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How to stay compliant in a complex regulatory environment

Mary Anne Harris

Title companies and real estate attorneys operate in a complicated regulatory environment, reporting to many overseers on multiple levels.


In the past, because insurance is regulated primarily at the state level, the state insurance regulators and the state bar association each held primary roles in overseeing the title insurance and closing processes in each state.


But federal agencies have increasingly inserted themselves into the process, with the advent of the Real Estate Settlement Procedures Act (RESPA) (updated and expanded with the passage of the Dodd Frank Act), followed by IRS laws regulating foreign owners of real estate and FinCEN’s foray into anti-money laundering efforts, just to name a few.


Staying up to date with all of the regulations spanning local, state and federal as well as the requirements of the state bar association and the insurance underwriters we work with can be a time consuming and costly enterprise.


Here are five steps to consider.


Put someone in charge

No matter the size of your agency, you must have one person who is in charge of managing your compliance obligations. A large agency may have a compliance officer and an entire department dedicated to this process, but even a small agency needs someone who is well-versed in the regulations to oversee each department’s adherence to compliance requirements.


Get it in writing

Creating policies and procedures that employees can rely on for guidance is a very practical and necessary step to ensure everyone in the agency is on the same page. The American Land Title Association’s Best Practices is a great starting point for ensuring your written policies are covering all of the bases. Having an outside counsel knowledgeable about the title insurance and escrow regulations in your state can provide great assistance in crafting these policies.


Use training software

If you want to ensure the most robust and consistent training, think about tapping into professional training software. This ensures that the transmission of your policies to your

staff is consistent and not reliant on a staff member to pass on this information in what may be a haphazard or erratic process.


Establish quality control

Policies and procedures are great, but you have to have a system for ensuring they are actually being followed in the day-to-day work of the agency. Having systems in place for checking and cross-checking how title, escrow and closing tasks are handled and invoking regular reviews to identify problem areas or improve performance will go a long way to keeping your agency compliant.


Tie your efforts into your audit plan

Since everything you do in your agency eventually ends up in your state and underwriter audits, all aspects of compliance reporting should be funneled into your audit database or audit management software. If you are aggregating this data consistently throughout the year, it will make it much easier to compile everything you need when your auditor comes knocking.


At Positively Balanced, we know how important it is to keep you audit ready. Our industry-leading escrow account management and reconciliation services offer an unparalleled level of data security, real-time transaction monitoring, fraud detection, audit readiness, and professional independence. Call us today to learn more!

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