ALTA's Best Practices Offers Banks the Guidance to Know written by Jonathan Biggs, VP for Risk Management, Investors Title Insurance Company and member of the ALTA Best Practice Task Force
Your Service Providers.
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?" .....
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