ALTA 2014
National Update
Peter J. Birnbaum
Treasurer - ALTA
President and Chief Executive Officer
Attorneys’ Title Guaranty Fund, Inc.
(312) 372-4375
pjb@atgf.com
Agenda
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Best Practices
Integrated Mortgage Disclosures
Improving the Closing Process
Advocacy Priorities
ALTA News
Messaging Campaign
ALTA Primer
• 107 years old
• Governed by 11 member board of AGENTS
and UNDERWRITERS
• Creates our policy forms and endorsements
• Provides Educational Resources
• Advocacy
• ALTA IS about YOU and your business!
Market Forces
• Federal Regulators Remind Lenders of Their
Liability
• CFPB Enforcement Actions
• The Message
– Lenders are responsible and liable for acts of third party
providers that harm consumers
Best Practices
• ALTA Response to Market Demands
– Best Practices Framework
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Title Insurance and Settlement Company Best Practices
Assessment Readiness Guides
Assessment Procedures
Certification Package
Policy and Procedures Creation Guidance
www.alta.org/bestpractices
Best Practices
• Title Insurance and Settlement Company Best Practices
 Establish and Maintain Current License(s) as Required
 Written Procedures and Controls for Escrow Trust Accounts
 Written Privacy and Information Security Program to Protect Non-Public
Personal Information
 Adopt Written Policies Ensuring Compliance with Federal and State
Consumer Financial Laws (recording and pricing procedures as applicable)
 Adopt Written Procedures Related to Policy Production, Delivery, Reporting
and Premium Remittance
 Maintain Appropriate Professional Liability Insurance and Fidelity Coverage
 Adopt and Maintain Written Procedures for Resolving Consumer
Complaints
Best Practices
• ALTA Board Motion
– Encourages members to complete self assessment
no later than September 2014
• Assessment Readiness Guides
– Exclusively available to ALTA member
• Separate guide available for each pillar
– Take ownership of your future
Creation Guide
• Policies & Procedures Creation Guide
– Detailed instructions and tips on how to draft policies and
procedures that fit a company’s practices
– Example of what written policies and procedures should
look like
– Policy and procedure template
– Important for each company to craft own policies and
procedures as cookie-cutter policies not helpful
– Member benefit
Lender Support
• Wells Fargo Endorsement
– Letter to its settlement agents network:
“Wells Fargo supports ALTA's Best Practices, and
considers them to be guidelines for sound business
practices that should ideally already be in place for
businesses providing title and closing services for our
customers.”
– Wells said implementation can help companies
prepare and be recognized as a top performer
Best Practices
• Develop Elite
Provider Program
– Help title and settlement
companies implement the
Best Practices
For more information, go to
www.alta.org/bestpractices
Best Practices
Why You Should Implement Now
Integrated Disclosures
• Dodd-Frank Act
– Created Consumer Financial Protection Bureau
• Purpose: “Protect consumers by carrying out Federal
consumer financial laws.”
– Mandate on RESPA/TILA disclosures
• Replace the existing disclosures required by RESPA and
TILA with a single disclosure.
Implementation: August 1, 2015 (no staggered start)
Integrated Disclosures
• Loan Estimate
• Three pages
• Combines early two-page TIL
and three-page GFE
– Who provides?
• Two options: lender or
mortgage broker
– When?
• Within three days of
application
– Still subject to tolerances
• Closing Disclosure
– Five pages
• Combines three-page HUD-1
and final two-page TIL
– Who provides?
• Two options: lender or
combination of lender and
settlement agent
– When?
• Three days before closing
• Exceptions
Integrated Disclosures
• Applicable Loans
– Final rule applies to most consumer mortgages,
EXCEPT:
• Home-equity lines of credit
• Reverse mortgages
• Mortgages secured by a mobile home or dwelling not
attached to land
• No-interest second mortgage made for down payment
assistance, energy efficiency or foreclosure avoidance
Integrated Disclosures
Integrated Disclosures
• Uniform Closing Dataset
– Joint effort by Fannie and Freddie to standardize the
underlying data required by the new Closing Disclosure
– Eliminates guesswork determining where data goes
– Goal is to enhance the accuracy and quality of loan data
– Agents, lenders need to verify systems can accept
electronic information from each other
• Lenders likely to demand this to meet three-day rule
Integrated Disclosures
• Disclosure of Title Insurance
– Owner’s Title Insurance Labeled as “Optional”
– Lenders policy:
• Services you can shop for category
• How to calculate: Full premium without any adjustment that might be
made for the simultaneous purchase of an owner’s title insurance
policy.
• Can use enhanced policy or endorsements if the lender knows that
these products will be purchased.
– Owners policy
• Other category
• Must be listed as “optional”
• How to calculate: Full owner’s title insurance premium, adding the
simultaneous issuance premium for the lender’s coverage, and then
deducting the full premium for lender’s coverage.
Integrated Disclosures
• What’s Not Included in the Final Rule
– All-in APR
• The Bureau did not adopt the proposed amendments adding
additional costs (such as title insurance) to the finance charge.
– Record Keeping
• The Bureau did not adopt its proposed requirement that creditors
maintain evidence of compliance in an “electronic, machine
readable format.”
• Final Closing Disclosure must be retained for five years after
consummation by the creditor
What’s Next
• ALTA will continue to work with CFPB and
coalition partners to improve rule
• Education and training material
• www.alta.org/cfpb
– Submit questions to ALTA about the rule
• blog.alta.org
– Follow ALTA’s blog for updates and analysis
Improving the Closing Process
• CFPB Releases Report on Closing Process
– Identifies Four “Pain Points”
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Not enough time to review
Overwhelming stack of paperwork
Complexity of documents
Errors in documents
– Two Potential Solutions
• Simplifying closing package
• Electronic closings
– E-closing Pilot Program
Advocacy Priorities
• Improve CFPB
Transparency
– ALTA President Rob
Chapman Testifies
Before Congress
“ALTA’s relationship with the
CFPB is good, but it could be
better with the creation of a
small business panel.”
• Need for small
business advisory
panel
• H.R. 4383
Advocacy Priorities
• Points and Fees
– Fees paid to title companies affiliated with the
creditor – 3% cap on points and fees under QM
– Critics of the industry use the Congressional
debate to attack the industry
– Senate proposed CFPB study
– House Committee hearings
– Committee approves after mark-up
Advocacy Priorities
• GSE Reform
– Johnson/Crapo bipartisan proposal
• Passed out of Senate Committee on Banking, Housing, and Urban
Affairs
– Communicate ALTA members’ interests on GSE reform
• Preserve the 30-year fixed-rate pre-payable mortgages
• Allow small businesses to compete
• Ensure that consumers—whether they live in urban, suburban or
rural communities—have equal access to credit and competitive
interest rates
• Preserve title insurance as an important underwriting risk
management standard
Advocacy Priorities
• Tax Issues
– Mortgage Forgiveness Debt Relief Act
• Called a “tax extender”
• Forgiven debt is considered income
• Foreclosures, short sales or a mortgage
restructuring
– Estimated 9.7 million homes with mortgages,
or 18.8% are still underwater
• Subsidized rates for non-primary residences phased out now
• Buying or selling a property could trigger rate increases
Advocacy Priorities
• National Association of Insurance
Commissioners
– Financial Reporting
– Guaranty Fund
– Consumer Shopping Tools
– Escrow Theft and Title Insurance Fraud White
Paper
Title Action Network
• Energized movement of land title professionals promoting
industry’s value and protecting consumer rights
– Quick and easy to join
– Focused on ensuring state and federal legislators understand value
of the land title industry
– Won’t clog your email or take up your time
– Easy-to-understand and provides brief advocacy updates on issues
important to you
• More than 7,500 members
– All state land title associations but two have partnered with TAN
• Join at www.titleactionnetwork.com
• “Like” us on Facebook!
www.facebook.com/titleactionnetwork
TIPAC
The Title Industry Political Action Committee
• Voluntary, non-partisan PAC of the America Land Title
Association
• 100% of your contribution to TIPAC helps elect and
re-elect candidates who support our industry and
understand our issues
• 2013: Raised $420,326 (goal was $350,000)
• 2014 goal: $425,000
• Your state’s 2013 contribution
• Contact Jessica McEwen at jmcwen@alta.org
Liaison Program
• Advocacy: If We Don’t Do it, Nobody Will
– Important to identify and capitalize on
relationships ALTA members have with members
of Congress
– Get involved with ALTA’s Policymaker Liaison
initiative
– Contact Madeleine Nagy at mnagy@alta.org
or Wayne Stanley at wstanley@alta.org
Market Share Analysis
• Refi Drop Tightening Market
– 2014 Q1 Title Premium Volume Down 16%
• $2.4 billion during Q1 2014 compared to $2.9 billion during Q1 2013
– 49 states and D.C. all reported decreases
• Only state to report increase: Texas
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Texas ($361 million, up 3.7 percent from Q1 2013)
California ($279 million, down 25.9 percent)
Florida ($231 million, down 2.0 percent)
New York ($216 million, down 2.4 percent) and
Pennsylvania ($92 million, down 33.6 percent)
– www.alta.org/industry/financial
ALTA Study
 Economic Impact of Title Industry
 The title insurance and real estate closing industry help consumers
sell, purchase, and refinance nearly 10 million real estate transactions
worth more than $2 trillion annually across the country
 Title insurance and real estate closing industry generates nearly $7.9
billion in wages per year to 222,921 American workers
 65% of settlement agents are small businesses
 Employ an average of three people
 Generate $214,801 in revenue per year
 The direct and indirect economic contributions of the industry to the
U.S. economy include more than $50 billion in economic activities and
nearly $12.7 billion in wages
ALTA Study
ALTA Growth
• Record membership five consecutive years
– More than 5,000 member companies
• 90% increase over past decade
• Diverse membership base, with majority of members
being small-sized title agents
• Also retain high percentage of members
– Title professionals value advantages of being an ALTA member
To join or renew membership: www.alta.org/membership
National Title Professional
• Purpose – Designation recognizes
professionalism and raises awareness of value
nationally
• Qualifications and requirements
• State certification/designation coordination
• Three-year renewal
• 26 designations awarded in 2013
• www.alta.org/ntp
ALTA Conferences
• Annual Convention
– October 15-18, 2014 at the Westin in Seattle, Wash.
• Business Strategies Conference
– March 18-20, 2015 at Sheraton Philadelphia Downtown
Philadelphia, Pa.
• Federal Conference and Lobby Day
– May 18-20, 2015 at the Mandarin Oriental in Washington, D.C.
ALTA Member Benefits
• Policy Forms License
– free with membership
• TitleNews
– Digital edition now available
• Education e-Kit
– Tools to help members educate consumers, real estate agents, lenders, the
media and others about the value of title insurance
– www.alta.org/ekit
• Title Topics
– Monthly webinar in topics impacting the industry
– www.alta.org/titletopics
• UPS Savings
– ALTA members can save up to 36% on shipping
ALTA Membership
– Several Membership Options
• www.alta.org/membership
• membership@alta.org
• 800-787-2582
Attorney Membership
• Eligibility – individual real estate attorney who
practices real estate law and provides title, closing
and/or settlement services
• Benefits
– Title Law Quarterly focusing on key lawsuits affecting real
property law
– weekly email updates
– Advocacy
– Title Counsel meeting and CLE opportunities
Cost $250 per year
(includes license)
Messaging Campaign
• Plan
– Review current messaging and communications vehicles; what works and
what doesn’t work
• Audience
– homebuyers, real estate agents, lenders and attorneys
• Research
– Focus groups and only surveys
• Develop Integrated Messaging
– Overarching theme, messages keyed to audience
Expect to share results during
ALTA’s 2014 Annual Convention
Early Findings
of Messaging Campaign
• DO provide more information to professionals
(lenders, realtors and attorneys)
• DON’T assume they have an understanding of
title insurance
• DO provide clear, plain and simple materials
they can give to home buyers
• DON’T clutter explanations with data and
stats
Early Findings
of Messaging Campaign
• DO help people understand title insurance
protects from defects that could come up (cite
examples: fraud, missing heirs, unfiled liens, etc)
• DON’T say title insurance protects from “things
that could be missed”
• DO use language about protection, peace of
mind, and confidence for homeowner
• DON’T use slogans (“protects the American
dream,” helps “stabilize the housing market”)
Thank You!