AGENTconnect Issue13 September 2016

AGENTconnect THE COLORADO AGENCY NEWSLETTER

Issue #13 | September 2016

ALIEN INVASION? By: Justin Lischak Earley, VP, Corporate Underwriting

Have you recently had an encounter with an EBE? No, we aren’t talking about extraterrestrial biological entities; we’re talking about exotic business entities! In the past few years, new and strange forms of artificial persons have begun to appear in real estate transactions. Some examples include series LLCs, statutory business trusts, family limited partnerships, and asset protection trusts. Often, these creatures were engineered in the legislative laboratories in one state (Delaware, Texas, Wyoming, etc.), but the parties to the transaction want to use these creatures for a real estate transaction in a state different than the one that created them.

EBEs create a number of problems for title insurance underwriters. In situations where we are being asked to

insure the EBE or a lender on the title purportedly owned by an EBE, it can be difficult to determine whether the EBE is capable of holding title in a state outside of its creation. If the EBE is already in title, it can be difficult to know whether a court may brush aside the separate existence of the EBE and permit liens and other encumbrances to attach to the property. And when the EBE is selling or mortgaging the property, it can be particularly challenging to sort out authority issues regarding the EBE. So, what to do? If you have a transaction involving a business entity that is out of the ordinary, reach out to underwriting early in the transaction for guidance. Armed with the right knowledge, you can stop your world from being invaded by EBEs.

COLORADO CURRENTS ARE YOU COMPLYING WITH NEW REGULATIONS? Colorado Regulation 8-1-3 concerning title insurance standards of conduct went into effect on August 15, 2016.

The newly adopted regulation focuses on standards of conduct including marketing practices and consumer protection.

Section 5.C.11, which frames new standards regarding closing protection letters, becomes effective January 1, 2017.

Are you familiar with the new requirements governing the title industry in Colorado? CLICK HERE to access the regulatory notice issued by First American Title on August 3, 2016 and review regulation 8-1-3 with all applicable personnel.

Regulation 8-1-3. Please contact your First American Title Colorado Agency Team with any questions.

UPCOMING EDUCATIONAL OPPORTUNITIES »» Make plans to attend the Colorado Agency Seminar on October 20th! Contact Amie Voss at abvoss@firstam.com for details about the seminar and to register. »» Sandy Plaven, Senior Underwriter, will be presenting a webinar entitled Wills, Trusts and Estates in the 4th quarter of 2016. Details and registration information will be coming soon!

As an agent of First American Title and licensed title producer in Colorado, you must be compliant with Colorado

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: 09/2016

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

CYBER FRAUD CYBER CRIME I N S U R A N C E

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Virtually every business now uses the Internet for email, social media and desktop publishing. In a data-driven world, businesses of all sizes have had cyber security breaches, whether the result of cyber-attacks, cyber crime, or internal carelessness. For many businesses, it is not a question of if it will happen, but when it will happen.

There are various types of insurance available to help protect title insurance and escrow agents against cyberattacks, data breaches, and cyber crime. Below is a brief summary of the types of insurance that may be available to pay losses associated with cyber fraud and cyber crime.

INSURANCE AVAILABLE TO TITLE INSURANCE AND ESCROW AGENTS 1. Cyber Liability Insurance: This type of insurance covers your liability for third-party financial loss due to a hacking attack or virus from your computer system, including the following types of liability/loss: a. Privacy Liability: Covers your liability due to a security breach resulting in breach of personally identifiable information and your failure to provide timely notification. b. System Damage: Pays the costs you incur of restoring or replacing your computer programs or data and costs for repairing, restoring or replacing your computer systems.

d. Consequential Reputational Harm: Reimburses you for reduction in profit because of damage to your reputation from an outage or security breach. e. Regulatory Actions/Investigations: Covers the costs you incur due to regulatory investigation of an actual or suspected breach of privacy. f. Privacy Breach Notification Costs: Pays expenses involved in third-party notification of actual or suspected breach of privacy, credit monitoring services, and investigation of your computer system.

c. System Business Interruption: Covers your reduction in profit during a system outage period as a direct result of a cyber peril.

First American Title | AGENTconnect | Issue #13 | September 2016

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CY B E R F R A U D & CY B E R C R IM E IN S U R A N C E

2. Cyber Crime Insurance: Provides protection against loss if your escrow accounts are hacked into and funds are stolen. It would also provide protection against loss due to wire fraud through social engineering (i.e., an employee is deceived into transferring funds to a fraudulent bank account).

3. Cyber Threats and Extortion Insurance: Pays costs incurred resulting from threats made to prevent access to your computer system, introduce viruses, reveal confidential information or damage your reputation.

4. Professional Liability/Errors & Omissions (E&O) Insurance: Covers an error (i.e., that which should not have been done and was) and an omission (i.e., that which should have been done and was not). E&O covers the professional entity and all professional employees for monetary damages to a third-party directly caused by providing or failing to provide professional services.

5. Fidelity Bond: Covers your business against an employee-dishonesty loss, such as embezzlement.

(Continued)

ARE YOU PROTECTED? Most title insurance and escrow agents maintain Professional Liability or E&O Insurance. However, these types of policies may not extend to losses due to a cyber-attack, data breach or cyber crime. Make sure you have the insurance coverage you need.

Ask your Professional Liability or E&O carrier the following questions: 1. Does my policy include Cyber/Data Breach/ Network Security coverage? If so: a. What are the sublimits? b. Does Cyber coverage include coverage such as Funds Transfer Fraud or theft? c. Does Cyber Crime coverage on an E&O or a current stand-alone Cyber Policy include Social Engineering Fraud coverage? (Most policies only include coverage for a hacker accessing a network or computer and accessing the account directly).

2. Does my policy include coverage for Consumer Financial Protection Bureau investigation defense and settlement costs?

3. Does my policy include Employee Dishonesty/ Fidelity coverage? If coverage is included, does coverage extend to Funds Transfer Fraud?

CA License No. 0534607 For additional information, please contact:

Bruce Lucas

866.215.7814 blucas@firstam.com First American Title | AGENTconnect | Issue #13 | September 2016

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T I T L E A G E N T S O N LY First American Comprehensive Calculator (FACC) Agents should access the First American Comprehensive Calculator created for use by First American Title Agents to ensure they are receiving accurate title quotes on transactions. The agency-specific version* of the FACC includes a Loan Estimate/Closing Disclosure option so you can easily provide quotes for TRID-related purchase and refinance transactions.

TWO WAYS TO ACCESS: »»

http://agency.facc.firstam.com/

»»

Logon to AgentNet® and select First American Comprehensive Calculator from the dropdown menu under the Helpful Links tab.

Please delete any bookmarks referencing the public-facing version of the FACC and share the new link with your customers: http://agency.facc.firstam.com/ *Title quotes only; closing costs are excluded

First American Title | AGENTconnect | Issue #13 | September 2016

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COLORADO COLORS, COWBOYS AND CHRONICLES »»

Scenic areas to view Colorado’s fall foliage and the state’s golden Aspen trees include Trail Ridge Road, Kebler Pass, San Juan Skyway, Maroon Bells, Grand Mesa Scenic and Historic Byway, Buffalo Pass, La Veta Pass, and the Peak to Peak Scenic and Historic Byway.

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All of the Beulah red marble in the world was used on the interior of the Colorado State Capitol.

It cannot be replaced, at any price.

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The world’s first rodeo was held on 4th July 1869 in Deer Trail just east of Denver. Colorado is the Rodeo capital of the world and every January it hosts The National Western Stock Show, the world’s largest Rodeo.

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How the West Was Won, Butch Cassidy and the Sundance Kid, City Slickers and The Lone Ranger were filmed in Colorado.

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Colorado is the only U.S. state that lies entirely above 1000 meters elevation and contains 75% of the land area of the U.S. with an altitude over 10,000 feet. There are over 53 Fourteeners’, peaks over 14,000 feet, in Colorado.

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Katherine Lee Bates was inspired to write “America the Beautiful” from atop Pikes Peak, the most visited mountain in North America.

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On June 2, 1987, minor league slugger Joey Meyer launched a 582-foot home at Mile High Stadium, believed to be the longest home run ever recorded.

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A golf ball flies on average 10 percent farther in Colorado than other states because of the altitude.

It flies even farther at higher altitudes (above 7,000 feet).

First American Title | AGENTconnect | Issue #13 | September 2016

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