Agency Today – A Magazine About Growth and Prosperity™ by First American Title - Agency Division

AGENCY

TODAY A M AGA ZIN E A BOUT GROW TH A N D PROSPER IT Y

10-3-20-15

HIKE! The Game Has Changed

Issue 3 | October 2015

AGENCY

TODAY

A M AG A Z I N E A BOU T GROW T H A N D PROSPE R I T Y

Welcome Agency Today is a publication covering a broad range of topics focused exclusively on growing and strengthening your title business. First American Title is committed to providing you valuable content, new ideas and access to the brightest minds in our business. We believe that in an age where so much can be lost in the digital interference of email, attachments and the internet that a well-crafted and thoughtful publication dedicated to your success is a great way to communicate our commitment to the independent title agent. It is our hope this magazine finds a home in your collection of reference materials. We are commited to not only help you resolve everyday challenges but to help you achieve new levels of success in your business.

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CONTENTS FROM THE EDITOR On behalf of all of us at First American Title, thank you for your business and loyalty. It is with great pleasure we bring you the third edition of Agency Today—A Magazine About Growth and Prosperity™ produced exclusively for policy-issuing agents of First American Title. The focus of the magazine is to provide articles that help you “work on” your businesses rather than “work in” your businesses. We hope you enjoy this publication, but more importantly, we hope it provides value to further enhance your organization. All the best, Louis Pontani VP, SALES AND MARKETING AGENCY DIVISION

AGENCY TODAY STAFF EDITORIAL Louis Pontani EDITOR IN CHIEF VP, SALES AND MARKETING

Lynn Lewis EDITOR/LEAD COPYWRITER

ART AND DESIGN Sheli Cordero DIRECTOR, MARKETING & COMMUNICATIONS GRAPHIC DESIGNER

Ryan Stangle GRAPHIC DESIGNER

ADVERTISING Elizabeth Sarber FAPRES/SMS

Agency Today - A Magazine About Growth and Prosperity™, published by First American Title Insurance Company. First American appreciates the articles contributed by independent vendors and the statements contained therein are solely those of the vendor and are not attributable to First American.

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MESSAGE FROM THE DIVISION PRESIDENT

Evan M. Zanic, Esquire, Executive Vice President, Agency Division President

EXECUTIVE SPOTLIGHT

John Hollenbeck, Executive Vice President, First American Title President-Elect, American Land Title Association

ARE YOU ‘BEST PRACTICES’ WEARY

By: Pam Sember, Business Development Manager, TrustLink Services, First American, SMS

KNOW YOUR JOB: HOW TO PLAY AT AN ALL-STAR LEVEL A LESSON I LEARNED FROM WILT CHAMBERLAIN By: Mark Eaton, Former Utah Jazz NBA All-Star, Teambuilding Expert, TV and radio talk show host

AGENT ACQUISITIONS

THE ART OF VALUATION By: Randy Noll, VP, Finance, Agency Division, First American Title

PERCOLATING By: John Hollenbeck, Executive Vice President, First American Title

Cs THE DAY!

WRITING A CLEAR, CONCISE AND COMPELLING SOCIAL MEDIA BIO By: Lynn Lewis, Lead Copywriter, Agency Division Marketing Department, First American Title

RECOMMENDED READING FOR TITLE AND SETTLEMENT BUSINESSES FRESH IDEAS AND AFFIRMATIONS OF TRIED AND TRUE IDEALS By: Lou Pontani, VP, Sales and Marketing, Agency Division, First American Title

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OVERCOMING OWNER’S POLICY OBJECTIONS

LENDER SCORECARDS

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ROAD MAP TO TRID RULE VARIATIONS/TOLERANCES AGENTNET UNDERWRITING REQUEST FEATURE HOW AND WHY MAJOR LENDERS WILL MANAGE TITLE AND SETTLEMENT AGENTS

DATA SECURITY BEYOND COMPLIANCE

IT’S ABOUT RESPONSIBILITY By: Kent Nies, Chief Business Officer, CertainSafe, Secure Cloud Systems

FAX TRANSMISSIONS

SECURITY MAY BE FICTION By: Steven R. Russo, Executive Vice President, Secure Cloud Systems

ALTA BEST PRACTICES CERTIFICATION MATRIX By: Habif, Arogeti & Wynne, LLP (HA&W)

CHECK THE ID

BE FAMILIAR WITH YOUR STATE’S DRIVER’S LICENSE By: Michele A. Green, VP, Senior Division Underwriting Counsel, First American Title

AGENT SPOTLIGHTS

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HOW AGENTS HAVE PREPARED THEIR COMPANIES TO WORK WITH LENDERS UNDER TRID MSC Title, Inc. Coleman Talley, LLP Capital Title Insurance Agency, Inc. Ironclad Title, LLC Florida Family Title, LLC Guardian Title & Guaranty Agency, Inc. Lakeside Title Company

SMS: ONE SOURCE. MANY SOLUTIONS.

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Message from the

Division President Never Been Prouder Since 2010 when the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, a flurry of activity in our industry began to brew. As blurred regulations and compliance guidance began to take form, a new landscape has begun to come into to focus in our industry. Stepping back from the barrage of interpretations and guidance, I noticed something Iâ&#x20AC;&#x2122;ve rarely seen in the decades I have been in this industry. Whether I look internally, externally, at customers or competitors, all of us as one industry have risen to a new level of existence. I believe our industry is ready to take the field, engaging the new rules and playing to elevated levels of sophistication that will benefit lenders, underwriters, real estate agents, title agents and most importantly consumers. I have never been prouder to be part of the title industry. I offer my thanks and admiration to not only our First American Title employees who have risen to the occasion by preparing for TRID and Best Practices, but also to our entire industry, customers, competitors, lenders and vendors. We have secured our field, so we may all continue to play in the game with integrity, professionalism and trust for years to come. Thank you,

Evan M. Zanic, Esquire

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Evan M. Zanic, Esquire Executive Vice President Agency Division President

AFitch Ratings A Moody’s Investors Service A3 A.M. Best Company

Standard & Poor’s

A-

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Congratulations

John Hollenbeck PRESIDENT-ELECT, AMERICAN L AND TITLE ASSOCIATION

The Agency Division wishes you great success on your appointment and sincerely thanks you for your leadership to the title and settlement industry.

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EXECUTIVE SPOTLIGHT

JOHN HOLLENBECK

EXECUTIVE VICE PRESIDENT | FIRST AMERICAN TITLE PRESIDENT-ELECT, AMERICAN LAND TITLE ASSOCIATION Q

It is always interesting to learn about how people get into the title insurance industry. What was your first job in our industry, how did you get there and what were some of your biggest steps along the way?

I needed a job at 19 years old. My requirements were simple. First, I remember telling an employment agency that I was looking for “30 years and a gold watch.” From the very beginning, I knew that I wanted to stay and grow with one company. Second, I wanted to work in an office environment. I was a scrawny little guy; I could not imagine needing to rely on physical strength to make a living. I went on several interviews, including with two thrift companies. One was looking for a debt collection agent. I was not right for that job. The other offered me a job, but, fortunately, a day or two after I accepted employment with First American. Even though it was for a little more money, I turned it down because I’d already committed to First American. That’s probably the best decision in my then young life. My 35 year career with First American has been nothing short of a blessing. I’ve been very fortunate to have been exposed to many different jobs within a single career. I started as a title searcher in our Riverside County, California office and worked in our Orange County, California office as a title officer and production manager. On our home office staff, I’ve worked as an underwriter, oversaw our Hawaii operations for a while, oversaw the development of some key technology, was instrumental in centralizing our title plants and production, oversaw a company we now know as First American Professional Real Estate Services, and a few other odds and ends. And, of course, one of my favorite jobs is representing First American on the ALTA Board of Governors. I truly enjoy helping to shape our industry.

When your tenure as ALTA President is over, what do you most want to be remembered for?

Being remembered is unimportant to me. The satisfaction of making a positive impact in an industry that’s given my family a good livelihood for 35 years is more than enough reward.

While on the subject, I am very proud of our profession. The title industry is full of good, hard working, law abiding people. We are ethical and trustworthy. We are very good at what we do. Our products and services are valuable to those we serve, to the nation’s economy, and to society in general.

What are the attributes of the most successful title agency in the future?

Providing excellent customer service is the short answer. For as long as people buy homes and other real estate, the need for settlement services and title work will be required. Title insurance will be required, too, for as long as the eye can see. Delivering these services in a professional, compliant and cost effective manner is the key to being successful. A longer answer would draw out a few areas that agency owners should hold important. A short list includes (i) investments in technology to support the production and delivery of services, (ii) talented staff, (iii) strict, energetic and steadfast compliance with all laws that govern market conduct and protect consumers, (iv) implementation and maintenance of industry best practices. There is no question about whether the things we do are important or valuable. They are. But, successful title agents recognize shifting demands of our industries various constituencies. Demographics play a role, of course. How the next generation of homebuyers expects to consume services will drive technology investments, for example. Public demands for consumer protection is not going away anytime soon. Good title agents embrace this idea. Lenders will remain under intense pressure to make sure all service providers follow the rules. In summary, there will be many successful title agents in the future. Excellent customer service requires doing the right things right, in a cost effective and compliant manner, eyes always looking forward on how the coming generations want to consume our services.

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Are You ‘Best Practices’ Weary

By: Pam Sember Business Development Manager, TrustLink Services, First American, SMS

The ALTA Best Practices compliance conversation has been ongoing since the second version came out in July 2013. There have been many articles, webinars, products and services available to assist title and settlement companies in completing a Best Practice Manual and demonstrate that they are in compliance. Have you completed yours? Here’s a nudge to get you started.

The KISS Principle “What? I have to create a Best Practice Manual? Where do I begin?” I’ve received multiple emails and telephone calls from agents across the country asking these questions. Some have requested that I send them the manual (if only I could), but agents must create their own. My advice has been to use the KISS Principle—Keep It Short and Simple—and find the simplest solution to accomplish your goal. Simplicity is key to understanding where to begin. Through your years in business, it is likely you have been compliant with most of ALTA’s seven pillars. Now is the time to document what you already do and put it together in a manual. The sheer volume of information to document can seem overwhelming. To accomplish any large task, break it down first. Once you have written down the processes you currently use, you can discover where you need to add or change those processes to align with the seven pillars.

The Pit of Fear There are many articles and white papers that promote the “fear factor” when preaching best practices. Don’t fall into that Pit of Fear! 8

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You know what’s expected of you to conduct business — appropriate licenses, protection of consumer non-public information and money, making sure the instructions are followed, the lien is paid off and the new lender is in first place on title, making sure the title policies protecting the consumer and the lender are delivered and that the premium is paid to ensure enforcement, charging the legal rates, professional insurance coverage required to protect your business and customers, and if your customer is unhappy, make sure they can communicate the issue so you can rectify it. You’re already doing that, right? The fear comes in when you let others interpret the ALTA Best Practices instead of using your expertise in the business. You are the best interpreter of best practices — you’ve been practicing them for years. Just do exactly what each particular pillar requires.

Who is completing that task? Use that team member to document how they deliver, report and remit. Add your professional insurance coverage to the manual. Review annually to make sure you have enough coverage. By implementing and creating best practices, your company will grow and you may need more insurance. Consumer complaints — sigh. Although many companies don’t consider this important, I once overheard an auditor say that if a company has zero complaints, either they don’t deal with customers or they are not being forthcoming with the truth. Make sure your customers have a place to compliment you as well as complain. Track the information and make every effort to resolve complaints. Assign this task to someone who works well with customers and is happy to take the compliments and complaints.

It Takes a Village

Using your team to create your Best Practice Manual will make sure everyone is engaged and understands its importance.

Building your manual is a team sport. If you are a small firm, divide up the tasks and conquer the pillars.

Need Some Assistance?

If you don’t already have someone who makes sure licensing is current, assign someone to set up your file(s) and reminders to renew. This same person could obtain a copy of your professional insurance to add to the renewal reminder — two pillars at once. Engage the expertise of those who take care of your trust accounting duties. Have them write down all that they do, identify any holes, and fill them to create the written procedures for Pillar 2. I’ve seen variations on the electronic verification of reconciliation. Remember to KISS it — email is electronic mail. Write your policy for Information Security. What are your objectives, and how are you going to accomplish them? What can you do now to secure information that is nonpublic? If this was your personal information, or that of your family, how would you like that information to be handled and stored? You know that super-messy employee that you’ve been encouraging to clean up their desk? Institute a Clean Desk Policy and enlist the help of the supermessy employee and the rest of your team. Ask them for suggestions on writing the policy; this will help them with execution and compliance.

There are many options out there to assist you in meeting the ALTA Best Practices. ALTA’s website provides a Best Practices Framework, Assessment Procedures and Self-Certification documents. They also have a Best Practice Compliance Guide that will walk you through setting up your manual by filling in and attaching your documentation. Your underwriter, First American Title, developed the Competitive Advantage Platform (CAP), a complete guide to assist you in building your Best Practice Manual. By answering some questions, a gap report is produced to identify where your procedures may be weak and provides suggestions to complete each pillar. Whichever means you use to complete your Best Practice Manual, just get started. Use the KISS Principle, don’t fall into the pit of fear and use your team for best results. Take advantage of the help available to you — many times at no charge — so when a lender requests your manual, you will be ready!

How are you verifying that your lender customer is in first place on the title? Can you assure them that, not only is the lien paid off, but it has been recorded? Were the fees charged the correct amount? If not, how are you refunding the party charged? Are you sure you’re charging the rates that are legally allowed? Test your staff and yourself. Assign someone in your office to check and verify, then document it all. What about those title policies? Do you have follow through? Agency Today | Issue 3

Photo Provided By: Mark Eaton

Agency Today | Issue 3

KNOW YOUR JOB:

How to Play at an All-Star Level A Lesson I Learned from Wilt Chamberlain

By: Mark Eaton Former Utah Jazz NBA All-Star, Teambuilding Expert, TV and radio talk show host

How many of us run around every day, in business and in life, trying to play every position, and do everything for everybody? As an entrepreneur, one of the greatest challenges is to stay focused on your role and vision for your business. As business grows and changes, it is easy to forget what is most important as we become caught up in the daily challenges of managing our companies. I think this story will help.

www.s7ft4.com

When I was just starting college basketball with UCLA, Wilt Chamberlain took me aside and taught me the most important lesson of my life. I only had one job. And, in 1989, knowing my job took me to a spot on the NBA All-Star Team. Many teams have a superstar who does more than one thing well, but without understanding the importance of honoring roles, ourselves and others, even the greatest players don’t stand a chance of winning every game.

SITTING ON THE BENCH After my first season at UCLA, I had some serious doubts about my future in the sport. I spent the whole season sitting on the bench, not playing at all. After that first year, I looked back and felt I had been an absolute failure. It just didn’t seem like I had what it took to be a success. It was like my dream was going up in smoke. I started to ask myself, “Am I good enough to be out here?” “Can I really play at this level?” I remembered what my basketball career in high school had been like. I spent most of my time warming the bench. I quit playing the game after high school for a reason, and now I doubted my decision to return. Enter Wilt Chamberlain.

RUNNING AROUND THE COURT Every afternoon that summer I went to the gym at UCLA. All the greatest players in Los Angeles congregated in what we called the Old Men’s Gym to test their skills against one another in pick-up games. Magic Johnson, James Worthy, Michael Cooper and many other NBA players were there every day, and only the best players could join in. One afternoon I was trying to catch this fast little guard on the other team named “Rocket” Rod Foster. He was so fast that he would be at the basket before I made it to half court! I could not catch him… I tried everything, and couldn’t figure out what I needed to do differently. I was on the court but not in the game! I just stood there on the sidelines, hands on my knees, huffing and puffing, frustrated and thinking to myself, “I can’t do it.“ I thought I would never be at the level these guys were at.

“IT’S NOT YOUR JOB” As I stood on the sidelines, I suddenly felt a large, strong hand on my shoulder. I turned around, and there was Wilt Chamberlain, arguably the greatest basketball player of all time. Wilt had retired from basketball a few years before, but every afternoon, he would still come over to the Old Men’s Gym to watch the younger players work out. He had been watching me from the sidelines. Wilt grabbed me by the shoulder, spun me around, looked me in the eye and said, “Young fella… first of all, you are never gonna catch that man… ” I said, “Thanks Wilt. I know that… ” I felt even more foolish about my basketball aspirations at this point, begrudging the fact that I had played so poorly in front of this basketball legend. But then he said, “What’s more important is; it’s not your

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KNOW YOUR JOB: How to play at an All-Star level A Lesson I Learned from Wilt Chamberlain (continued) job.” He took me by the arm out onto the basketball court. He positioned me right in front of the basket and told me, “Let me tell you what your job is… ” Wilt said, “Your job is to guard this basket. Your job is to stand right here, on the painted area under the basket, and keep other players from scoring. I’ve watched you play, and I see the skill you have at defense. That is what you need to concentrate on.” That day, everything changed for me. I began to understand what I needed to do on the court. I understood what I could be great at. Wilt showed me my role and how I could be invaluable to my team. I wasn’t fast, and I wasn’t that good at scoring, but I did have a talent for preventing others from scoring goals. At 7’4”, I could be a force on defense to be reckoned with.

BECOMING AN ALL-STAR After Wilt Chamberlain pulled me aside and showed me what he saw in me, I stopped running around, trying to do everything on the court. My job was to play defense and guard the area under the basketball net. Before the game, when everyone was warming up, I would walk around the area under the basket, and say to myself, “This is my house… and I will make sure that nobody gets in here.” I focused on the one thing I could be great at, and I went on to become one of the great defensive players in the NBA. Four years later, in 1985, I broke the record for the most blocked shots in a single season, 456, which is still the NBA record. I was

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named Defensive Player of the Year twice. Our team became a recognized force in the league. In 1989 I became an All-Star. What are you excellent at? What is your greatest strength? . Start by asking your coworkers, partners, your family, your friends. You might be surprised what you hear. When you feel like the walls are closing in, look for that hand on your shoulder – you might be surprised to see who it is when you turn around. At times, it takes someone else, a partner or a mentor to show us our true talents and assets. It doesn’t have to be a Wilt Chamberlain. Look and listen for the greatness within yourself and remember that is your unique gift; your contribution to your business, others and the world. That gift is what drives you and what your team is counting on; your strength is their guiding light.

NARROW YOUR FOCUS When we get too focused on exceeding expectations, sometimes we forget the basics. As an entrepreneur, it may be time to slow down, narrow your focus and intensify it. Do what you do best and let go of the rest. When you focus on your strengths, you allow your team to focus on theirs. If everyone on your team focuses on what they do best, you have a great plan for victory. Mark Eaton is a business speaker and coach who works with organizations and individuals sharing the four commitments that bring about teamwork, breakthrough success and sustained cultural change. His inspiring journey from auto mechanic to record-breaking NBA player, combined with his practical strategies and principles, help organizations play and win in the biggest game out there. To book Mark for your next event, visit www.7ft4.com or e-mail him at mark@7ft4.com.

YOUR SUCCESS IS OUR PRIMARY MISSION. That’s why we offer First American agents more Best Practice solutions than any single provider.

A LT A ® E L I T E P R O V I D E R S

ALTA Best Practice #2 Trust Accounting With daily 3-way trust account reconciliation and a complete Unclaimed Property service, TrustLink has the services and experienced staff you need to keep your trust accounts in line with best practices.

ALTA Best Practice #3 Security of Non-Public Personal Information From clean desk practices to secure electronic document delivery, our electronic office management system secures your customer’s data with all the cost saving benefits of working without paper.

ALTA Best Practice #7 Consumer Complaint Resolution Rizolv allows you to promptly handle and resolve customer issues by capturing complaints and assigning them a single point of contact. Up and running in minutes, Rizolv helps you make customer care your highest priority.

ADDITIONAL BEST PRACTICE SOLUTIONS

ALTA Best Practice #3

SMS Vault

Security of Non-Public Personal Information Exclusively for StreamLine and GreenFolders users, SMS Vault is our online data back-up service that integrates seamlessly with your business and makes backing up your data a snap.

ALTA Best Practice #4 & 5 Settlement Processes and Policy Production TitleExpress has customizable workflow and event management to help track title policies and recordings quickly and efficiently. From a robust rate and premium calculator to document preparation, TitleExpress allows you to streamline your process and prepare policies with speed and accuracy.

ALTA Best Practice #4 & 5

StreamLine 800.767.7832 sms-sales@SMScorp.com firstamsms.com

Settlement Processes and Policy Production Our StreamLine title production platform takes the guess work out of premium rate calculations. And with customizable workflow processes, you can keep everyone on track and quickly prepare and deliver title policies.

ALTA Best Practice #4 & 5 Settlement Processes and Policy Production With our lien tracking and title clearing services, you can be certain that the documents required to clear liens paid off at closing are correctly recorded with the appropriate recording jurisdiction, allowing you to issue a final title policy in a timely manner. Agency Today | Issue 3

AGENT

Acquisitions The Art of Valuation

Agency Today | Issue 3

By: Randy Noll VP, Finance Agency Division First American Title

Imagine every car in the world is custom built, and no two are alike. Furthermore, there are no auto manufacturers — you can either build your own or buy one someone else has built. When looking to buy, you can narrow down your choices by number of seats, color, and mileage, but beyond that it’s up to you to determine build quality, longevity, safety and ultimately what you are willing to pay for it. Welcome to the world of title agency valuation; a world where the market for an asset is so small and individualized, every transaction must be priced on its own set of factors, comparisons are few and far between and the ultimate value of a company is simply based on what someone is willing to pay for it. Valuing a title agency is a combination of art and science, or more specifically assumption and calculation. Common calculation methods can be found through a simple internet search: profit multipliers and discounted cash flow analysis are two popular methods. The theory behind these methods is to calculate a current value based on expected performance. The art comes into play when you need to determine what you think the expected performance, usually expressed in net income or cash flow, will be for a specific agency. To get started you need to understand how the company operates today. Multiple years of audited financial statements, organizational charts, key-customer lists, and leases or any other contractual obligations are a good place to start. Typically a non-disclosure agreement (NDA) is signed prior to obtaining this information. Once you have this information, how can you use it to determine an appropriate purchase price?

Multiple years of audited financial statements, organizational charts, key-customer lists, and leases or any other contractual obligations are a good place to start. If you’ve ever invested in the stock market you’re probably familiar with a common phrase: “Past performance may not be an indicator of future results.” When you invest in a company’s stock, the fact that it went up 50% in the last year does not ensure you will get a 50% return over the next year. The savvy investor will take past performance into account, but will look at many other factors to determine if the stock is a good buy at the going price. Likewise, there are many factors that go into determining the expected future performance of a title agency. These include: • Business mix (purchase, refi, commercial, etc.) and how you believe the market for each will perform in the next 5-10 years. There are many industry projections publicly available to help estimate this. • Customer base, and whether there is a disproportionate

dependency on a single customer. • Relationships and where they are held. Is there risk that the owners of these relationships may leave after the acquisition? • Are there any contractual obligations to employees, vendors, customers, or other partners? When do they end and what is the impact? • Does any of the revenue come from a joint venture, and is that revenue at risk due to compliance or other factors? • Are there any other “one-time events” that may have influenced the past results? Events such as: a single large commercial deal, the settlement of a lawsuit, or a past practice that has ceased. The above list is by no means exhaustive, but it’s also only focused on the agency in question, not on what the ultimate combined agency might look like post acquisition. This is where the future performance estimate gets very specific and may vary from buyer to buyer. Items to consider might include: • Are there common customers between the companies where the result might be that 1+1 is less than 2? Or greater? • What is your plan to integrate the two companies and are there possible expense savings by eliminating redundant office locations or functions like accounting or HR? • What is the additional cost of integrating the two companies? New office space, rebranding, relocation, severance, and technology integration might be considerations. • What expenses in the company are specific to the current owner and may not continue? Car payments and country club dues for example. Once you feel you have a good understanding of the factors driving the future performance of the combined entity, you are ready to do the calculations to determine what you think a fair price for the company is. As stated at the beginning of this article, there are multiple ways to calculate the value of a company. Since most title agencies don’t have in-house mergers and acquisition teams, in many cases hiring an outside firm to perform this calculation might be the best option. Such firms may offer more than just valuation services and could provide assistance throughout the entire acquisition process. In the end, your primary goal is to be comfortable that the price you are paying to acquire a company is appropriate given the future value you will get from the operation. Going back to the used car analogy, fortunately we live in an era where in less than ten minutes we can learn almost everything about the safety, reliability, features and complaints for a specific year, make, and model of car. On top of that you can obtain historical data on the actual car you are considering buying. Yet most people still consider buying a used car a significant gamble. In the world of title agencies, where each one is unique, you may need to do more than pop the hood and kick the tires to ensure you’re getting the deal you want.

Agency Today | Issue 3

Percolating By: John M. Hollenbeck, Executive Vice President, First American Title

This is not a discussion about policy coverage, but rather about process. Itâ&#x20AC;&#x2122;s not about underwriting standards, but rather about what might be expected of the title industry in the future. Itâ&#x20AC;&#x2122;s a discussion percolating in the mortgage industry, and in Washington, D.C.

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Is your curiosity piqued? The topic is lien releases. Should long-paidoff liens be released of record before a new mortgage is made? A few months ago I read a law review article written in the 1930s. I’ve tried desperately to put my fingers on it again, but can’t seem to find it. The author railed against mortgage lenders for their failure to release liens following payoff. Sound familiar? The article was a forceful argument in favor of the adoption of marketable record title acts by state legislatures. Of course, during the course of our careers in the title industry, we’ve grown accustomed to dealing with the failure of mortgage lenders to record lien releases. We have workarounds, underwriting standards and processes for dealing with the situation. We’ll close a transaction once we’ve determined to a reasonable certainty that the prior mortgage is paid off, notwithstanding the lack of a lien release in the public records. Let’s back up for a moment and take this from another angle. When a conventional loan is made and sold to Fannie Mae or Freddie Mac, the mortgage lender must follow the government sponsored enterprises (GSEs) Seller/Servicer Guide— essentially a series of three ring binders that contain all of the rules for mortgage origination. The mortgage lender represents that the rules were followed and warrants, among other things, certain aspects of the title, including that the new mortgage is in first lien position and that the title is marketable. Similarly, when a mortgage lender makes an FHA loan, it does so subject to federal regulations that require good and marketable title to be delivered to the Secretary of Housing and Urban Development after foreclosure. Following the Great Recession of 2008, the number of defaults and foreclosures skyrocketed. This meant that Fannie Mae, Freddie Mac and FHA were forced to deal with large volumes of foreclosure assets. Among those, as you might expect, some percentage of properties involved complicated title issues ranging the gambit from vesting problems to legal description errors, missed encumbrances to unreleased but paid-off mortgages.

A year or so ago, the GSEs and HUD started giving mortgage lenders a fair bit of grief over title issues that survive foreclosure. In the old days, mortgage servicers could convey potentially “defective” titles to the GSEs and HUD following foreclosure, and the problems would get worked out with title insurance during the sale to an REO purchaser. But recently, the GSEs and HUD started pushing back. They are reminding mortgage servicers of the requirements in the Seller/Servicer Guides and in the FHA regulations, and requiring that title be “cleaned up” prior to conveyance. Kurt Pfotenhauer, First American Executive Vice President, Lender Clients & Vice Chairman, and I recently attended a meeting in Washington, DC, joined by representatives of the Federal Housing Finance Authority (FHFA), Fannie Mae, Freddie Mac, Mortgage Bankers of America (MBA) and several lenders. Thirty people, focused on lien releases, batted this issue around for two hours. Specifically, one question was whether a mortgage lender should be permitted to originate a mortgage loan in the face of an unreleased, but paid-off mortgage, irrespective of whether or not title insurance is available to insure the new mortgage in first lien position? Here is an observation from the meeting. All thirty people at the meeting understand the issue very well. They understand completely the role that title insurance plays in making a good faith determination that the prior lien is paid off, and so forth. They understand that this issue has been with us for generations, and that no title is perfect. What they may not fully comprehend is the difficulty in switching to a standard of perfect titles. We left the meeting with the question unanswered. The conversation continues in Washington, D.C. Fortunately, First American and ALTA are deeply involved in the discussion. What do you think about the issue? How are you tracking releases for the liens you are paying off? Need help? Log on to www.SMSFasTrax.com.

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YOUR TIME IS VALUABLE. DON’T WASTE IT TRACKING DOWN LIEN RELEASES. Our FasTrax Release Tracking service proactively contacts the lender for releases on current payoffs. Simply submit your request and let us do the rest! With a success rate of over 90%, our FasTrax Title Clearing service takes the hassle out of obtaining releases and missing assignments for previously paid off liens.

BOOST YOUR PRODUCTIVITY BY CONTACTING US TODAY! 800.767.7832 x1362 sms-sales@SMScorp.com SMSFasTrax.com

Agency Today | Issue 3

Cs the Day!

Writing a Clear, Concise and Compelling Social Media Bio

By: Lynn Lewis Lead Copywriter Agency Division Marketing Department First American Title

Making a good first impression is as important online as it is in person. On social media, you have seconds to capture someone’s attention, so it’s critical to make a connection and make it fast. Writing a clear, concise and compelling social media bio takes a little work, but, the better the first impression, the longer potential customers will stay on your page.

information someone should know about you. This is not the place for a laundry list of accomplishments, but it may be helpful to make a connection by listing your alma mater or favorite sports team. Use characters wisely, add at least one detail that makes you memorable, and be sure to include your business phone number, physical address and website homepage URL. With billions of people now accessing social media via mobile devices, making it easy for them to connect with you increases opportunities to capture customers in need of your service.

Clear

In a fiercely competitive market, the professional who best answers the customer’s “What’s in it for me” question, may have a distinct advantage. Using an upbeat tone and optimistic language, set yourself apart by highlighted specific service you provide that exceeds customary expectations. Giving potential customers precise information about what your company offers compels them to choose you because of the value they will receive.

Compelling

Identify yourself, using your full name, and define the type of business service you provide. Avoiding hype and buzzwords, position yourself as an expert in your field who brings value to a specific audience. You can’t be all things to all people, so get right to the point and focus your attention on the niche market and target audience you serve. Your social media bio should contain professional information with a few personal details to make you and your business seem approachable.

Summing up the entire scope of your business in 140-160 characters is an impossible feat to tackle, but capturing the attention of potential customers with a clear, concise and compelling social media bio is a worthy goal you can accomplish. Cs the Day!

Concise Brevity is the key on social media. On most platforms, you have a limited number of characters to convey the most important Platform

Alloted Description Length

Twitter

160 Characters

•

155 Characters

• • •

facebook

Tips

• LinkedIn

Company Page: 75-200 Characters Personal Page: 2,000 Characters

• •

Use industry keywords to help others find you when searching Include email address and link to your website Keep it short, yet professional Create separate page for your business — keeping your personal page personal Use industry keywords to help others find you when searching It’s important to be sure that your LinkedIn profile is complete and detailed — think of it as an online resume. Include full business contact information, services, etc. Agency Today | Issue 3

BOOK REVIEWS

Recommended Reading For Title and Settlement Businesses Fresh Ideas and Affirmations of Tried and True Ideals

By: Lou Pontani VP, Sales and Marketing, Agency Division First American Title

Agency Today | Issue 3

BOOK 1

Decide: Work Smarter, Reduce Your Stress, and Lead by Example By: Steve McClatchy | Bestseller Lists: New York Times (#2), USA Today Business (#1) and Amazon (#1) Decisions shape a person’s career and life, and define them as a leader. Everyone desires to be more productive and deliver stellar results. Decide provides a very simple and practical blueprint to consistently position the reader to make good decisions and manager their time. Decide will show you ways to reduce complexities and create real gains simply by changing one thing: the way you make decisions. Decide takes you on a journey that will ultimately lead you to changing three simple things: the way you prioritize, the way you plan, and the way you execute the plan. You will better understand how your current reality and quality of life is a direct result of the way you do these three simple things. You'll also learn how to: • • • •

Make better decisions to get better results Get more done in less time End email addiction and stay focused Keep a two-minute interruption to two minutes

• Use procrastination to your advantage • Get organized so you spend less time looking for what you need • Plan in order to save time and reduce stress

BOOK 2

Go-Givers Sell More By: Bob Burg and John David Mann Many believe the word sell is synonymous with the word take, truth be told, the word sell comes from the Old English word sellan, which means “to give.” Great salespeople are not master closers who can overcome any objection with great ease; great sales people are ambassadors of good will who genuinely understand and care for the needs of their customer. They know how to add value by enriching and enhancing their clients businesses first and asking for the business later. This builds a solid foundation of trust which makes their relationship near impenetrable. BOOK 3

The Art of the Start By: Guy Kawasaki | Bestseller Lists: Amazon (#15) in New Business Enterprises While many of our customers are established businesses and far from the days of being a startup, the lessons and principals from Guy Kawasaki are as applicable now as they were then. The Art of Start has no shortage of advice on topics such as: innovating, recruiting, fundraising, and branding. The book is easy to read with plenty of diagrams and simple, yet very practical language. With a central focus on 5 principals, The Art of Start is a perfect complement to the regulatory and compliance-related changes our industry is facing. • Make meaning • Make mantra • Get going

• Define the business model • Weave a MAT (milestones, assumptions and tasks

Agency Today | Issue 3

OVERCOMING

Owner’s Policy Objections The new Closing Disclosure lists the Owner’s Policy of title insurance as an “optional” purchase. While owner’s title insurance has never been required, this “optional” language could spur questions regarding the value of title insurance. Here are some of the more common objections to the purchase of an Owner’s Policy, along with suggested talking points to better illustrate the value of title insurance. I’m already paying for title insurance. This charge is for a Lender’s Policy of title insurance, which protects your lender. This coverage is almost always required, but does not offer protection for your investment. Only an Owner’s Policy helps protect your interests. In fact, your bank’s loan policy only covers the amount of the mortgage and only lasts until that debt is settled. An Owner’s Policy offers you protection for as long as you or your heirs have an interest in the property. This is a brand new home. There are several title issues that could exist with newly-constructed homes. While the structure might be new, the property on which it sits is not, and there could be title issues that exist with the land. Not to mention that a Mechanics’ Lien could exist resulting from unpaid construction debts. Other potential issues include legal rights of access, easements, restrictions, covenants, HOA liens or other issues that may affect your ownership and enjoyment of the property. 22

Agency Today | Issue 3

This is a foreclosure. If you’re buying a foreclosure, the only attorney to review the property’s back title and validity of the foreclosure is the attorney who performed the bank’s foreclosure work. There could still be clouds on the title or outstanding liens or debts that may surface after the transaction is complete. The sellers have lived there for decades. The amount of time the sellers owned the property does not translate to a worry-free transaction. There could still be unsettled issues that affect the property title, including problems stemming from life estates, home equity lines, refinances, divorce settlements, unpaid taxes, assessments and municipal utility bills. I’m only buying land. There can be many title issues affecting vacant land. These include unclear property boundaries, unrecorded deeds or the discovery of prior interests due to omissions in wills and estate planning, divorce settlements and real estate taxation. I’m not going to own it for long. I’m planning to flip it. When you sell the property, the buyer’s title agent will be able to do more efficient work if an Owner’s Policy is already in place. Not to mention that, as the owner, you will be responsible for resolving issues that affect the insurability of the property. Title defects may drastically affect your ability to resell the property when they are discovered during the settlement process. This is just an investment property. This is just a vacation home. Regardless of how you’ll use the home, it’s still an investment – and an asset. Title issues may arise regardless of how the home was or will be used. I’ve been told that title insurance isn’t worth it. Considering that you only pay the premium for an Owner’s Policy of title insurance once, and it offers you protection for as long as you or your heirs hold an interest in the property, title insurance is a valuable investment. This is especially clear when you compare

the cost of the premium with the cost of defending and/or settling a title claim. I can’t afford another fee. It’s likely that this home is your largest investment. Your Owner’s Policy is actually a one-time premium; once you’ve paid for it, you’re covered for as long as you own the home. Even heirs to the property are covered under your policy. Plus, there may be a discount available when purchasing the Owner’s Policy alongside a Lender’ Policy, which is already required.

There may be hidden issues in the title chain that won’t surface until later. For instance, if fraud or forgery occurred somewhere in the past, an Owner’s Policy may protect you when the fraudulent activity is discovered.

I don’t see the value. While it may not be required by law, the issuance of an Owner’s Policy is considered the standard of care within the real estate industry. In fact, many real estate contracts automatically include a requirement for an Owner’s Policy to protect the buyer. Additionally, if we consider the fact that a lender requires their own policy to protect their interest, you can see that your own interest in the property should also be protected. I looked at the title commitment/preliminary report and I don’t see anything that will be a problem. There may be hidden issues in the title chain that won’t surface until later. For instance, if fraud or forgery occurred somewhere in the past, an Owner’s Policy may protect you when the fraudulent activity is discovered.

For more information, visit www.firstam.com/TRID Agency Today | Issue 3

Agency Today | Issue 3

AgentNet® Underwriting Request Feature Utilizing the Underwriting Request feature in AgentNet enables agents to simplify processes and streamline communication by submitting Over Underwriting Limit, Special Pricing, Mechanics’ Lien Risk and other unusual risks directly from AgentNet. Simplify Processes • Electronically submit requests for underwriting authorization and approval that are currently requested via phone, email or fax • Complete necessary forms, upload documents and provide transaction-specific details with your request

Streamline Communication • Ability to select your preferred underwriter and collaborate directly from your AgentNet file • View all data exchange and determinations stored in the file • Receive secure, encrypted email notifications regarding status of request

TO VIEW TRAINING VIDEOS AND GUIDES

www.firstam.com

Agency Today | Issue 3

Lender Scorecards

How and Why Major Lenders Will Manage Title and Settlement Agents The October 3rd implementation of the TILA-RESPA Integrated Disclosure (TRID) Rule is not just a change in the forms. It is more than that; it is a change in disclosing, liability, responsibility and profitability for both the lender and the title and settlement agent. Disclosing

New forms and new cost tolerances

Liability

Lenders face greater private rights of action from consumers and increased enforcement from regulators for actions performed by the lender or service providers on behalf of the lender.

Responsibility

Lenders are responsible for delivering the Closing Disclosure and the actions of their settlement agents.

Profitability

Transactions failing to meet the new performance standards directly impact the qualified mortgage rules and may subsequently impact the lenderâ&#x20AC;&#x2122;s â&#x20AC;&#x153;reps and warranties.â&#x20AC;?

Agency Today | Issue 3

Bottom Line Lenders are concerned with very specific areas of the loan closing. These are some of the areas where a title and settlement agent’s performance can impact the lender scorecard: • • • •

Policy delivery Recording of security instruments and subordination agreements Charging actual recording fees Providing accurate property tax information

• •

Refunding consumers in a timely manner when overcharges occur Ensuring all documents are complete, signed and executed properly

Inaccuracies and slow turn times in these areas place a lender at risk with their regulators.

How Title agents operating in the centralized refinance or REO markets have already experienced lenders measuring performance and providing written expectations. Now, lender scorecards are becoming more of the norm for all settlement service providers across all types of financed residential transactions. Many lenders will create scorecards based on the transaction performance of individual title and settlement agencies. Performance will be determined by benchmarks called Service Level Agreements or expectations defined in the closing instructions. Scorecards may be issued to the title agent monthly or quarterly. Lenders intend to use scorecards to help identify and manage which settlement service providers can and cannot transact closings for their institution.

Action Items 1. Know your lenders a. Talk to your lenders now: https://amd.firstam.com/TRIDReadinessFormLetter/TRIDReadinessFormLetter.docx b. Use the TRID Agent Tool Kit to prepare: https://registration.firstam.com/creativeservices/GenMarketing/LenderScoreCard/ TRID_Agent_ToolKit.pdf c. What are the benchmarks and expectations of the lenders that are your business source? 2. Know your process a. How do your processes match lender expectations and processes? b. Do you need to change your processes in order to continue to operate successfully? 3. Know your performance a. Documenting your processes is only the first step. Knowing how your processes perform and accessing metrics to evaluate and manage your processes will be critical to continuing business with your lending customers. 4. Know First American Title is here to help you a. To provide our policy-issuing agents with uniformed access to information and preparedness, First American Title brings years of lender relationships across all business lines, industry expertise and total enterprise resources to a central focus point.

Executive Summary

b. Agent Resource Center in AgentNet ® i. TRID Agent Tool Kit ii. Competitive Advantage Platform (CAP) iii. TRID training material, videos and industry news c. Locally provided state-specific training d. TRID Customer Forum sessions (live/recorded)

Major lenders have shared their plans about how they intend to manage and mitigate the increased liability risks post October 3rd. The plans includes creating a scorecard to monitor each title agency’s performance. An unsatisfactory scorecard performance may result in discussions with the lender about an agency’s performance. Continued below-expectation performance may result in being prohibited from transacting closings for the lender. Title agencies will be experiencing two significant market shifts with lenders who use scorecards. 1. Lender scorecards are becoming a more significant factor in determining which title agencies can transact closings for the lender. 2. The work intensity on transactions must continue well

past the closing, well after all fees and revenue have been collected. Work on transactions does not stop until all lender requirements have been met and the lender has everything needed to produce a compliant and deliverable loan. Agency Today | Issue 3

Data Security Beyond Compliance It’s About Responsibility By: Kent Nies Chief Business Officer, CertainSafe Secure Cloud Systems O: 719.323.6680 Ext: 130 C: 214.403.8172 www.CertainSafe.com

719.323.6684 | www.certainsafe.com 28

Agency Today | Issue 3

Of all of the regulatory changes, compliance measures and business requirements mandated by the CFPB, none is more important than data security and the protection of NPI data. This is not just the lender’s responsibility; liability and responsibility go hand-in-hand. Accountability lies in the proactive measures each of us must take as business leaders to minimize the risk of a cyber-attack or mass data breach occurring. With the escalated rise in cyber-terror, it is incumbent upon each corporate executive, business owner and operations manager to ensure their ‘house’ is taking the appropriate steps to remain as fail-safe as possible by establishing and following a comprehensive data security plan.

What is NPI (Non-public Personal Information)?

• • •

•

First name/last name OR first initial, last name AND Social Security number OR Driver License/state-issued identification card information OR Financial account number(s)

Electronic Locations of NPI

• • • • • • •

Computers Network servers Email services Instant messaging services Fax services Copy machines with internal hard drives Network storage devices

• • • •

Web servers Cloud storage Backup tapes or online backup services User-provided devices/ media (smartphones, tablets, USB storage devices, etc.)

As presented in Experian’s 2015 Second Annual Data Breach Industry Forecast, “Showcased by shifts in leadership at companies that suffered a public data breach in the last year, it is clear that security can no longer be viewed as just an IT issue. In 2015, scrutiny of corporate leadership’s management of security will continue to increase, in the form of legal and regulatory action after a major incident.” This regulatory action is occurring now across the entire real estate vertical. In 2015, the forecast calls for an increase in breaches involving the loss of usernames, passwords and other information stored on a local server, computer or in the Cloud. Cloud services have been beneficial to both consumers and business productivity. However, as more information gets stored in the Cloud, and consumers rely on online services for everything from mobile payments and banking to photo editing and commerce, they become more attractive targets for attackers. In fact, a recent study found a Twitter account is worth more on the black market than a credit card number1 and stolen identities, including online credentials, are worth upwards of $25 per record.2 Beyond online credentials, loss of other personal information remains a serious threat, especially when a breach is unidentified and/or underreported. There may be an increase in cyberMarkets for Cybercrime Tools and Stolen Data: Hackers’ Bazaar. Hackers Sell Health Insurance Credentials, Bank Accounts, SSNs and Counterfeit Documents, for over $1,000 Per Dossier, Dell SecureWorks

1 2

attacks this year to access consumer passwords and other data stored in the Cloud. To combat this, incident response plans should include considerations of how to reset user passwords on demand globally, as well as the ability to send mass notifications rapidly to all who were potentially affected. Although there is heightened sensitivity for cyber-attacks, a majority of companies and individuals continue to miss the mark by not executing the fundamental steps required to secure their environment. Between human error and malicious insiders, a significant amount of data breaches originate inside company walls. Employees and negligence are the leading cause of security incidents, but remain the least-reported issue; according to industry research, this represented 59% of security incidents in 2014. In 2015, people-based breaches continue to be the leading cause of compromises, yet still receive the least attention. While investments will favor new technologies capable of helping better prevent intrusions and the exfiltration of data from attackers, data security has to start with the basics.

Organizations that provide regular security training to employees and implement a culture of security committed to safeguarding data will be better positioned for ongoing and sustained success. Currently, only 54% of organizations report that they conduct security awareness training for employees and other stakeholders who have access to sensitive or confidential personal information. Making a significant dent in the number of breaches in 2015 will require companies to pay more attention to raising the security intelligence of employees by providing knowledge and guidance for them to “do the right things.” Organizations that provide regular security training to employees and implement a culture of security committed to safeguarding data will be better positioned for ongoing and sustained success. A best practice for each company or office would be to draft, implement and follow a data security mission plan. There are a number of potential gaps that may be remedied without many IT resources, technology enhancements or additional costs; the over-arching objective is to minimize or eliminate the internal, as well as, external exploitation of your clients’ and firm’s sensitive data.

Basic Steps That Will Provide an Immediate Impact On Protecting Your Organization Utilize a proven Antivirus, as well as anti-spyware products and keep them updated daily. This will mitigate risks and threats that come with the utilization of both the internet as well as your internal intranet. It will also provide protection against software viruses/worms, designed to invade your computer and copy, damage or delete your data. It will also identify many forms of Agency Today | Issue 3

Data Security Beyond Compliance It’s About Responsibility (continued)

spyware that secretly watch and/or record activities, send you endless pop-up advertisements and provide protection against ‘Trojan Horses’ that pretend to impersonate other products while destroying your data and damaging your systems. Don’t Just Click — Execute the Stop-Read-Analyze-Call approach. Ensure your team is on the lookout, so they don’t get caught in a phishing ploy that provides upsetting or exciting information within the message. As messages are received, analyze the message by carefully reading their claims. Review and analyze all links and web addresses contained within the message before clicking on them. When in doubt, call! Do not reply to emails requesting you confirm account information. Call the company in question by utilizing a known telephone number to verify the email is legitimate.

Utilize a proven Antivirus, as well as anti-spyware products and keep them updated daily. This will mitigate risks and threats that come with the utilization of both the internet as well as your internal intranet.

up to date with the latest protection. These are available and should be top of mind to ensure your firm has the most current protection. Require employees to lock their computers when they leave their desks. Computers should be set to automatically lock out access after a reasonably short period of time (example, 10-15 minutes). Restrict physical access to computers in the same way the office doors are locked and protected. Articulate penalties for violating the firm’s cyber policy, in an effort to demonstrate your firm’s commitment to your best practices security protocols and mandates. Each of us must recognize that these efforts require continuous and vigilant attention and are more important than just complying with industry regulations. Cyber-attacks have become so pervasive that we have a social, moral and personal responsibility to protect ourselves, the places we work, our vendor partners and most of all, our customers. Make instituting a data security plan your #1 business imperative today!

Best Practices Security Protocols Discontinue the use of unencrypted emails that can easily be intercepted and read without your consent. Additionally, educate your team that attachments received by email can contain viruses, even when sent from a trusted source or friend. Ongoing phishing attempts continue to exploit good-natured individuals by sending emails that appear to come from a trusted, known individual. When in doubt — check it out. Require strong passwords (minimum of 8 characters which contain upper and lowercase letters, numbers and symbols) and make it a requirement that each individual have their own password that should never be shared with anyone. Require passwords be changed at set intervals. Establish guidelines for internet usage, including restricted access to non-secure websites, (such as those that are not https://) as these add a significant amount of additional security risk to your firm. Security updates from your providers, as well as commonly utilized browsers, contain security patches required to remain 30

Agency Today | Issue 3

719.323.6684 | www.certainsafe.com

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FAX

TRANSMISSIONS:

S E C U R I T Y M AY B E F I C T I O N It is clear that today, data breaches, email scams, electronic fraud and embezzlement are an ongoing everyday occurrence. Cyber-terror continues to escalate, with measured market indicators suggesting that this malicious activity will continue well into the future. It is also apparent that there are still By: Steven R. Russo Executive Vice President many that continue to act under the Secure Cloud Systems false pretense that the odds of any O: 719.323.6680 Ext: 120 of these events occurring against C: 847.613.0486 F: 888.344.6556 them and/or their firms would be srusso@securecloudsystems.com very rare. A vast majority continue www.securecloudsystems.com utilizing age-old devices such as the trusty fax machine, with the idea that fax transmission is safe and secure. Well, this simply is not the case! The fact is that many traditional forms of electronic communication can be compromised with moderate effort and at a low cost. Healthcare Information and Management Systems Society Director, Lee Kim, in an interview with PCWorld™ states, “Documents which are being sent via fax are difficult to intercept, if sent over an analog telephone line, as this requires special equipment.“ In our world today, one of the ways this can be accomplished is with the utilization of a low cost fax demodulator. According to faxauthority.com, a fax demodulator is a device that can intercept fax signals, either over a phone line or a radio fax signal. A fax demodulator can be deployed that facilitates the observance of a fax transmission. It is a somewhat stealth method in that it does not participate in the fax handshake or two-way communication which occurs between fax machines, yet allows sensitive information to be captured in parallel with the transmission. Interceptors can intercept both analog signals as well as digital and IP-based signals. With the advent of recent spy technology, it brings up the 32

Agency Today | Issue 3

question whether or not the faxing of sensitive information should be recognized as compliant when there are indeed secure solutions to replace it. Businesses of any size have access to best-in-class file-sharing/storage platforms (of which CertainSafe® is a good example) to ensure ultra-secure protection, compliancy and digital audit trails of sensitive information transmissions. With the ongoing requirement for physical signatures, the requirement not to disrupt everyday business practices, and the unintentional security gaps that exist, many if not most organizations continue to utilize facsimile as an everyday transmission means. This tide needs to turn as more and more electronic interception, both known and unknown, continues to occur with increased frequency, with the biggest challenges continuing to be the unknown interceptions.

The fact is that many traditional forms of electronic communication can be compromised with moderate effort and at a low cost. While there is “freeware” available today, companies such as VOCAL Technologies™ provide VoIP decoding software that, according to their company, extracts audio and video from intercepted VoIP communications sent over mobile, LTE, and other IP networks. VOCAL’s VoIP decoder software, just as an example, is designed for the lawful interception and decoding of multimedia transmissions from previously recorded files, as well as “real-time data streams.” Decoded communications can then be output to standard file types. Their technology is designed to extract data of interest from the large volumes of network traffic that can be collected. The key to fax technology is to not focus on the device that sends or receives the message, but the channels and/or tunnels

it travels through. In recent years, we have seen a significant increase in the popularity of cloud-based and online fax services to speed up business processes. With the ongoing need for more and more people sharing data digitally, any interruption in the daily business process requiring any additional steps and/ or changes is viewed as a detrimental reduction to corporate productivity and output. “For many business professionals, it’s cumbersome to scan paper documents for inclusion in a digital repository,” TMCnet contributor, Mae Kowalke stated. “New technologies exist for the task, including scanner apps for smartphones and dedicated personal document scanners, but most businesses already have fax machines, and faxing is a cheap and easy way to get paper documents sent and distributed.”

someone can receive a random fax which is not addressed to them, they have no legal obligation to ignore the information contained in the message. When auto-dialers are used, typing errors can have even more dramatic consequences. While it is still considered a criminal offense (in most cases), fax interception is not only a reality, but can be very inexpensive to set up. Reported estimates of the special electronics required to intercept a fax transmission start as low as “free” for software and $50 for hardware. Today, law enforcement agencies purchase relatively sophisticated fax interception equipment to perform this act. Fax espionage is leading to ongoing and unknown levels of exploitation. Fax interception is becoming more common and more organized.

Faxing over IP channels helps to solve a common problem experienced by enterprises. However, as more professionals become ‘mobile cloud warriors’, they are less likely to use technology, which they view as counterproductive, even if it is the most effective and secure solution available. As we analyze the landscape, we believe this is one of the main reasons many employees forgo the everyday fax machine and repeatedly attach their sensitive documents to email messages which can, and most likely will, ultimately lead to disastrous consequences.

These threats exist and should be considered when issuing guidelines regarding which type of documents can be sent by fax. Prior to the availability of file sharing/collaboration security tools, such as the CertainSafe Digital Vault, the need to accelerate the business cycle forced the use of faxing confidential documents. In today’s sophisticated marketplace where cyber espionage abounds, best practices should suggest that a more secure communication(s) capability is required. It stands to reason that it may be in an organization’s best interest to proactively consider new business protocols or practices before a breach occurs to you and/or your clients!

By supplying staffers with a tool which couples ease of use with legal and, quite frankly, moral obligations, it is indeed possible to enjoy a new level of productivity from new processes. Investing in this sort of asset helps businesses move away from the use of traditional outdated methods without losing the ability to communicate. Entities that still depend on faxing as their preferred method should consider making a conscious effort to re-evaluate their strategies and consider upgrading from these legacy solutions which they have in place today.

According to the US Department of Agriculture, “In most cases, there is no way to know whether an individual communication is being monitored. Because it is so easy to monitor communications, and it happens so often, it is best to assume that any communication which contains information of great potential value to another person, organization, or country, may be monitored and/or intercepted.”

Confidential Documents by Fax Fax communications do not, in any way, guarantee confidential transmission. As an addition to the possibility of malicious interception, there exists the most frequently expressed concerns regarding fax transmission and confidentiality; the handling of incoming fax messages is lax at best. At least documents sent via mail or a carrier, such as FedEx® or UPS, arrive in a sealed envelope with the addressee’s name on its cover. A fax document is printed on a fax machine, which is often located in an open office environment and shared between multiple numbers of colleagues. This presents significant security risks.

Compliancy, security and best practices suggest that on behalf of your clients, you should be considering new and updated methods when sending any form of electronic communication containing sensitive subject matter. For more information please contact CertainSafe at 719.323.6684 or info@certainsafe.com.

Additionally, the human aspects of sending a fax transmission still remain. It is a vulnerability created by a human simply typing errors in dialing the destination number. In other words,

719.323.6684 | www.certainsafe.com

Agency Today | Issue 3

ALTA Best Practices Certification Matrix From demonstrating excellence to your lenders, to ensuring your operations are running as efficiently and effectively as possible and minimizing business risk, the benefits of becoming compliant with ALTA Best Practices are numerous. Ultimately, however, the primary goal of implementing ALTA Best Practices within your organization is to ensure that you will be deemed compliant by your lender(s) as a result of the compliance certification process you go through and accompanying reports issued. Unfortunately, there is much confusion in our industry as to what “certification” really means (the exact definition), as well as what lenders are requiring from you to show that you are “certified.” We’ve all heard the countless names of services being offered today, they include self-assessments, SOC reports, SSAE16, consulting engagements, reviews, examinations and several others. To make matters more confusing, some names are synonyms for the same service, terminology can vary by service provider and all of the offerings connote varying degrees of success, whether or not your lender will accept the report and deem you compliant. Speaking of providers, the types of providers that offer certification services vary greatly. Providers may include the single-person consulting shop that has identified a new market, consulting companies that remediate pillars and certify, underwriters that have beefed-up their internal auditing procedures by consulting with a CPA firm and CPA

firms that offer different levels of CPA attestation services. The choices are many. So how do you decide which report is best for you and which type of service provider should perform your compliance testing work? The answer depends on how much confidence you want to have that your report will be accepted by your lenders, or stated another way, how much risk are you willing to take that it won’t be accepted. Ask yourself the following questions when making your compliance choices:

• • • • • • •

How comfortable will my lenders be with the type of service provider I have chosen? What is the likelihood that my lenders will accept the type of report I have chosen? What experience does the service provider have in performing ALTA Best Practices testing and reporting? Is the service provider working for me directly — with my best interests in mind — or were they hired to represent someone else’s interests? Are there any conflicts of interest between who helps me get ready for compliance and who actually tests me for compliance? If I write for multiple underwriters, will my chosen report apply to them all? What commitment is the service provider making to me that my report will be accepted by my lenders?

HA&W Commitment to Agents HA&W is confident that your lender will accept our Examination or Review Report (Report) as defined in our engagement letter with you. In fact, we will refund your Report fee if your lender (1) rejects our Report within 90 days of issuance and (2) requires that you obtain a second Report from another CPA firm. In addition, if ALTA changes their Best Practices Assessment Procedures within six months of the issuance of our Report, requiring additional testing to certify your conformity, HA&W will charge you only for the incremental work necessary to reissue our Report.

Agency Today | Issue 3

Certification Matrix CERTIFICATION TYPE

WHO CAN DO THE TESTING?

TYPE OF TESTING PERFORMED

Service Organization Controls Reporting (SOC)

CPA firm only

Assesses financial risk to lenders With particular emphasis on escrow accounts

Focuses on security, processing integrity, privacy and confidentiality Customized to include all seven ALTA Best Practices pillars

ADVANTAGES

CHALLENGES

Highest level of assurance provided for service organizations

Significant investment

Commonly recognized by lenders in the marketplace

Thoroughness of report may be unnecessary

Provides market distinction and competitive advantage

Onsite visit(s) provided for maximum testing and additional testing performed remotely There are two types of SOC reports, The difference between the two types is the date range the audit is performed. Type 1 addresses a particular point in time and Type 2 addresses a specific period of time.

Examination

CPA firm only

Evaluation of policies and procedures

Highest level of assurance provided for ALTA Best Practices

Inspection of documents and records

Report may be shared in the marketplace

Make inquiries of personnel

Provides market distinction and competitive advantage

Observe activities

High degree of rigor required to achieve compliance

On-site visit provided for maximum testing and additional testing performed remotely

Agreed-Upon Procedures

CPA firm only

Testing would be jointly defined by all parties to the engagement

Lenders must first agree to procedures to be tested

No opinion provided in report

High level of assurance provided

Medium degree of rigor required

Must be performed by a CPA

Lender may require higher level of rigor to achieve compliance

Testing would be developed under that engagement and is NOT required to follow the ALTA Best Practices Framework Assessment Procedures

Review

CPA firm only

Testing includes evaluating policies and procedures and making inquiries of personnel Testing performed remotely with optional on-site visit

Provides market distinction and competitive advantage

Report may not be distributed to a lender that is not party to the engagement contract

Depending on agent size

Consulting

Anyone

Limited third-party testing

Minimal external cost

No opinion provided in report CPA oversight not provided

Underwriter Internal Audit Program

Agentsâ&#x20AC;&#x2122; internal auditors

Unknown

Minimal to no external cost (depending on underwriter)

May not conform with the ALTA Best Practices Framework Assessment Procedures Each underwriter program is unique and does not conform to the same standards

Self-Certification

No third party involved

No independent third-party testing

No external cost

No third-party verification Lowest level of assurance

Agency Today | Issue 3

The fast track to compliance using ALTA Best Practices

Our ComplianceSuccessÂŽ Program provides comprehensive benchmarking, testing and reporting across all seven ALTA Best Practices pillars.

Get Started Today. Contact: Adam Klein,

Carol Adams,

Client Relationship Executive adam.klein@hawcpa.com

Client Relationship Executive carol.adams@hawcpa.com

1-844-848-6529

Agency Today | Issue 3

www.compliancesuccess.com

ÂŠ 2015 Habif,f Arogeti & Wynne, LLP

CHECK THE ID: Be Familiar With Your State’s Driver’s License!

In 2014, the title industry suffered serious losses in the area of fraud and forgery. Unfortunately, with new stories being reported almost weekly, 2015 has not provided a different experience. There are quite a few places in the process that we can work to avoid these losses, but one of the last clear chances to stop the fraud is at the closing table when the fraudster presents false identification — either the ID is fake or the person presenting it isn't the person identified on the ID. It is absolutely critical that every person charged with overseeing the execution of closing documents be extremely familiar with their state's driver's license. All states have built-in fraud prevention aspects to their licenses, and it is our job to know what they are, how they work and how to critically examine that identification for veracity when it is presented at closing. Equally important is when we believe we have authenticated the identification, we must be certain that the person presenting the ID is the person on the identification. If the situation doesn't feel right, or the person seems nervous about answering your questions designed to verify their identity and identification, take it as a warning sign.

By: Michele A. Green VP, Senior Division Underwriting Counsel First American Title

LOOK

• Fine-line background pattern unbroken by alteration. • Half-tone small picture.

• Overlapping data on pictures. • Forged ID may appear brand new, even though issue date is not recent.

TOUCH

• Feel for smooth, uniform edges. • Bend the edge slightly. Fake IDs may buckle.

• Photo areas should feel smooth not bumpy.

SHINE

• Does your state license have: »»An opacity mark (watermark) that »»Laser engraving? »»Optically-variable overlay? only shows when light is shined »»Rainbow printing? behind it? • Foils and holograms should flash in and out while tilting card.

SCAN

• Scan the bar code on the ID with a phone app and compare data.

CHECK

• Compare features listed on license: »»Correct height? »»Correct weight? »»Correct eye color? »»Correct age/birthdate? • Is the cardholder: »»Nervous? »»Avoiding eye contact? »»Hesitant when asked a random

Most forged IDs will not scan.

question? (Zodiac sign? Year of high school graduation?) • If you are still unsure of identity: »»Have cardholder sign a piece of paper; compare the signature. »»Ask for a second form of photo ID or credit card. »»Ask for permission to call the DMV to verify the license. Agency Today | Issue 3

AGENT SPOTLIGHT

Question:

How have you prepared your company to work with lenders under the new TRID Rule?

Agency Today | Issue 3

AGENT SPOTLIGHT A: MSC Title has been preparing for the upcoming changes in a number of ways. First and foremost, we completed an ALTA Best Practices Manual demonstrating to lenders that we are committed to adhering to the best practices in our industry, providing confidence and peace of mind to our lending partners. Second, we have been vetted by Secure Settlements, a risk management company who provided a risk management analysis of our company, ensuring our commitment to protecting our customers and lenders. Third, we have implemented software encryption, securing all NPI when sent via email. By: Laura Bowers Managing Director Licensed Title Agent MSC Title, Inc. 40 N. Osprey Avenue Sarasota, FL 34236 O: 941.552.5211 | F: 941.552.5210 laurabowers@msctitle.com www.msctitle.com

Our staff continues to attend webinars and seminars about the impact of TRID and how it will change the way we share and work with lenders once its implemented. We have already registered with some website portals we know the lenders will be using to share information. The key to a successful transition will be communicating with our lending partners as well as educating the real estate professionals and their customers about proper closing date expectations. MSC Title welcomes the changes and remains optimistic that this is a positive change for the consumer and our industry as a whole.

A: In preparation of the new TRID Rule, Coleman Talley, LLP hosted a free, two-hour breakfast seminar in April. The seminar was attended by nearly 100 mortgage and lending professionals from across South Georgia. Presenters included: Scott Logan, Georgia State Counsel for First American Title Insurance Company, J.D. Crowe, President of the Mortgage Bankers Association of Georgia, and Coleman Talley Partner, Richard Coleman, provided an exceptional overview of the changes ahead.

By: Richard L. Coleman Partner Coleman | Talley, LLP 910 North Patterson Street Valdosta, GA 31601 229.242.7562

richard.coleman@colemantalley.com www.colemantalley.com

By: Amy Maris Owner/Licensed Title Agent Florida Family Title, LLC 222 East Pine Street Lakeland, FL 33801 863.937.9126 www.FloridaFamilyTitle.com amy@flfamilytitle.com

The event was very educational for both the lenders and our real estate team, not to mention the event provided an excellent opportunity to open the lines of communication with the lenders. Attendees were also provided with an overview of CFPB Bulletin 2012-03, regarding third-party vetting and the steps that settlement providers are taking to comply. In addition to the numerous TRID compliance training seminars and webinars our attorneys and staff have attended, closing software training was next on the list. Following the software training, our real estate team spent time practicing use of new forms and features. In preparation of the firmâ&#x20AC;&#x2122;s third-party ALTA Best Practices certification examination in October, Coleman Talley, LLP has already taken steps to organize closing processes. Our management team believes this to be one of the key components of being prepared to work efficiently with the lenders to meet the new requirements.

A: With the impending implementation of TRID, education has been the central focus of Florida Family Title. We believe strongly, the most effective way to be prepared is to gain knowledge. We have attended very informative seminars offered by First American Title, as well as webinars and further, traveling to Washington, DC, to attend the ALTA meeting in March. It is equally important to us, to educate our real estate agents by providing classes which detail ways in which they can prepare for the changes. Now more than ever, it is vital we build strong relationships with our lenders and mortgage companies. We are proactively contacting the lenders and mortgage companies inquiring how we may assist them through the implementation of these changes.

As a result, Florida Family Title has gained tremendous knowledge and has been able to stay ahead of the curve when it comes to taking advanced security measures. We utilize secure portals and email encryption services, while continuing a good rapport with our colleagues. It is the goal of our company to make this transition smooth as possible for our customers, real estate agents, mortgage brokers, lenders and title companies. Agency Today | Issue 3

Question: How have you prepared your company to work with lenders under the new TRID Rule?

By: Michael P. Maniche President Guardian Title & Guaranty Agency, Inc. 1130 Chester Avenue Cleveland, OH 44114 440.477.3300

A: Guardian Title & Guaranty Agency, Inc. and its affiliates recognized early on the importance of preparing for and ensuring the company’s overall compliance to the new CFPB regulations, understanding the new TRID Rule and creating workflow flexibility in order to seamlessly work with our lender customers once the new rule is in place. Our process started by building our CFPB Compliance Manual to make sure our policies, practices and procedures were in line with the 7 pillars of the ALTA Best Practices. Our employees participated in training sessions to ensure their full understanding of the importance of their daily participation in safeguarding the integrity of our compliance model. Upon completion of the manual, our operations management began communicating at a high level with our lender customers to gain a complete understanding of their expectations for their vendors with regard to compliance and the preparation of the new Closing Disclosure documents. Based on those discussions, one key area of focus was making sure we created flexibility within our workflow to meet whatever the needs of our lender customer would be far in advance of the TRID Rule implementation.

Technology was at the top of our list and we were fortunate to already have an operating platform, RamQuest, which was fully engaged in building the new disclosures, not only for ease of preparation, but also for ease of communication and delivery with and to all parties involved in the transaction. The RamQuest Closing Market communication portal was a key element in our preparation. In our communication with lender customers, we found most of our lender customers were going to choose RealEC’s Closing Insight™ collaborative closing portal; Guardian Title and its affiliates immediately became part of the network. A vital point to make about the technology we are using is that both RamQuest and RealEC use the MISMO (Mortgage Industry Standards Maintenance Organization) guidelines for compliance which are very specific about how data interactions with lender data-handling systems are done.

mmaniche@guardiantitle.com www.guardiantitle.com

Our employees engage regularly in training regarding the preparation of the new Closing Disclosure documents. We continue to communicate at a high level with our customers as we look forward to the October 3, 2015, implementation date. We believe the flexibility we have built within our workflow and technology platform has positioned us to be able to meet the needs and expectations of all of our customers.

A: I find it interesting how little the title and mortgage industries have worked together in the past. Even though we typically communicate with each other on a daily basis, we’ve never really taken the time to strategize with each other on how to create a more symbiotic relationship. The CFPB has forced new conversations and a new level of relationships.

By: Thomas Lico President/COO Capital Title Insurance Agency, Inc. 25800 Northwestern Hwy. Suite 110 Southfield, MI 48075 248.330.1960 tlico@capitaltitle.net www.capitaltitle.net

Agency Today | Issue 3

To address these unchartered TRID waters, we sat down with two lenders in our area that we work with on a regular basis. We had individual discussions comparing interpretations, hypotheticals, workflows, and new processes. We’ve also spent time gaining a better understanding each other’s industries – which was long overdue. In September, as we trained our staff on the software changes, we sent test files back and forth based on different scenarios. We also have monthly meetings scheduled throughout the winter to monitor our progress and make the appropriate adjustments. While we are not exclusive customers of each other, we have all agreed that embracing the change and adjusting to it quickly will make all of us more competitive in the marketplace.

AGENT SPOTLIGHT

By: John F. “Jack” Robichaux, N.T.P.™ Ironclad Title, LLC 1777 Ryan Street Lake Charles, LA 70601 O: 337.433.0234 F: 337.433.1274 jfr@rmwlegal.com www.ironcladtitle.com

A: Through our involvement with the American Land Title Association, including attendance at Annual Conventions and Business Strategies Conferences, we decided early on to become proactive in our approach to TRID preparedness. Our staff travelled the country attending seminars and webinars, graciously put on by First American Title and other third-party vendors, as well as utilizing the information provided in First American’s AgentNet platform in preparing for TRID and Best Practices compliance. In addition to the extensive training, we transformed our office into “Fort Knox” in order to provide the level of security required to protect non-public personal information. We worked with our software providers and sent our closing administrators to their offices for firsthand experience with their new software. Our First American Title agency representative, Sadie Thibodeaux, was a valuable resource, as well as someone who kept encouraging us to continue through the process despite times of frustration. Perhaps the best decision we made was to become Best Practice certified by Pershing, Yoakley & Associates, P.C., an independent ALTA Elite Provider CPA firm in Knoxville, TN. While quite exhaustive, the certification process has become quite the sounding board for our practice, especially since we were the first company in Louisiana to achieve certification. We felt that engaging a nationally recognized CPA firm to take us through the certification process would provide a greater level of confidence with national lenders.

By using the knowledge we gained from our trusted resources, and becoming Best Practice Certified, we have been able to get in front of lenders of all scopes and sizes and become a trusted source of information for other professionals in our local residential real estate market. Our staff is fully trained and well-versed in the intricacies that TRID brings, and have made sure that our vendors are prepared for the paradigm-shifting changes coming our way. Being proactive in preparedness was the key to our recent successes and we look forward to the future. Ironclad Title – You Deserve a Good Deed!

By: Yvonne Deardorff, Esq. Chief Operating Officer Executive Vice President Lakeside Title Company 5840 Banneker Road, Suite 120 Columbia, MD 21044 410.992.1070

A: Part of our overall business plan this past year was to use the new TRID Rule as an opportunity to not only stand out among our competitors, but also achieve a place of distinction with our lender customers. Our primary goal was to establish ourselves with local lender and real estate professionals as the title company expert on TRID. Early on, we implemented all of the ALTA Best Practices and members of our management team and I attended events and trainings sponsored by ALTA, the Mortgage Bankers Association, and our underwriters. We obtained and disseminated the most current information TRID to our clients then created and hosted classes to educate lenders, real estate agents and our staff inviting lenders to participate in those trainings. As a result of our partnerships and the lender participation in these programs, many local in-house lender compliance officers contacted me directly seeking our company’s opinion on how they should set up their internal processes relative to TRID.

For the most part, we were able to authenticate and strictly follow many of our existing processes related to licensing, escrow protection, privacy and security, policy production and delivery in YDeardorff@lakesidetitle.com order to be compliant. We have always invested in technology, but this past year we implemented www.lakesidetitle.com new technology to meet TRID requirements. We updated our website to include an easy way for consumers to provide feedback, tracked individual lender requirements as they were made available and we continue to be responsive to lenders while meeting their deadline requirements for information. Realizing that the compliance burden of the lender under TRID is much greater than our burden, we made settlement processing changes and are providing information to them early, quickly, accurately, and at a cost reasonable to the consumer. This will make it easier for the lenders to do business with us. We believe the biggest obstacle facing title companies in a post-TRID environment is maintaining their lender and real estate agent client base while proving their value and the value of title insurance. Our team has embraced the required TRID changes and view this is an opportunity instead of a burden. We hope our methods will allow Lakeside Title Company to continue to grow and prosper as we have for almost 20 years. Agency Today | Issue 3

ONE SOURCE. MANY SOLUTIONS. From title and escrow production systems to trust accounting, SMS delivers solutions that span the entire real estate closing process—seamlessly integrating front office tasks with back office processes to make your life easier and your business stronger. We understand that the title and settlement arena is always in motion, and the regulatory environment is constantly changing. Nothing is more important to title and settlement professionals than having someone on their side—an expert team with extensive experience, the strength to help, and targeted products and services to help them make the most from each and every transaction with SMS.