPA Integrated Disclosure (TRID) new deadline of Oct. 3, lenders are going to be more particular about the title companies with whom they choose to do business, and this type of certification could make all the difference in terms of gaining a competitive advantage in the marketplace.
The first step to achieving an ALTA Best Practices certification is to understand what gaps may exist between your existing business processes and the seven Best Practice pillars. The two methods available in the market place are the ALTA Best Practices Assessment tools located at www.alta.org/bestpractices and ComplianceSuccess Benchmark tool located at www.compliancesuccess.com/getstarted.
ALTA Best Practices are a body of standards for the title insurance industry to allow agents the opportunity to upgrade their policies, procedures and internal controls for the purpose of mitigating business risk.