Managing Change: Major Issues Facing the Industry and the - PDF document

9/16/2015 Managing Change: Major Issues Facing the Industry and the Opportunities That Exist Steven G. G. Da Day| y| T Treasu easurer of rer of ALTA | Fidelity lity N Nation onal al Title G Group | ste steven.da .day@fnf @fnf.c .com Market Drivers  Compliance/Regulatory Environment  Consumer Protection  Economy  ALTA Goal  Help industry understand these pressures and navigate the changing landscape Dodd ‐ Frank Act  Congress Makes Sweeping Responses to Crisis  Industry Left Picking Up Pieces  Major Components of Legislation ○ Created Financial Stability Oversight Council ○ Reformed mortgage, securitization and derivative markets ○ Established Consumer Financial Protection Bureau 1

9/16/2015 CFPB  Different Type of Agency: Consumer Cop  Purpose: “Protect consumers by carrying out federal consumer financial laws.”  Concerned about financial transactions at a household level  CFPB consumer complaint portal  Enforcement actions  Mandate to combine TILA-RESPA Disclosures CFPB  Complaint Portal  CFPB believes publishing complaints will: help detect market trends ○ aid consumer decision-making ○ drive improved consumer service ○  According to the CFPB, a complaint is: ○ “a written expression of dissatisfaction with or allegation of wrongdoing by a provider of any financial product or service or any entity subject to regulation or supervision by the Bureau or a Prudential Regulator made by a Consumer (including a representative acting on behalf of a Consumer).”  Nearly 8,000 complaints published in June  Companies given the opportunity to post response Enforcement Actions  CFPB More Active Than Other Regulators  Targeting perceived low-hanging fruit  Cordray Issues First Ever Agency Appellate Decision in PHH RESPA Case ○ Held that PHH Corp violated RESPA by accepting payments for the referral of settlement service business ○ Expanded penalty from $6.4M to $109.2M ○ Key take away: Every “Kickback” is a violation  Cordray said RESPA violation occurred every time there was a “kickback” Decision sends important message regarding calculation of remedies under the  RESPA anti-kickback provision 2

9/16/2015 Enforcement Actions  RESPA Section 8(a) – anti-kickback  April 2015 – Genuine Title, individual loan officers and title company owners  January 2015 –Wells Fargo, JP Morgan Chase and Todd Cohen  February 2015 – NewDay Financial  September 2014 – Lighthouse Title  January 2014 – Fidelity Mortgage  April and November 2013 – Mortgage insurance  RESPA section 8(c)  May 2014 – RealtySouth  October 2013 – Borders & Borders  May 2013 – Paul Taylor Homes That’s Just an Appetizer … TILA ‐ RESPA Integrated Disclosures It’s More Than New Forms | It’s A Process Change 3

9/16/2015  Be aware of the process  Data accuracy is change paramount  Address shopping list  Run tests with lenders  Set the right expectations  Understand staffing needs  Check title fees www.alta.org/cfpb TILA ‐ RESPA Integrated Disclosures  Inaccurate Disclosure of Title Policy Fees The Problem: When both a loan and owner’s title insurance policies  will be purchased in a transaction (called “simultaneous issuance”) the rule requires the lender or settlement agent to inaccurately disclose the title premiums on the Closing Disclosure Why is this a problem? In roughly half the states, a consumer is  entitled to discount on loan title insurance policy when an owner’s policy will be simultaneously issued 4

9/16/2015 TILA ‐ RESPA Integrated Disclosures  ALTA Model Settlement Statements  Developed to bring standardization  Help meet state regulator requirements to accurately show costs  Not meant to replace Closing Disclosure  Available in Excel, Word or PDF format  Four versions available Borrower/Buyer  Seller  Combined  Cash  TILA ‐ RESPA 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  Needed to continue to doing business with lenders selling  loans on secondary market 5

9/16/2015 TILA ‐ RESPA Integrated Disclosures  DVD Training  Appropriate for owners, managers and employees  Where we’ve been & how we got here  Detailed walk through Loan Estimate & Closing Disclosure  2½ hours of training  Model presentation for talking with your customers about the rule and changing roles & responsibilities  Order at www.alta.org/lti/tridtraining Regulatory Environment  Federal Regulators Remind Lenders of Their Liability and CFPB Enforcement Actions  The Message ○ Lenders are responsible and liable for acts of third party providers that harm consumers ○ Lenders worried about risk Title/settlement agent typically last consumer touch point  Want to be confident consumer leaves with good experience  ALTA’s Best Practices Created in response to regulatory pressure to help as many companies as possible compete in the market 6

9/16/2015 Best Practices  Lender Support  Wells Fargo letter to settlement agent 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.”  BankcorpSouth, IBERIABANK, Trustmark  Requires independent, third ‐ party certification to ALTA’s Best Practices  SunTrust  Self assessment of ALTA’s Best Practices www.alta.org/bestpractices Best Practices  Self-assessment vs. Third-party Certification?  Be proactive  Talk to lenders and understand their needs ○ Make sure there are no barriers to business relationship  Completing self-assessment good first step ○ Will show any deficiencies a company may have in being compliant Best Practices  Assessment Readiness Guides Guides for each pillar  Series of simple questions  about the company’s practices and procedures Suggested reviews or testing  Collect Best Practice  materials via appendices Member benefit/Subscription  available to non-members www.alta.org/bestpractices 7

9/16/2015 Best Practices  Compliance Management Report Standardized, 32-page report  Customizable: Add company name and logo  Complete and provide to lender to show compliance  Member benefit/Subscription available to non-members  www.alta.org/bestpractices Best Practices  Elite Provider Program Help title and settlement companies  implement the Best Practices Comprised of service providers committed to  offering comprehensive benefits to the title insurance and settlement services industry Elite Providers provide effective solutions for  ALTA members’ critical needs Discounts offered to ALTA members  www.alta.org/elite ALTA Universal ID  Purpose Response to market needs  Lenders increasing oversight of  third-parties Help lenders, vendors identify  settlement agent across industry databases  What You Should Do Update company record  Learn your Universal ID  Make updates now  www.alta.org/universalid 8

9/16/2015 Take Charge of the Consumer Experience 1) Communicate Early with Homebuyers 2) Talk about the Benefits to the Insured (not the work you do) 3) Monitor and Follow-Up on Complaints Communications  Message Research Campaign Critical to educate consumers  about title insurance and the work performed Significant confusion about  title insurance Early education has  quantifiable impact Homebuyers want info about  title insurance early in the process Key positive messages include  “protects your financial investment for as long as you own your home” and “one-time fee” Communications  Message Research Campaign  Things You SHOULD Do DO provide more information to  professionals (lenders, real estate agents and attorneys) DO help people understand that title  insurance protects from defects that could come up (cite examples: fraud, missing heirs, unfiled liens, etc) DO provide examples of how title  insurance protected consumers DO use plain language about  protecting property rights, peace of mind and confidence for homeowner 9

9/16/2015 Title Insurance Education E ‐ Kit  Content Exclusive to Members  Help members educate consumers, real estate agents, lenders, the media and others about the value of title insurance  Information in a variety of formats that can be easily downloaded and used by members Homebuyer presentation  Videos  Education articles and blog content  Social media content  Brochures  www.alta.org/ekit ALTA Primer  108 years old  Governed by 11 member board consisting of agents and underwriters  Creates our policy forms and endorsements  ALTA is About You and Your Business! Record Membership www.alta.org/membership 10