Friday
August 1, 2014

Title Agents Are Wary of Third-Party Vetting Firms

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Title Agents Are Wary of Third-Party Vetting Firms

A number of start-up firms have created third-party companies to vet the reliability of settlement service providers that work for lenders.

For a fee, the third-party firms perform due diligence on the practices and procedures of settlement service providers and generate an index score that is made available to participants in the mortgage sector. In return for the fee, the firms "promise" settlement service providers preferential access to lenders' settlement business -- which is illegal under the Real Estate Settlement Procedures Act.

Moreover, settlement agents are already "vetted" by at least three layers of government oversight and private industry; and the confusion and lack of uniformity in the practice of vetting could result in higher closing costs for consumers.

In October, with the objective of providing the public with more information on safeguards that have been in place for decades, the American Land Title Association issued guidelines outlining best practices for title insurers and settlement companies. "The more that consumers know about the protections that already exist in the title industry, the better," said ALTA President Michelle Korsmo.

Also last month, representatives from the Consumer Financial Protection Bureau met with industry representatives to discuss third-party vetting companies. Such meetings should lead to the development of uniform national best practices for settlement agents.

Source: "Title Agents Are Wary of Third-Party Vetting Firms," Washington Post (11/10/12)

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