Illinois Agency Insights - Summer 2019 by First American Title - Agency Division

Illinois

SUMMER 2019

AGENCY INSIGHTS ~ A B I A N N U A L P U B L I C AT I O N F O R I L L I N O I S A G E N T S ~

BETTER SAFE THAN PRISCILLA BASTIC Illinois Underwriting Counsel

The real estate industry is being targeted by fraudsters. The increased exposure of title professionals and their businesses to an ever-expanding landscape of security threats is one of the greatest challenges facing our industry today. Attorneys and title companies have taken many steps to combat this problem, but the criminals are smart and constantly alter their tactics to steal information and money. We all must do our part to stay vigilant, look for warning signs, and assume fraud is involved with anything out of the ordinary.

PAGE

IN THIS ISSUE

Better Safe Than Sorry

Red Alert: Cyber Fraud

Email Security Tips

Title Buzz

Endorsements

Why Do We Need Regulation?

Coming Home

AgentNet® Title & Escrow

First American Financial Position

Errors & Omissions Insurance JULY 4 TH

INDEPENDENCE DAY SEPTEMBER 2ND

LABOR DAY – State Agency Office Will Be Closed –

Take steps to protect your agency by sharing the information in the Red Alert and Email Security Tips flyers with your employees. First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates. AMD: 07/2019

RED

ALERT

Protect Your Agency from Cyber Fraud The stories regarding hacked email accounts, forged wire instructions, cyber fraud and other risks to your agency continue to be reported at an alarming rate. Protect your agency by keeping these helpful tips near the desk of everyone in your office, especially anyone in charge of wiring money! In the cyber world, criminals are communicating with you posing as your customers. Worse, they are communicating with your customers posing as YOU.

DON’T BE A VICTIM! VIGILANCE AND A HEALTHY DOSE OF SKEPTICISM ARE THE BEST WEAPONS IN THE BATTLE AGAINST CYBER FRAUD. Wire and other disbursement instructions received by email should be confirmed by telephone at a known or independentlyconfirmed number, NOT the telephone number at the bottom of the email you are trying to confirm.

Confirm the account to which you are wiring is in the name of the party entitled to the funds.

Consider providing YOUR wire instructions via hard copy only, with a notation: With cyber-crimes on the increase, it is important to be ever-vigilant. If you receive an email, or any other communication that appears to be generated from our office, containing new, revised or altered bank wire instructions, consider it suspect and call our office at a number you trust. Our bank wire instructions seldom change.

Be leery of a new deal coming to your office out of nowhere.

Be especially skeptical of any change in wiring instructions. Who really changes their wire instructions that frequently?

Be suspicious of emails from free, public email account domains as they are often a source of risk.

Example: “I have a sales contract and a deposit for property I am purchasing, and I was referred to your office. Will your office act as title and settlement for my transaction?” This conversation is typically followed by a subsequent request to wire out funds originally deposited by check. Watch out for phishing emails with embedded links, even when they appear to come from a trusted source such as First American Title.

Priscilla Bastic Illinois Agency Underwriting Counsel 27775 Diehl Road Warrenville, IL 60555 (O): 630.799.7011 | pbastic@firstam.com The information contained in this document was prepared by First American Title Insurance Company (“FATICO”) for informational purposes only and does not constitute legal advice. FATICO is not a law firm and this information is not intended to be legal advice. Readers should not act upon this without seeking advice from professional advisers. First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.

First American Title | Illinois Agency Insights | Summer 2019

AMD: 05/2018

www.firstam.com

Email Security Tips Cyber fraud is on the rise, largely due to compromised email accounts being used to initiate wire fraud and other financial crimes. The following security tips can help you identify a compromised email account and help prevent further exploitation. PROTECT YOUR EMAIL ACCOUNT

► Change your password often. Make it complex and avoid using personal information. ► Enable two-factor authentication for account access. A quick Internet search will show how to set this up for most major email providers. ► Maintain and routinely update an anti-virus/malware program. ► Scrutinize email content and avoid anything that looks suspicious. ► Before you click, hover your cursor over the sender's email address along with any URLs in the message to be sure they are legitimate. ► If you suspect the 'From' address is fraudulent, you can check it with a header analyzer such as this one from Google: https://toolbox.googleapps.com/apps/messageheader/ ► Review your account activity records for suspicious logins. ► Periodically check your Sent folder to be sure emails aren't being sent or forwarded without your knowledge. ► Periodically check your email configuration to ensure automatic forwarding has not been enabled without your knowledge. A quick Internet search will show how to configure forwarding for most major email providers.

INDICATORS THAT AN EMAIL ACCOUNT HAS BEEN COMPROMISED ► ► ► ► ►

You are unable to login, indicating password has been changed. Activity records show suspicious login times or unknown locations. Account configuration is set to forward emails to an unknown address. Friends and/or colleagues are receiving "spam" messages from your account. You receive replies to emails you did not send.

TIPS TO RECOVER A COMPROMISED EMAIL ACCOUNT ► Change your password immediately. ► If possible, make the account disconnect or sign out of other web sessions. ► Check the message forwarding settings to ensure hackers are not being forwarded the incoming emails.

Note that a compromised email account could be an indicator that the computer itself has been hacked. It is recommended that users complete a full virus scan and change the computer login password. Victims of email fraud can submit a complaint via the FBl's Internet Crime Complaint Center site located at: https://www.ic3.gov Additional information to help protect yourself from malicious emails can be found in the SANS Security Awareness Newsletters located at: https://securingthehuman.sans.org/newsletters/ouch/issues/OUCH-201512_en.pdf Contact your email service provider for more information and tips to protect your important communications.

First American First American Financial Corporation makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American Financial Corporation is a parent holding company that does business through its operating subsidiaries. First American, the eagle logo, and firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.

800.854.3643 .,

www.firstam.com

02017 Flrst � FIMndal CorporatJon and/« Its affllates. AJI rights reserved. NYSE:FAF

FA-12/2017

First American Title | Illinois Agency Insights | Summer 2019

Page 3

Title Buzz

The ever-changing face of title insurance may have a couple of new wrinkles in 2020. JODIE RIVETT Agency Sales Representative

Remote Online Notarization (RON)

SB1317

The Illinois Land Title Association is hosting a panel discussion on Remote Online Notarization (a.k.a. Remote Online Notary, Remote eNotarization, Webcam Notary) at its annual convention. The eClosing Process: • All closing documents are digital and eSigned • The lender’s promissory note and any documents that require notarization (deed, mortgage, etc.) are eSigned as part of an online video session between the notary public and buyer/seller/borrower. • In the online video session, the notary interacts with the consumer in real time while the consumer eSigns documents. • The notary eNotarizes the relevant documents using a digital notary seal and the notary’s eSignature. The recordable documents are submitted for electronic recording.

The Illinois Land Title Association’s conduct reform legislation, SB1317, was introduced in an effort to protect the integrity and soundness of the title industry. The three areas of proposed market conduct reforms include: • Rate regulation through authorization of a rating bureau with a file and approve requirement; • Title agent entity licensing structured to utilize the current registration process; • Specific prohibited acts to address improper inducements and referrals. The Bill passed out of the Senate on April 10, 2019, and was introduced in the Illinois House, but a need for further discussion about title services and payments as well as a clear definition for improper referrals has sidelined the Bill until the next legislative session. The Illinois Land Title Association will be conducting a Town Hall meeting on SB1317 at its annual convention.

At this time, no legislation has been introduced in Illinois regarding RON.

2019 ILTA CONVENTION | July 10 - 12, 2019

SAFE ESCROW

Lake Lawn Resort Delavan, WI 53115

Imagine a new way to fund. Safe Escrow provides title agents a secure, proven solution to escrow funding with our underwriter-approved collaborative disbursement system. From opening a transaction to post funding matters, Safe Escrow gives you added peace of mind. http://pcnsafeescrow.com

Make plans to attend the informative educational sessions on Remote Online Notarization and Mortgage Payoff Fraud, take part in the PAC Trivia Night, enjoy a scenic cruise tour of Lake Geneva and much more! The closing general session features motivational speaker Holly Hoffman, the sole survivor of the Espada Tribe and the last woman standing on Season 21 of the CBS hit reality show Survivor Nicaragua.

See you at the lake!

First American Title | Illinois Agency Insights | Summer 2019

Page 4

ENDORSEMENTS MARTIN CANN Illinois State Underwriting Counsel

The basic coverages provided by the standard American Land Title Association (ALTA) title insurance policies address many common title insurance needs. Often, however, certain Insureds or aspects of a specific real estate transaction raise special concerns. By requesting an endorsement to the title insurance policy, an insured owner or lender may be able to receive insurance against the risk of a particular matter that is beyond the coverage of the standard policy jacket. Over the years, various endorsements have been drafted in an effort to address many common concerns. ALTA has standardized and adopted many endorsement forms that are available for general use by the title insurance industry. From time to time, ALTA adopts, removes or modifies endorsements. Effective 12-1-2018, the American Land Title Association (ALTA) adopted three new endorsement forms and revised four others.

The new endorsement forms are: • ALTA 3.3-06 Zoning – Completed Improvement – Non-Conforming Use • ALTA 3.4-06 Zoning – No Zoning Classification • ALTA 18.3-06 Single Tax Parcel and ID

The revised endorsement forms are: • ALTA 9-06 Restrictions, Encroachments, Minerals – Loan Policy • ALTA 32-06 Construction Loan • ALTA 32.1-06 Construction Loan – Direct Payment • ALTA 32.2-06 Construction Loan – Insured’s Direct Payment

SUMMARY OF NEW ENDORSEMENTS AND MODIFICATIONS TO EXISTING ENDORSEMENTS NEW ALTA 3.3-06 Zoning – Completed Improvement – Non-Conforming Use This endorsement was developed for property that has a legal non-conforming use. For example, a 100-foottall building that conformed to city zoning regulations when it was built in 1997, but became non-conforming in 2003 when the city enacted a new zoning ordinance restricting building height for the property to 50 feet.

NEW ALTA 3.4-06 Zoning – No Zoning Classification This endorsement was developed for property that has no zoning classification or is located in a jurisdiction that has not enacted any zoning laws relevant to the property.

NEW ALTA 18.3-06 Single Tax Parcel and ID This endorsement was developed to give coverage for the tax parcel ID number of a single tax parcel. It is similar to the existing ALTA 18-06 endorsement, but adds a space to identify the parcel ID number similar to the space contained in the ALTA 18.1-06 and 18.2-06 endorsements.

REVISED ALTA 9-06 Restrictions, Encroachments, Minerals – Loan Policy The text following section 4.a.ii. of the endorsement was moved to the left to align with romanettes 4.a. i. and ii. in order to enhance the clarity of that provision.

REVISED ALTA 32-06 Construction Loan, ALTA 32.1-06 Construction Loan – Direct Payment, and ALTA 32.2-06 Construction Loan – Insured’s Direct Payment The words “Loss of Priority” were deleted from the names of each of these endorsements. No other changes were made. View the new and revised endorsement forms on ALTA’s website.

First American Title | Illinois Agency Insights | Summer 2019

Page 5

WHY DO WE NEED REGULATION? PHIL STEIN VP, Illinois Agency State Manager In response to the Illinois Department of Financial and Professional Regulation’s Town Hall presentations, the Illinois Land Title Association (ILTA) formed an ad hoc committee to draft legislation that would address perceived market abuses. The committee was composed of three title insurance agents and three title insurance underwriters along with the current ILTA president, which allowed for a balanced approach. The efforts of the committee were valiant, but many market participants were less receptive as they felt their voices were not heard. As a result, Senate Bill 1317 has been shelved for this session pending additional discussions and modifications. It will be reintroduced in the next legislative session. This begs the question, “Why do we need regulation?” Economic activity flourishes when consumers can trust producers, but the consumer must have grounds for trust. When a consumer enters into a real estate contract for the sale or purchase of a property, they purchase title insurance to protect them against any defects or problems with the title to the property. Title insurance premiums and fees, which may be split between a licensed title insurance company and its registered title insurance agent in Illinois, have increased dramatically over the past decade. This rise in title insurance costs has captured the attention of the Illinois Department of Financial and Professional Regulation (IDFPR).

First American Title | Illinois Agency Insights | Summer 2019

In January 2018, the Department issued Proposed Regulatory Guidance Title Insurance: Splitting Premium and Fees with Title Agents and conducted two town hall meetings in which they solicited public commentary. The public commentary has been published on the IDFPR website. I created the “word cloud” below from some of the comments used to describe the title insurance programs offered in Illinois.

The title insurance industry in Illinois must now take a reflective look at how we do business, and decide whether self-regulation was ever in our best interest. We have an opportunity to restore the integrity of the title insurance industry in Illinois, and this starts with your involvement in the legislative process.

Page 6

Susan Humphris Illinois Agency Associate Account Manager

I began my career in the title insurance industry with First American Title Insurance Company in May 2001. My introduction to the title industry came in the middle of the craziness triggered by the refinance boom. In 2006, I left the Company to pursue other opportunities, but never forgot the wonderful people and the corporate culture instilled in our employees. When I spoke about First American Title, it was always heartfelt and with fond memories. Somehow, I knew I would return one day. Well, I’m back! I am thrilled to return to the First American Illinois Agency team, reunited with Phil, Marty and Priscilla and working closely with Jodie for the first time. My associate account manager role encompasses a variety of responsibilities focused on the needs of title agents. Please consider me your resource and point of contact for inquiries regarding AgentNet®, new or updated agent applications and registrations, policy and escrow signatories, and more. I will continue my efforts to represent our industry as the incoming president of the Illinois Land Title Association. Since joining the Association in 2008, I have been actively involved in the membership, education and settlement services committees and when asked to be a member of the board of directors, I was honored to be recognized by my peers. After serving diligently in committee chair positions through the hierarchy of the Association, I will assume the role of president on July 11, 2019. It is my responsibility both as an employee of First American Title and as a member of the Illinois Land Title Association to make our industry better. I am committed to assisting you in offering the best products and services for your customers while helping you grow your business and thrive in our ever-changing environment. It’s good to be home again, and I look forward to working with you.

Our offices will be closed

JULY 4, 2019

as we celebrate the Independence Day holiday. First American Title | Illinois Agency Insights | Summer 2019

Page 7

Kick The Cost and Complexity of Title Software

Introducing AgentNet® Title & Escrow

Save time and money while reducing the risk of errors with this powerful web-based title production and settlement solution available exclusively to First American Title agents. • • • • • • • • •

No setup or software costs Web-based platform with multi-office/firm access Custom clause library for commitment/policy creation State-specific documents/forms Ability to create custom templates Personalized address book and email available Google® address search and validation Drag-and-drop document storage functionality eRemit and eReporting functionality

• • • •

Title premium rate calculator Transfer tax and recording fees calculator On-demand training Integrated products and services including, Back Title, Search Order and Import, SDN, CPL, eJackets, Policy Upload and more.

NOT AVAILABLE IN ALL STATES | ASK YOUR FIRST AMERICAN REPRESENTATIVE FOR DETAILS.

First American Title | Illinois Agency Insights | Summer 2019

Page 8

Billions Billions

$6.7

$5.7 $6.2

$6.2B

$5.2 $5.7

$5.7B

$4.7 $5.2 $4.2 $4.7 $3.7 $4.2 $3.2 $3.7 $2.7 $3.2 $2.2 $2.7 $2.2

First American Title | Illinois Agency Insights | Summer 2019

$6.2B

$6.2 $6.7

$5.7B

$4.5B $4.5B

$3.1B $3.1B

2012

2013

2014

2015

2016

2017

2018

2012

2013

2014

2015

2016

2017

2018

Page 9

Title Professionals

Errors & Omissions Insurance An exclusive program for First American Title Agents, Abstractors/Searchers and Escrow/Closing Agents.* Exclusive Benefits: • Policy discount when partnered with Safe Escrow® • $5,000 deductible credit on transactions underwritten by First American • $150,000 fraudulent escrow funds transfer coverage • Carrier is rated A++ by AM Best • $25,000 employee dishonesty, privacy security and technology coverage

GENE BOHEN

N at i o N a l C o m m e r C i a l l i N e s

800.253.2214 gbohen@firstam.com l i C e N s e N u m b e r 0C60917

tel

*All states except WV, HI, AK, & LA It is important to read the terms of each policy to ensure information. First American Property & Casualty Insurance Agency, Inc. makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American and the eagle logo are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates. Safe Escrow® and PCN Network are registered trademarks or trademarks of PCN Network, LLC and/or its affiliates. AMD: 05/2019

First American Title | Illinois Agency Insights | Summer 2019

Page 10