Xhevrije West has an article on MReport about differing perceptions of the new(ish) ALTA Best Practices, based upon the findings of a survey done by Habif, Arogeti & Wynne, LLP. The survey’s findings aren’t the least bit surprising. The short version is this: smaller title companies aren’t thrilled with the Best Practices and larger firms believe they’re a great idea, possibly the newest and best measurement for title company compliance and protection of consumer information. A cynical eye might say that the smaller companies are kicking against the goads because they just don’t want to spend the time, money, and continuing effort to remain compliant with said best practices. For larger title agents, maybe the reason they love the new standard, is because it takes smaller firms out of the game if they can’t comply. A more generous take would say that both sides probably have their legitimate points in their responses.
However, the conversation has to be moved outside the realm of the Best Practices’ effect on the title industry, and into the context of lender and (especially) consumer protection. Since the new reality is that the CFPB will hold lenders accountable for monitoring their vendors, the Best Practices provide a helpful benchmark by which lenders can abide. Since lenders are not (typically) in the title business, they need some guidance on what qualities to look for in a vendor partner.
More importantly, much of the new standards are predicated upon the protection of consumer information. Sensitive information is given to lenders and title companies by borrowers. So when consumers read about security breaches in the mortgage industry in the news, it’s no wonder someone somewhere (regardless of it’s ALTA or not) is saying, “Hey — we need to do everything we can to prevent this.” For title companies to only be concerned with how it affects business misses the point entirely. If the consumer benefits greatly – and time will tell if they do – then this shift toward more monitored compliance and better protections is worth it.