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CFPB Compliance - Policy and Procedures Template

In the August edition of our newsletter, Investors Title published an article about the Consumer Financial Protection Bureau ("CFPB") and its coming regulation of the banking industry. The article highlighted a memorandum sent by the CFPB to the banking industry in April 2012 which stated that banks are expected to oversee their service providers "in a manner that ensures compliance with federal consumer financial law." In addition, the newsletter article focused on how this regulation could affect you, the closing attorney, as a third-party service provider. For the last several months, Investors Title has been conducting seminars across the State to educate our approved attorneys about this fluid environment and how it might affect their real estate practice.

In the seminars, we talked in great depth about the CFPB and how this regulation will affect the banking industry, the title industry, and the legal profession in North Carolina. We discussed the fact that (i) the CFPB memorandum lacked specifics on how the banking industry should comply with this new federal mandate; and (ii) in an effort to address the gaps left by the CFPB's memorandum, the American Land Title Association ("ALTA") stepped forward and
has offered the banking industry seven questions that each bank should ask its service providers as a guide to verify compliance. These are known as the ALTA Best Practices.


At the core of the ALTA Best Practices are the adoption and maintenance by third-party service providers of written policies and procedures to protect the interests of consumers and avoid consumer harm. In addition to our educational efforts, Investors Title has been committed to providing you with a template to serve as a guide in your preparation of written policies and procedures.  We have invested substantial time and effort in preparing this template. Our objective is to provide our approved attorneys with a tool that can be used to further their understanding of the ALTA Best Practices, assess their needs, explore solutions, and simplify the process of documenting their compliance. These documents are intended to be a guide that you can tailor to the needs of your practice.  

The first document we have prepared is a basic sample Policy and Procedures Manual template and it is intended to contain the minimum content necessary for compliance.  In addition, we have provided alternate versions to expand and enhance procedures related to ALTA Best Practice #2, #3, #4 and #5.  In many cases, these more robust procedures will more closely mirror what you are already doing in your practice.  As you review the alternate versions, note that the sections required for compliance with the ALTA Best Practices are in
RED AND BOLD.   The portions in regular text are optional sections for your consideration.  You may access all of the above documents by clicking here or on the link in the top left of this message.

Through our seminar series and newsletter communications to date, our primary goal has been to create awareness among and provide education to our approved attorneys concerning the issues of vetting and compliance with the ALTA Best Practices.  The timing and degree to which the ALTA Best Practices may be ultimately adopted is unclear.  The issue of vetting and utilization of ALTA Best Practices is a fluid one and there are multiple market influences at play.  In short, we do not know when or to what extent lender requirements will evolve as to adoption of the ALTA Best Practices.  That said, we encourage you to invest the time necessary to familiarize yourself with these issues.  Please also look for additional communications from Investors Title addressing each best practice individually and do not hesitate to contact your local representative or home office personnel in Chapel Hill with questions.       

Thank you again for your continued support.


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