AgentConnect - Issue #11 - March 2016

AGENTconnect THE COLORADO AGENCY NEWSLETTER

Issue #11 | March 2016

COMPLIANCE AUDIT FINDINGS APPLYING ACCUR ATE R ATES By: Amie Voss, VP, Colorado and Wyoming State Agency Manager

In the fourth quarter of 2015, First American Title in Colorado conducted its annual compliance audit of agent’s files. The purpose of the audit is to assist agents in being prepared for future Colorado Division of Insurance Market Conduct Exams by retaining proper documents, while also performing our due diligence as the underwriter. As part of the file audit, accuracy of rate applications is also reviewed.

This is an area where we continue to see the highest percentage of errors. For your benefit, the following list contains the most common errors we find in rate calculations: • Rounding Up: The total Basic Rate should be rounded up to the next dollar. This includes the total with any discounts taken, such as when applying the Short Term Reissue Rate.

• Applying the Short Term Reissue Rate: The charge for the new policy should be based on the full liability of the new policy at the applicable charge of 50% or 70%, based on the time period.

• Applying the Correct Rate for Property Type: The Basic Rate for Commercial properties is found in Area H, with the outline of charges currently in Section I. Care should be taken to apply the correct rates for Residential vs. Commercial. The rate for Vacant Land should be applied pursuant to how the assessor shows the property, and in cases of non-residential, the commercial rate should be applied.

• Extended Coverage Charges: Extended Coverage for deletion of Items 1-3 are found in Section H-2 of the current rate manual (dated 5/15/13). Additional charges for deletion of Mechanic’s Lien Coverage apply and are found on page 49 of the current

rate manual. For most transactions, the charge to delete the Mechanic’s Lien exception will be $15 for residential and $25 for commercial properties.

• Not Applying the Correct Underwriter’s Rates: Agents who have agreements with multiple underwriters, must take care to apply the rates for the underwriter whose paper the transaction will be written on. There are cases where a transaction may switch to another underwriter, during the course of the transaction, and a process must be in place to update the file with the appropriate underwriter’s rates.

• Incorrect Charge for Endorsements: Please refer to the appropriate section in the current rate manual for endorsement charges.

First American Title has a resource available to assist our agents in calculating the appropriate rate. The First American Comprehensive Calculator (FACC) can be accessed at facc.firstam.com and should be used by all agents as a tool to ensure accurate rate applications.

Currently, Commercial rates are not available through the FACC, but enhancements are coming soon to enable this feature.

If you need any assistance with the rate calculator or have any questions with rate applications, please reach out to me or your local underwriters at any time.

The information contained in this document was prepared by First American Title Insurance Company (“FATICO”) for informational purposes only and does not constitute legal advice. FATICO is not a law firm and this information is not intended to be legal advice. Readers should not act upon this without seeking advice from professional advisers. First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.

AMD: 03/2016

©2016 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF

Get to Know the Colorado Underwriting Team BOB RICE

VP, Regional Counsel 208.321.5180 rrice@firstam.com Bob Rice joined First American Title in 2015 and brings over 17 years of legal and title insurance experience to his position. As regional counsel, Bob provides underwriting support and guidance to agents on issues related to the issuance of title insurance commitments, policies and other products. Prior to joining First American title, Bob served as regional and state counsel for two national title insurance underwriters where he provided underwriting support to agents and was responsible for all legal, regulatory and underwriting matters in multiple states throughout the West.

Bob resides in Boise, Idaho with his wife, Tammy, 11-year old Black Lab, Ed, 10-year old English Bulldog, Captain and 20-year old cat, Cleo. In his free time, Bob enjoys taking advantage of Boise’s many craft breweries, running and biking in the Boise foothills and waterfowl hunting on the Snake River.

SANDY PLAVEN Senior Underwriter 303.305.3361 splaven@firstam.com

Sandy Plaven joined First American Title in 2010 and was recently promoted to Senior Underwriter. She has over 35 years of industry experience and wideranging residential and commercial knowledge that enhances her perspective as an underwriter. Sandy has worked for several large title companies in both management and underwriter capacities. She also gained a wealth of knowledge working at two smaller title agencies which allows her to understand the challenges faced by both small and large agents.

Sandy lives in Colorado with her husband, Lou, and cat, Max. She has two grown children and two wonderful grandsons. In her free time, Sandy enjoys camping with family and friends, volunteering at a local battered women and children’s shelter, and participating in lively discussions with the ladies in her book club. Sandy is an active member of the Land Title Association of Colorado and currently serves on the Board of Directors.

YOUR SUCCESS IS THE RESULT OF YOUR HARD WORK, SKILLFUL EXECUTION, AND COMMITMENT TO EXCELLENCE. AT FIRST AMERICAN TITLE, OUR SUCCESS IS THE RESULT OF OUR UNWAVERING COMMITMENT TO SUPPORT YOU IN ACHIEVING THAT SUCCESS. Our knowledgeable, experienced title professionals are committed to providing underwriting guidance and assistance in a timely and efficient manner, regardless of the complexity of the transaction. With a national reach and local decision-making ability, our underwriting team is dedicated to using their expertise, knowledge, and problem-solving skills to resolve legal or underwriting issues presented by our valued customers.

First American Title | AGENTconnect | Issue #11 | March 2016

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WEBINAR OPPORTUNITY Title Insurance in Colorado – How Did We Get Here?

Presented by: Sandy Plaven, Senior Colorado Underwriter Look for your invitation in your email!

Is Someone Pretending To Be You and Communicating With Your Customers?

By: Michele Green, SVP, Senior Business Counsel-Agency Division

We have received numerous reports from agents around the country about fraudsters impersonating our agents and attempting to steal money from unsuspecting consumers and lenders. Although you have been hearing from us on these issues for over a year now, please realize that the threats have not lessened and are not going away.

Just in the last couple of weeks: • An agent called their local First American Title office and reported, “I have a closing coming up and, like I always do, I have communicated with my client via email about how they are to provide required funds for closing. After exchanging emails, it was decided that they would bring a cashier's check to closing. Unbeknownst to me, my clients subsequently received another email that LOOKED like an email from my office – it even had my letterhead! The email instructed my clients to wire the funds for closing to a new account and provided wire instructions. Just by chance, my clients were confused about how to complete the wire, and called my office to ask about it. Thank goodness! We quickly figured out that a fraud was being attempted and caught it before any of my clients’ funds were lost.”

• Another First American Title agent called her local office in a complete panic – She received a call on a Monday from the bank that holds her escrow account letting her know that it was overdrawn. The last week had been a busy one, but the agent was sure that all had gone smoothly.

After going over her account records, she realized that one of the lender funding wires from one of the closings conducted last week never made it into her account. When she contacted her lender client, she was told the lender had received “her” email notifying the lender of a change in wire instructions for her escrow account. She hadn’t sent any such email, and in the flurry of closings during a busy week, she hadn’t verified the receipt of each and every wire, especially since this lender had emailed her indicating that the wire had been sent.

In both cases, cyber criminals hacked into an email account of one of the parties to the transaction and monitored email traffic about the closing. At the right time, the fraudsters created “spoof” emails that appeared to be from the agent, and had communicated with clients and customers in order to misdirect closing funds. How can you protect yourself and your clients?

One way that we know can help: CONSIDER HOW YOU PROVIDE YOUR WIRING INSTRUCTIONS TO YOUR CLIENTS AND CUSTOMERS! Across the country, many of our agents have decided to provide wire instructions via hard copy only – and with a notation on that hard copy that states essentially “If you receive an email or any other communication that appears to be from my office and that contains new, revised or altered bank wire instructions, consider it suspect and call our office at a number you trust.

It is extremely unlikely that our bank wire instructions will change.” No matter how you get the message across to your clients, let them understand that if anyone tells them how or where to send their money, those instructions need to be confirmed by a phone call to your known phone number – NOT by email.

First American Title | AGENTconnect | Issue #11 | March 2016

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