Tag Archives: ALTA Best Practice

Title Insurance Issues

Alta Best Practice #2

This is the second installment of ALTA Best Practices.  It concerns Escrow Accounting.

Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.

Purpose: Appropriate and effective escrow controls and staff training help title and settlement companies meet client and legal requirements for the safeguarding of client funds. These procedures help ensure accuracy and minimize the exposure to loss of client funds. Settlement companies may engage outside contractors to conduct segregation of trust accounting duties.

Procedures to meet this best practice:

  • Escrow funds and operating accounts are separately maintained.
    • Escrow funds or other funds the Company maintains under a fiduciary duty to another are not commingled with the Company’s operating account or an employee or manager’s personal account.
  • Escrow Trust Accounts are prepared with Trial Balances.
    • On at least a monthly basis, Escrow Trust Accounts are prepared with Trial Balances (“Three-Way Reconciliation”), listing all open escrow balances.
  • Escrow Trust Accounts are reconciled.
    • On at least a daily basis, reconciliation of the receipts and disbursements of the Escrow Trust Account is performed
    • On at least a monthly basis, a Three-Way Reconciliation is performed reconciling the bank statement, check book and Trial Balances.
    • Segregation of duties is in place to help ensure the reliability of the reconciliation and reconciliations are conducted by someone other than those with signing authority.
    • Results of the reconciliation are reviewed by management and are accessible electronically by the Company’s contracted underwriter(s).
  • Escrow Trust Accounts are properly identified.
    • Accounts are identified as “escrow” or “trust” accounts. Appropriate identification appears on all account-related documentation including bank statements, bank agreements, disbursement checks and deposit tickets.
  • Outstanding file balances are documented.
  • Transactions are conducted by authorized employees only.
    • Only those employees whose authority has been defined to authorize bank transactions may do so. Appropriate authorization levels are set by the Company and reviewed for updates annually. Former employees are immediately deleted as listed signatories on all bank accounts.
  • Unless directed by the beneficial owner, Escrow Trust Accounts are maintained in Federally Insured Financial Institutions.
  • Utilize Positive Pay or Reverse Positive Pay, Automated Clearing House blocks and international wire blocks, if available.
    • Background Checks are completed in the hiring process. At least every three years, obtain Background Checks going back five years for all employees who have access to customer funds.

Ongoing training is conducted for employees in management of escrow funds and escrow accounting

Title Insurance Issues

ALTA Best Practice #1 – Licenses

Over the next few weeks I will be discussing the ALTA Best Practices.  #1 is about licensing.

– Title Agent or Producer license or registration or any other business licensing requirement as by state law, or a license to practice law , where applicable.

Best Practice

– Establish and maintain all current licenses that are required to conduct title and insurance settlement services business.

Reason

– Keeping up to date with all applicable state mandated licenses and corporate registrations, helps to establish and maintain a healthy and happy relationship between your company and the state.

For more information about ALTA Best Practices, take Learntitle’s Ethics course.  Enroll Here.

Continuing Education

How to create a strong password

ALTA Best practices encourages the use of strong passwords for your computer systems. Passwords provide the first line of defense against unauthorized access to your computer. The stronger your password, the more protected your computer will be from hackers and malicious software. You should make sure you have strong passwords for all accounts on your computer. If you’re using a corporate network, your network administrator might require you to use a strong password.

Check the strength of your password here

What makes a password strong (or weak)?

A strong password:

  • Is at least eight characters long.

  • Does not contain your user name, real name, or company name.

  • Does not contain a complete word.

  • Is significantly different from previous passwords.

  • Contains Uppercase letters, Lowercase letters, numbers and symbols

A password might meet all the criteria above and still be a weak password. For example, No1password! meets all the criteria for a strong password listed above, but is still weak because it contains a complete word. N01 p@ssw0rd! is a stronger alternative because it replaces some of the letters in the complete word with numbers and also includes spaces.

Help yourself remember your strong password by following these tips:

  • Create an acronym from an easy-to-remember piece of information. For example, pick a phrase that is meaningful to you, such as My daughter’s birthday is 28 October, 1974. Using that phrase as your guide, you might use Mdbi28/Oct,74 for your password.

  • Substitute numbers, symbols, and misspellings for letters or words in an easy-to-remember phrase. For example, My daughter’s birthday is 28 October, 1974 could become MiDauBrthd8iz 281074 (it’s OK to use spaces in your password).

  • Relate your password to a favorite hobby or sport. For example, I love to play basketball could become ILuv2PlayB@sk3tb@ll.

If you feel you must write down your password in order to remember it, make sure you don’t label it as your password, and keep it in a safe place.

Check the strength of your password here