An Express Article from the California Land Title Association
Bulletin 12/13-26 - September 4, 2012
Recently, a number of title companies in California and across the nation have been contacted by a company called “Secured Settlements, Inc” (SSI) soliciting them to use their service of “vetting and approving” their title and escrow personnel through their third-party risk management firm for lenders who use them as closing agents. To date, SSI is the only third party firm we are aware of that is providing this “vetting” service. If you are aware of other companies doing the same thing, please let the CLTA know immediately.
The vetting and registration program offered by SSI would require (a) Closing agents such as title and escrow companies to apply to and be vetted by SSI annually, (b) Pay an annual flat fee of $299 per person, per closing agent, and other personnel related to the transaction, and (c) Submittal of extensive confidential information about the escrow personnel as well as sensitive company information including bank account numbers. The list of lenders claiming to use this new vetting process is compiled from data provided by CLTA members that have recently received such notices.
In its FAQs, SSI purports that such “vetting” is a lender’s obligation under Dodd-Frank, but may in fact be derived from an April CFPB Bulletin requiring lenders to take certain steps to oversee their service providers. SSI also purports to be the mortgage industry’s only third-party closing professional verification service, addressing warehouse bank, lender, and title underwriter risk management at mortgage closings. The “Notices” sent by SSI in advertising its program advise closing agents that they will not be able to close after the end of the year unless they have been registered and approved by SSI. An article in “The Title Report” stated that Secure Settlement Inc. is close to finalizing contracts with 12 of the largest warehouse banks in the industry but CLTA has yet to confirm that assertion to be true.
The CLTA is currently working closely with the ALTA, individual title company members, and the California Escrow Association in gathering information about the legality and legitimacy of these requests, potential conflicts of the SSI services and products with RESPA and state law. In addition, we anticipate seeking guidance from California regulators who already enforce stringent licensing for escrow officers and title agents once we get more information.
CLTA and ALTA are getting many inquiries about this program and as we find out more information we will pass it along to you. Clearly there are a number of major issues and substantial costs associated with this program, in addition to other problems associated with the sharing of sensitive personal and confidential information required to be submitted to an unknown risk management firm under the SSI program. Lastly, the scope of the program’s application to any person handling funds or documents is another issue. The CLTA suggests that companies or persons receiving such requests consult with their own legal counsel and share your findings with CLTA if you consider it appropriate.