Title agent compliance

How Can Lenders Ensure Title Agent Compliance?

The following question was asked on our January webinar, “Post TRID Challenges and Innovative Solutions and it’s still relevant today:

“If title companies aren’t motivated to reduce the risk they bring to the transaction, what can we as lenders do, other than ask for assurances in writing, that they assume liability for their own actions?”

Over the last six months, this concern has only grown for lenders as they assume liability for TRID loans. Lenders need to be certain that the settlement, closing and title agents they do business with are compliant with regulations and will not incur fees and/or TRID violations.

Here is title professional Brent Laliberte’s answer:

“I would hope that those title agents that don’t realize the seriousness of this are looking for alternate work, because obviously the lenders need to find people that understand the value in this.

“I can tell you that all the good title companies that we run across have taken this serious for quite a number of years, and I think lenders are going to search and seek those out and make sure all the good ones are properly trained, have all the best practices, have the SOC 1 certifications, SOC 2, whatever it may be, and vendor management to make sure they’re identifying who they’re doing business with and what they’re doing to protect all the data and information that we have.

If a title company doesn’t realize by now, and really if they haven’t started by now to realize how important all this is, I don’t that know the lenders can afford to do business with them … The title companies have to step it up and make sure they are being compliant.”

In other words, lenders need to perform due diligence on title/settlement agents and “search and seek” the good ones.

Yet some lenders still believe they shouldn’t act as supervisors over title/settlement agents, or are confused whether these agents are considered lender vendors in the first place. But if you look at the CFPB’s intent behind its vendor management rules, the answer is clear.

And take a look at leading mortgage regulation attorney Marx Sterbcow’s, opinion on the subject in “Who’s Your Vendor?”

Marx includes title agents and escrow companies in his list of lender vendors. He also points to the CFPB’s bulletin on this subject and says it:

“Provides that lenders may be held legally responsible for the actions or inactions of their service providers where consumers are harmed as a result of the service provider failing to comply with consumer financial law.

“To ‘limit the potential’ for such responsibility, lenders ‘should take steps’ to ensure no unwarranted risks are posed to consumers by their service providers.”

ATS Secured verifies that you, your vendors and your service partners’ identities are true and accurate. We also make it easy for you to vet companies and individuals to further solidify trust and provide accurate data to those who need it.

Our platform is a transparent environment—empowering lenders, title agents and all types of mortgage professionals to connect their LOSs, title production and other systems to create one mortgage file. With this, lenders can check on title and settlement agents’ compliance and vice-versa.

Interested in learning more from the webinar this question came from? Download it here!