Continued Change is a Certainty!

Best Practices is here to stay and lenders expect settlement agents to have adopted Best Practices and to have a manual prepared.

Dear Members,

This week's email is contributed by Maggie Thumberg, Senior Underwriting Counsel and Legal and Branch Education Manager here at The Fund. Melissa is on vacation this week (whoo whoo) and we did not want you to miss out on important information!

Recently, October Research, LLC held its annual National Settlement Services Summit in Charlotte, North Carolina. NS3, as it's called, is a conference designed to bring lenders, settlement agents, underwriters, and regulators together. As has been the case over the past few years, regulatory compliance matters took center stage!

Two major themes emerged from the conference that are near and dear to Fund Members: Best Practices compliance and cybersecurity.

You are going to start hearing more from us about Best Practices compliance over the summer. Suffice it to say, though, that Best Practices is here to stay and lenders expect settlement agents to have adopted Best Practices and to have a manual prepared. If you do not already have your Best Practices manual ready, The Fund has resources to assist you on our website.

The discussion at NS3, however, went beyond mere adoption of Best Practices to the next level. Will Fund Members need to be third-party certified or will even higher levels of certification be required such as SSAE or SOC? The jury is still out with respect to most lenders. The overwhelming consensus was that until additional clarification comes from the CFPB in the form of rule-making or enforcement actions, lenders are hesitant to require such certifications from settlement agents because it may limit borrowers' choices in the marketplace. The Fund has prepared resources to assist you in making decisions about how to handle these issues for your firm, including a chart outlining what we know lenders are requiring in terms of Best Practices. It can be found here: TheFund.com/BankChart. If you have questions about Best Practices or want to share information you have received from lenders, please email us at BestPracticesQuestions@thefund.com.

The other major issue discussed was cybersecurity. Lenders and their regulators are just as concerned as we are about the security of customer information and funds used for closing transactions. Lenders are continuing to look for ways to make data sharing more secure and it will be affecting how we close transactions. Lenders are going to continue pushing for fee and data sharing to move into secured platforms. As Bank of America and Wells Fargo informed us in their recent communications, the use of Closing Insight will continue to ramp up. You should also expect other lenders to move to or increase their use of portals.

Lenders are also concerned about recent reports of real estate agent email accounts being hacked to fraudulently divert closing funds. You may want to reach out to the real estate agents you work with to let them know about these schemes and to make sure any change to wiring information is confirmed over the phone or in person. Also, free web-based email accounts seem to be most at risk, so be especially wary of emails coming through those channels.

A series of articles on cybersecurity issues appeared in the Fund Concept last year. If you did not have a chance to take a look at them, now might be a good time.

There is a lot happening in the settlement services industry today and there is one thing we can all rest assured of - Continued Change is a Certainty!

As always, thank you for your support of The Fund.

Best Regards,

Melissa Jay Murphy
Senior Vice President and
General Counsel