How are Chess and ALTA Best Practices Alike?

In chess, each player must strategize the exact right moves to defeat the opponent. Getting to make the first move may be the greatest advantage. In business, as in chess, first movers often gain momentum by grabbing market share before others get into the market. As we consider the benefits of early adoption of the American Land Title Association’s (ALTA’s) Best Practices, competitive advantage is at the top of the list. Specifically, immediately upon obtaining ALTA certification, you can communicate your compliance to lending customers and use marketing efforts to distinguish yourself from your competition.

What’s so important about ALTA Best Practices?

On January 10, 2014, amendments to Regulation X became effective for residential mortgage lenders. The Consumer Financial Protection Bureau (CFPB) Bulletin 2012-03 holds mortgage lenders accountable for their relationships with third-party service providers, forcing compliance for their title insurance and settlement companies. The CFPB has already started auditing mortgage lenders for risk management compliance. For that reason, lenders will only want to do business with CFPB compliant title insurance and settlement companies.

ALTA has developed a set of uniform Best Practices to help members highlight policies and procedures that the industry exercises to protect lenders and consumers. These standards also help to ensure a positive and compliant real estate settlement experience. On July 10, 2014, the ALTA Board of Governors approved a motion encouraging members to self-assess their adaption of the best practices by September 2014. Lenders now request that all certification be completed no later than July 31, 2015.

Back to our chess analogy. Your King is your business value. If your King comes under attack, you are put in check, and the only move you can make is one that removes your King from imminent death. You become constrained, reactive, and forced to very carefully determine the best move to stay alive. When a company moves to adhere to ALTA Best Practices for operations and written policies and procedures, it becomes proactive instead of reactive. Once confidant that it is compliant, the company can engage a third party to evaluate compliance and secure certification.

Three benefits to adopting ALTA Best Practices

Client Retention: Having an ALTA Best Practice certification will help ensure profitability by maintaining your existing client base. The title insurance and real estate closing industry helps consumers sell, purchase and refinance nearly 10 million real estate transactions worth more than $2 trillion annually across the country.Real estate lenders subject to the new CFPB regulations likely will only conduct business with settlement companies that can certify their compliance with the Best Practices.

More Effective and Efficient Control of Operations: Best Practices not only help lenders remain compliant with CFPB regulations; they also encourage better management, enhanced controls and even greater efficiencies within a title and closing operation.

Enhanced Marketability: Adhering to the policies and procedures of ALTA’s Best Practices will allow you to attract new clients. All CFPB regulated institutions will only be hire ALTA certified settlement providers. The quicker your company can get certified, the quicker you can build a competitive advantage.

Has your organization adopted ALTA Best Practices? What benefits have you recognized as a part of the effort?