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American Land Title Association “Best Practices Assessment” for Real Estate Settlement Attorneys

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, which brought about significant changes to the American financial regulatory environment. Dodd-Frank established the Consumer Financial Protection Bureau (CFPB) and provided authority to supervise certain types of financial institutions for compliance with federal consumer financial laws. Under Dodd-Frank, providers of financial products or services must comply with applicable consumer financial laws listed in the Act. Providing real estate settlement services (other than appraisals) to one of the regulated financial institutions is deemed to be providing financial products or services under the Act. As a result, the CFPB can bring enforcement actions directly against a real estate settlement services provider (such as a closing attorney or a title insurance agent) for a violation of a consumer financial protection law.

In response to enforcement actions against financial institutions by regulators based upon the lender’s oversight of third parties, the American Land Title Association (ALTA) established a best practices framework for settlement companies to provide guidance to meet lender requirements for demonstrating compliance with consumer financial protection laws. The banking industry is in support of the ALTA initiative, and many lenders are beginning to require settlement agents to provide assurance that they meet the ALTA guidelines through a variety of means from self-assessments to independent reviews conducted by third party consultants or CPA firms. It is widely anticipated within the industry that such oversight efforts will continue to increase with time.

The required level of assurance (review vs. examination) will be dependent upon requirements issued by a settlement attorney’s lender relationships and will vary from lender to lender. We encourage our clients to consult with their lender relationships to determine their individual assurance requirements so that a cost effective solution can be provided that still meets or exceeds those requirements.

TJS Deemer Dana is equipped to provide settlement attorneys and their lender relationships assurance of compliance with ALTA Best Practices through conducting reviews or examinations under AICPA attestation standards. Unlike certification reports issued by third party consultants, an attestation report can only be issued by a CPA and are conducted under AICPA professional standards which are trusted throughout the financial industry.

We feel that settlement attorneys who are proactive in their ALTA compliance efforts will be poised to maintain their existing lender relationships as well as gain market share as industry oversight requirements continue to increase. Contact Matthew C. Jones, CPA, CISA, OSCP at 478-272-2030 or to discuss how TJSDD can assist you in assuring compliance with ALTA Best Practices.