Welcome to Virginia Title Center's E-Communication Special Report Edition for Lenders.  It is our hope that you will find the information contained herein to be useful and timely.  Please let us know what you think.  We want to hear from you.
Additional best practices articles related to the CFPB and third party providers are forthcoming for Escrow Controls and Protection of Non-Public Personal Information.
Thank you,

Patti Dickerson
Director of Marketing & Communications
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August 6, 2013
Special Report for Lenders

BANKS PUT ON NOTICE: CFPB Says Banks are Responsible for Service Providers
written by Jonathan Biggs, VP for Risk Management, Investors Title Insurance Company and member of the ALTA Best Practice Task Force 


The Consumer Financial Protection Bureau (CFPB) issued a three-page memorandum ("Memo") in April 2012, that put banks on notice that they have "legal responsibility" to "oversee their business relationships with service providers..." 


The Memo specifically singles out service providers as: ". . . any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service."  For the purpose of this article, we will focus on those service providers that have the most direct impact on your real estate closings: title agents and settlement agents, including attorneys.


The Memo acknowledges the banks' use of service providers as an appropriate business decision. The CFPB has asked banks to look at their service provider relationships to make sure they are working with trusted, ethical professionals. The CFPB wants banks to use and oversee service providers "in a manner that ensures compliance with Federal consumer financial law, which is designed to protect the interests of consumers and avoid consumer harm. The CFPB's exercise of its supervisory and enforcement authority will closely reflect this orientation and emphasis." These statements in the Memo sent a shockwave through the lending industry as banks can now be fined or sued by the CFPB over the illegal activities of their service providers.


The Memo says that banks are expected to:


please click here to read the rest of the article 

ALTA's Best Practices Offers Banks the Guidance to Know
Your Service Providers.

written by Jonathan Biggs, VP for Risk Management, Investors Title Insurance Company and member of the ALTA Best Practice Task Force


ALTA's Best Practices offers banks the guidance to know your service providers. The ALTA Best Practices help banks and service providers navigate the requirements of the Memo.  ALTA has also provided a mechanism for the banks to verify compliance.

 ALTA has offered 7 questions that each bank should ask its service providers.  Every service provider may be measured by 7 standards called the ALTA Best Practices that can be summarized with 7 routine questions, which are:


ALTA Best Practice #1 - Licensing

  • Are they properly licensed?

 ALTA Best Practice #2 - Escrow Account Controls

  • Do they have proper controls in place to safeguard the millions of dollars that your bank sends through their trust/escrow accounts?

 ALTA Best Practice #3 - Protect Confidential Info

  • Do they have proper controls in place to safeguard the bank customers' personal information from identity theft and cyber fraud?

 ALTA Best Practice #4 - Follow Federal & State Consumer Laws

  • Do they know and follow the consumer laws that are required to protect the bank's customers? 

 ALTA Best Practice #5 - Deliver Policies on Time

  • Do they have procedures in place to make sure that title matters are concluded in a timely fashion?

 ALTA Best Practice #6 - Maintain Appropriate Insurance

  • Do they maintain the appropriate levels of insurance to protect the bank's interests and the bank customers' interests in the event that things do not go according to plan?

 ALTA Best Practice #7 - Address Consumer Complaints

  • Do they address the bank's complaints and the bank customers' complaints (if any) in a timely and professional manner?

An elementary evaluation of the service provider relationships would prompt one to ask these seven routine questions.  The CFPB is now requiring that banks (i) ask these questions, (ii)  be assured that the service providers' policies are appropriate for the circumstances, (iii) be assured that the service provider follows its own policies and (iv) have mechanisms to be aware and address failures when the service provider does not follow its own policies for the protection of the bank and the bank's customers. 


Compliance with some of the ALTA Best Practices can be as simple as asking: "Does the service provider have a proper license?" .....


Please click here to see the entire article and for additional guidance.


Do you have questions about either of these articles or anything related to the CFPB Memorandum?


Send your comments and questions to Patti Dickerson and she will get a response to you.


Jonathan Biggs is the Vice President for Risk Management at Investors Title Insurance Company and member of the ALTA Best Practice Task Force. 


**Remember to offer your borrowers Owners' Coverage on their most valuable investment. It's a one time premium with a lifetime of security. In addition, they will receive a reduced premium rate when they obtain it simultaneously with your Lender's Coverage.**

What Topics Are On Your Mind?

Virginia Title Center wants to provide you with pertinent information in future E-Blasts and Webinars. What questions are on your mind regarding the real estate and mortgage lending industry? What Hot Topics would you like to receive greater insights and clarity? Send Patti your thoughts.
Patti L. Dickerson                                      
Director of Marketing & Communications
Virginia Title Center, LLC
"where going the extra mile
     is nothing extra at all..."

Give Patti a call today!
 "Change has a considerable psychological impact on the human mind. To the fearful it is threatening because it means that things may get worse. To the hopeful it is encouraging because things may get better. To the confident it is inspiring because the challenge exists to make things better."
 - King Whitney Jr.-
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