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FALL 2015
Greetings MLTA Members,
By the time you receive this edition of TitleGram (or have time to read it), TRID regulations will finally be here. I am sure you are as tired as I am of hearing: LE, CD, TRID, intent to proceed, consummation, closing portals and all the other language we have been listening to for the past couple of years. October 3 will finally answer some of those lingering questions, and it will also bring an opportunity for our industry to shine. Of the three industries dealing with these changes I believe that our title industry is the best prepared. Collaborating with realtors and lenders and getting transactions to the table smoothly is what we do best. Even when we don’t have all the answers, we have the necessary resources to ensure a successful consumer experience.
As prepared as we are for the changes, there is need for continued education. Not only for our seasoned employees but more importantly for those employees who are coming up through the ranks. As a small company I know how hard it is to find experienced title industry staff. MLTA can be a resource to assist with training for the industry. The Education Committee is headed by Brandt Keefe and David Welshons. One focus in the coming year will be to begin bringing MLTA’s education courses up to date. These include Introduction to Closing, Principles of Real Estate Law and Title Insurance, Title Examination, and Basic Abstracting and Legal Descriptions.
Not only does the Education Committee provide training courses it also is responsible for the Spring Conference. The 2016 Spring Conference has been scheduled for Monday, April 4 in St. Cloud. Discussions regarding content for the conference have begun. If you have suggestions please contact Brandt or Dave directly. Their contact information is available at the end of TitleGram.
Although owner’s title insurance has been “optional” in Minnesota for as long as I have been in the business, it is more important than ever to educate consumers about what we do and what it means for them. The American Land Title Association (ALTA) offers a variety of resources to assist with marketing, and it has been working diligently the past few months to create a message that we can take directly to consumers.
Not only is it important to educate consumers about what we do, it is equally, if not more important, to continue to educate those who regulate our industry. MLTA provides education to regulators and elected officials through its Legislative Committee. The MLTA Legislative Committee is headed by Dan Pearson, Chad Novak and Nancy Landmark along with our lobbyist Nancy Hylden with support
President’s MessageSue Basiago, Midland Title
In This Issue MLTA ......................................................................... 1
- President’s Message - Welcome New Members - FIRPTA Forms and Guidelines - 2016 Spring Seminar - 2016 Convention - 2015 Convention Recap
Industry Events ......................................................5Choosing the Right Malpractice Insurance ................................................................6MLTA Advertisers..................................................7Title Certificates, Reports, Commitments & Policies: The DifferenceMay be Your Job!..................................................8MN Department of Revenue Wins Award for eCRV ....................................................9Enhancing a Title Policy with Endorsements ....................................................... 10PRIA’s Notary Work Group White Paper Posted for 30-day Review ................................. 11Cybersecurity Resources for Consumers ............................................................. 11ALTA .......................................................................... 12
- 2015-16 Nominations for ALTA Board and Executive Committees
- ALTA Events - Industry Headlines - ALTA Endorsement 46-06 Published in
Final; Technical Corrections Announced - Webinar: Data Security Essentials:
Strategies to Protect Non-public Personal Information
- TRID - Ask questions on ALTA’s Blog and Listen to TRID Townhall Recording
- CFPB Governance Structure Discussed by Joint Trade Groups
CFPB ......................................................................... 14 - Supervision and Examination Manual - CFPB Releases TRID Readiness
Guide to Aid ComplianceCybersecurity Resources .................................. 15
- Securities Industry and Financial Markests Association (SIFMA)
- Federal Financial Institutions Examination Council (FFIEC)
NAIC ......................................................................... 16 - NAIC Accepting Applications for 2016
Cconsumer Liaison Representatives - NAIC Cybersecurty Regulatory - Principles and Insurer Examinations - NAIC’s Title Insurance Task Force - NAIC Principles for Effective Cybersecurity:
Insurance Regulatory GuidanceMLTA Leadership .................................................. 18
TITLEGRAM FALL 2015 • 2
from Tom Freeman. Along with being an ongoing resource to regulators and elected officials, the Legislative Committee reviews legislation that can directly and indirectly affect the industry.
In the past few years MLTA has sponsored a Lobby Day at the Capitol while the legislation is in session. This has been a great opportunity for us to educate our individual legislators about what is happening in the industry. Because of the ongoing construction at the Capitol it is unclear when or if an organized Lobby Day will take place next session. Stay tuned for more information.
One way of educating consumers about our industry is through our website and social media. The focus of the Technology Committee headed by Manoj Purohit will be on continuing enhancements to the website and working with the Membership and Public Relations Committee led by Kathy Austen about how to incorporate our message on social media.
MLTA also educates our county recording partners. Darlene Missler is our Recorder Liaison and co-chairs the MN PREP Metro Chapter. Jeff Carlson is our e-Recording Liaison and is Chair of the ERER Commission. MN PREP meeting times and locations are available on the MLTA website.
MLTA has a great Board of Directors and as you can see an amazing team of people heading up the committees and serving as liaisons. However, MLTA also needs you, the MLTA members, to serve as committee members, to review and teach course material, to talk to your legislators when matters of importance arise, to become involved in governance and direction of the association, and to ask questions and provide suggestions on what MLTA can and should be doing.
I have been meeting individually with Board Members and Committee Chairs to discuss what MLTA is to them, what MLTA does well and what MLTA can do better. This is your organization as much as it is mine and all those that are serving in elected and appointed positions. So I ask you the same questions: What does MLTA mean to you? What does MLTA do well? What can MLTA do better? And I will add: What can I contribute to MLTA to continue the mission of “securing the integrity of land titles” and to uphold the Code of Ethics and Standards of Conduct of the association? I invite you to contact me with answers to these questions. You can reach me at [email protected].
Thank you for the opportunity to be President of your association. I am honored to work alongside the Board and Committees to do our best in serving MLTA.
Sue BasiagoPresident Minnesota Land Title Association
Welcome New Members!Attorneys Title Group, LLCVadnais Heights, MN www.attorneystitlemn.com
North American Title Insurance CompanyMiami, FL www.natic.com
Precise Abstract LLC Vandais Heights, MNwww.preciseabstract.com
Renee Haglund TierneyEden Prairie, MN
SRL Law, PLLCMinneapolis, MN www.srllawfirm.com
Thomton, Sperry, Jensen & Keithahn, Ltd.Litchfield, MN www.tsjklaw.com
Title Resources Guaranty CompanyOak Brook , IL www.titleresources.com
WC Title, LLCNew Brighton, MNwww.wctitlemn.com
TITLEGRAM FALL 2015 • 3
MLTA ANNOUNCES FIRPTA FORMS AND GUIDELINESEffective August 1, 2015, the Minnesota Association of Realtors Purchase Agreement specifically addresses FIRPTA (Foreign Investment in Real Property Tax Act) and inquires whether the seller is a foreign person. In the same spirit, the MLTA has adopted standardized FIRPTA forms for the exclusive use of MLTA members. FIRPTA applies to every sale of U.S. real property. The applicable tax is as much as 10% of the gross sale price (not net proceeds). In most cases, an exemption will apply, most likely being that the seller is a U.S. Person as defined in the Act. This should be documented in all cases. If an exemption does not apply, then a withholding will be required. The MLTA forms include a Q&A, along with certifications and affidavits pertaining to seller status as well as buyer withholding requirements.
MLTA’s standardized FIRPTA forms are available for members only and can be found in the documents section of the MLTA website once logged in.
If you have questions about the legal or tax consequences of FIRPTA, contact your legal counsel or tax advisor. If you have questions about the forms, please contact Chad Novak or Lisa Brecount:
Lisa BrecountBurnet [email protected]
Chad NovakOld Republic National Title Insurance [email protected]
MLTA 2016 ConventionThursday-Friday, August 4 & 5Arrowwood Resort, Alexandria
If you have questions about the 2016 Convention, please contact Linda Larson at 612-371-1177 or [email protected].
Hosted by:
MLTA 2016 Spring SeminarMonday, April 4
Kelly Inn, St. Cloud
If you would like to help plan the 2016 Spring Seminar or if you have topic suggestions, please contact MLTA Education Committee Co-chairs:
Brandt KeefeStewart Title Guaranty [email protected]
David WelshonsDCA [email protected]
MARK YOUR CALENDARS
TITLEGRAM FALL 2015 • 4
MLTA 2015 Annual Convention Recap
If you missed it, you missed out on a great event! Thanks again to the Fidelity National Title Group for hosting the convention this year. Even though the Saints game ended early due to rain, we still enjoyed our visit to their new ballpark in St. Paul and the lightning show on the way back to the hotel! Our Title Gives Back project for 2015 was a benefit for CommonBond Communities to advance the work they do in affordable housing and community development. This year we included a silent auction for an autographed Teddy Bridgewater Vikings jersey as a part of our fundraising event and the highest bidder was Tony Winczewski. Thanks Tony for your generous support! Watch for an article in the next TitleGram regarding the final results of our Title Gives Back efforts for 2015.
Michelle Korsmo was here to enlighten us on ALTA & the current issues in Washington, D.C. A couple items from her address: The times they are a-changin’ and ALTA’s goal is to help the industry understand the various pressures and navigate the new landscape! The 3 primary drivers are: 1. Compliance/Regulatory Environment 2. Consumer Protection 3. The Economy. Michelle challenged us to take control of our message and our future by taking charge of the consumer experience!
Bill Risser spoke on Social Media & the Title Industry, giving us all great hints on how to better structure our use of Facebook, LinkedIn & Twitter. Bush Nielsen related several stories from his experience in claims administration and how what the title company did or didn’t do affected the outcome. Mary Schuster shared her perspective as a member of ALTA’s TRID Implementation Task Force on the CFPB’s actions and what is currently happening in the collaboration between industry participants in preparation for October 3rd.
On a lighter note, Ted Mondale enlightened us on the plans and progress for the new Vikings stadium. Did you know the facility is 65% complete now! The features of the stadium and the planned economic developments in and around the new facility are amazing. Joe Schmit energized us with his observations on the power we all have to influence others, even when we are not trying to be impressive! His book Silent Impact is a great read.
Remember, the speakers PowerPoint presentations are all posted now on the member (password protected) side of our website: www.mlta.org if you’re interested in reviewing them.
Our 2016 convention will be hosted by Old Republic National Title Insurance Company on August 4th & 5th at the Arrowwood Resort in Alexandria, MN. Reserve the dates on your calendar now for next year’s convention!
Past President Jim Milinkovich MLTA 2015-16 Board of Directors Left to right: Richard Welshons, Jim Milinkovich, Nancy Landmark, Sue Basiago, Karen Drill, Nick Koester, Dan Pearson
Speaker Ted Mondale
TITLEGRAM FALL 2015 • 5
INDUSTRY EVENTSMINNESOTA LAND TITLE ASSOCIATION (MLTA)MLTA 2016 Spring SeminarMonday, April 4, 2016Best Western Kelly Inn, St. Cloud, MN
MLTA 2016 ConventionThursday-Friday, August 4-5, 2016Arrowwood Resort and Conference CenterAlexandria, MN
http://www.mlta.org
IOWA LAND TITLE ASSOCIATION (ILTA)Legal Entities & Special Circumstances CourseFriday, November 6, 2015Details TBA
http://www.iowalandtitle.org/events_list.cfm
NORTH DAKOTA LAND TITLE ASSOCIATION (NDLTA)2016 Mid-Winter MeetingSaturday, January 16, 2016Ramada Hotel, Bismarck, ND
2016 Annual ConventionThursday-Saturday, September 8-10, 2016Ramada Plaza Suites, Fargo, ND
http://www.ndlta.org/events.html
SOUTH DAKOTA LAND TITLE ASSOCIATION (SDLTA)2016 Mid-Winter MeetingWednesday, February 3, 2016Ramkota River Center, Pierre, SD
2016 Annual ConventionWednesday-Friday, June 8-10, 2016Cedar Shores, Chamberlain, SD
2017 Annual ConventionYankton, SDDetails TBA
http://www.sdlta.org/events.html
WISCONSIN LAND TITLE ASSOCIATION (WLTA)Prelicensing SeminarThursday, October 22, 2015Wisconsin Builders Association Bldg, Madison, WI
Prelicensing SeminarFriday, October 23, 2015Holiday Inn, Eau Claire, WI
Title Examiner Courses I, III, VI Thursday, November 5, 2015 Wisconsin Builders Association Bldg, Madison, WI
Title Examiner Courses II, IV, VI Friday, November 6, 2015 Wisconsin Builders Association Bldg, Madison, WI
Prelicensing SeminarFriday, December 11, 2015 Wisconsin Builders Association Bldg, Madison, WI
http://www.wlta.org/wlta/events.asp
AMERICAN LAND TITLE ASSOCIATION (ALTA)Annual ConventionWednesday-Saturday, October 7-10, 2015 Westin Copley Place, Boston, MAhttp://meetings.alta.org/annual/
Title Topics Webinar: Data Security Essentials: Strategies to Protect Non-public Personal InformationWednesday, October 28, 2015 2:00-3:00 p.m. EDT http://www.alta.org/titletopics/
Homebuyer Outreach Program (HOP) WorkshopTuesday, December 1, 2015Kentucky Land Title Association (KYLTA)http://meetings.alta.org/hop/
Business StrategiesWednesday-Friday, March 16-18, 2016JW Marriott Indianapolis, Indianapolis, INhttp://meetings.alta.org/bsc/
Federal Conference & Lobby DayMonday-Wednesday, May 16-18, 2016Renaissance Downtown, Washington, DChttp://meetings.alta.org/federal/
MINNESOTA ASSOCIATION OF COUNTY OFFICERS (MACO)MACO 2016 Winter ConferenceMonday-Friday, February 1 - 5, 2016 Ramada Mall of America, Bloomington, MNhttp://www.mncounty.org/events/event_details.asp?id=602152
PROPERTY RECORDS INDUSTRY ASSOCIATION (PRIA)Winter SymposiumTuesday-Friday, February 23-26, 2016 Hilton Savannah Desoto, Savannah, GA
Annual ConferenceMonday-Thursday, August 22-25, 2016 Hotel Julien, Dubuque, IA
http://www.pria.us/i4a/pages/index.cfm?pageid=3786
METRO PREPTuesday, November 10, 2015 10:00 am to NoonFrance Place, 3601 Minnesota Dr. #175 Bloomington, MNhttp://www.mlta.org
MINNESOTA CLE REAL ESTATE INSTITUTE 2015Thursday-Friday, October 22-23, 2015 St Paul RiverCentre, St. Paul, MNhttps://www.minncle.org/SeminarDetail.aspx?ID=100371601
TITLEGRAM FALL 2015 • 6
PRACTICE MANAGEMENTIdentifying and selecting proper malpractice insurance is a serious undertaking. Attorneys and firms are required to balance a law practice’s unique malpractice risk factors against the price of coverage, but it is very important to consider factors other than just price.
Understanding the proper type of insurance is particularly important for California attorneys, who are required to disclose to clients if they do not carry malpractice insurance. Rule 3-410.
EVALUATING MALPRACTICE RISKAlthough many law firms face potential malpractice claims, there are unique differences that insurers consider, and attorneys should, in evaluating the risk of a legal malpractice claim.
Some practice areas, such as residential real estate and plaintiffs’ personal injury, have a higher frequency of claims. Other practices, such as intellectual property and securities, have fewer claims, but with much higher severity.
Malpractice insurers are mindful of the types of cases attorneys and law firms handle and, as purchasers of insurance, attorneys and law firms should be as well. The American Bar Association’s Standing Committee on Lawyers’ Professional Liability maintains data regarding legal malpractice claims, which law firms can use to see how they stack up on both frequency and severity of claims.
REVIEWING POLICY TERMSAlthough every term is important, attorneys should pay careful attention to five that can have catastrophic consequences if not carefully analyzed: the policy limits, the scope of coverage, the retroactive dates, innocent partner coverages and exclusions.
COVERAGE LIMITSPolicies typically include both an “aggregate” and a “per claim” limit of liability. If the coverage amounts are too low, the law practice is underinsured and may not have enough coverage when a claim occurs.
The aggregate limit of an insurance policy is the maximum an insurer will pay for all malpractice claims during any one policy term. For law firms with a high frequency of claims activity, the aggregate limit can be very important. Attorneys in these practice areas need enough aggregate coverage to pay all claims that may arise.
The per claim limit is the maximum amount an insurer will pay for a single claim. For high severity risk firms, the per claim limit may need to be equal or close to the aggregate limit.
In determining the amount of coverage, attorneys should consider the amount at issue in the average matter that the practice handles. For example, a practice principally handling residential real estate closings with assets worth $500,000 should consider that boundary in deciding the per claim policy limit. The amount of coverage should be directly related to the size of the matters that the law firm handles.
THE SCOPE OF COVERAGEMany law firms engage in a number of law-related activities and services, including notary services or offering of title insurance, and should make sure the scope of coverage in the policy includes those activities. The key is to match up the scope of services with the coverage the policy provides.
On the other hand, some policies contain provisions that provide a single limit of liability for both defense and indemnity. These provisions allow defense costs to erode or liquidate the policy limits, reducing the amount available to pay for a settlement or judgment.
While certainly less expensive, policies with eroding defense costs are typically not worth the risk. Because legal malpractice claims inevitably involve experts and other extra expenses, defense costs can increase rapidly, causing the policy limits to be insufficient to settle a claim or pay a judgment.
RETROACTIVE DATESThree dates are important when it comes to a legal malpractice policy: the retroactive date, the inception date and the expiration date. Before purchasing insurance, it is important to understand the significance of each.
Typically, legal malpractice policies cover claims made after the inception date and before the expiration date. Policies can also cover claims arising out of acts, errors or omissions occurring before the inception date but after the retroactive date. Basically, the claim must be made during the term of the policy, but may arise from conduct occurring after the retroactive date.
Other than for new attorneys, it is rarely advisable to purchase a policy with a retroactive date that is the same as the inception date, as doing so could cause
Choosing the Right Malpractice InsuranceRandy Evans, Parner, Dentons US LLP Shari Klevens, Partner and Deputy General Counsel, Dentons US LLP
TITLEGRAM FALL 2015 • 7
a gap in coverage between the date when the prior policy expires and the new policy begins.
INNOCENT PARTNER COVERAGEIn some instances, claims arise not from a mistake, but from a rogue partner who engages in conduct that is intentional, dishonest or illegal. This conduct is typically excluded from malpractice coverage. Nonetheless, plaintiffs may assert a negligent supervision claim against innocent partners, who will need protection from such claims.
Innocent partners can be covered as a result of three other provisions. First, such coverage can be addressed in an innocent partner clause. Second, innocent partners can be excepted from intentional misconduct exclusions. And third, the policy application can be severable, meaning that representations by any one partner will not adversely affect any other partner.
EXCLUSIONSExclusions vary greatly from one policy form to another. Yet, exclusions can take away the very coverage that many law firms need. One of the most important steps for any law practice is to carefully review and analyze the actual policy exclusions.
If a policy includes an exclusion for the type of work performed by the law practice, the practice can ask that it be deleted by an endorsement. If the insurer refuses, attorneys can move on to another insurer, as it makes no sense to purchase a policy that does not insure the work performed by the practice.
SELECTING THE RIGHT INSUREROnce a law practice narrows its policy choices, the next step is to select the “right” insurer. The most readily recognized distinction among insurers is price. But price alone should not be the determining factor in selecting a malpractice policy.
Some insurers specialize in providing coverage much in the same way law firms specialize in practice areas. Other insurers offer unique coverage enhancements and expansions. It is the total package that matters,
which requires a comparison of not only price but also scope of coverage.
In addition, the reputation and financial stability of the insurer is important. malpractice insurers are rated by two primary companies: Moody’s and A.M. Best. Law practices should compare the most recent ratings received by the insurers it is evaluating and the coverage policies.
An insurance company that is nonresponsive to inquiries or is difficult to work with during the policy evaluation process will likely be worse when a claim is made. To avoid that circumstance, consider these issues when comparing insurers.
Finally, if all other things are equal, consider add-ons that some insurers offer. For example, many insurers offer resources to law practices, including free CLE credit, loss prevention newsletters and toll-free hotlines, which may be particularly valuable to the law practice. Or the insurer may allow input in the selection of defense counsel.
Conscientious practices should consider all of these factors before making a final purchase decision.
Randy Evans is a partner and Shari Klevens is a partner and Deputy General Counsel at Dentons US LLP, which has six offices throughout California. The authors represent attorneys and law firms and regularly speak and write on issues regarding the practice of law, including “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance” (ALM 2013) and “California Legal Malpractice Law” (ALM 2014). Randy can be contacted at [email protected] (http://www.dentons.com/en/randy-evans). Shari can be contacted at [email protected] (http://www.dentons.com/en/shari-klevens).This article was published in The Recorder on September 3, 2015 and is reprinted with permission.
http://www.therecorder.com/id=1202736329047/Choosing-the-Right-Malpractice-Insurance#ixzz3l1V14uX3
Thank you MLTA Advertisers!
TITLEGRAM FALL 2015 • 8
A distinguished Mississippi attorney once observed, “Words mean so much more when you know what they mean.” In some cases, words just don’t mean what we think — like decimate, factoid, peruse, and snafu. In other situations, you could be dealing with industry vernacular – as in the real estate title business. For attorneys, lenders, and developers, the subtleties of certain terms – such as title certificate, report, commitment and policy – could be your job.
As to title, the first question about real estate is “Who owns it?” You probably also want to know if there are any mortgages, tax liens, judgments, easements, or unpaid taxes. The answer to these questions can be found in the local land records. Searching the land records may, however, require some knowhow.
Instead of spending days examining dusty books, mastering a foreign computer system, and learning the nuances of thirty-two years’ worth of different clerks’ methodology, you may choose to engage an attorney to deliver a TITLE CERTIFICATE (sometimes called a TITLE OPINION), which sets forth the attorney’s opinion as to title.
In order to issue the certificate, an attorney might (1) personally review the land records, (2) ask a trained staff member to research the records, or (3) engage a company (such as a third-party abstract company or a title insurance company with an abstract department) to prepare a TITLE REPORT.
In many transactions, the parties might simply rely on a warranty deed, updated title certificate, and settlement statement as evidence of a proper conveyance. If, however, the transaction involves a loan, the bank will likely require a TITLE INSURANCE COMMITMENT (sometimes called a TITLE BINDER). This document evidences a title insurance company’s obligation to issue a TITLE POLICY after the closing.
If you have a warranty deed (as opposed to some lesser deed like a “special” warranty or a quitclaim deed) and a clean title certificate from a reputable attorney, shouldn’t that be enough? The seller has “warranted” title and the attorney has issued a title opinion. Why would the bank require the borrower to purchase title insurance? There are at least two good answers.
1. Remedy (aka Blood from a Turnip). A warranty deed and title certificate are only as good as the signer. In many business transactions, the seller is a
single purpose, single asset entity that will, a few months after the sale of the single asset, dissolve and distribute all money to its members or shareholders. A warranty from a dissolved entity is essentially worthless.
As to the title certificate, it pains us to admit that attorneys move, retire, become insolvent, and even die. Law firms dissolve. Did the practicing attorney or law firm have an E&O policy? Even if the seller or attorney is solvent and can be found, how will she handle your “claim”?
By contrast, title insurance companies are regulated by state insurance departments and required to maintain adequate reserves for claims.
2. Standard for Liability. The standards for determining liability are different as to the parties issuing (a) title certificates, opinions and reports, versus (b) a title policy. If an attorney’s title certificate proves to be defective, the standard of liability is negligence. The fact the title certificate proves to be wrong doesn’t mean the attorney was negligent. It could be a problem with the land records or a computer glitch in the county’s records. Or it might be a survey issue rather than a true land record issue. But, as to a title insurance policy, the insurance company is held to a policy-holder friendly “strict liability” standard. It doesn’t matter if the land records were a mess or that a computer glitch deleted all the federal tax liens.
It is mainly because of the remedy and standard of liability that lenders require title policies on large commercial real estate loans. Other reasons include (i) the myriad exceptions, assumptions, qualifications and carve-outs that undermine any “opinion” of a title opinion, (ii) federal loan guidelines, and (iii) the smorgasbord of endorsements for added coverage that can be purchased with the policy. From the over 75 endorsements available, the routinely purchased endorsements address mineral activity, tax parcels, compliance with subdivision regulations, specific access, zoning compliance, environmental liens, and survey issues. Endorsements added to a title policy are like, well, extra toppings on an already excellent cheese pizza.
Commercial title insurance policies come in two basic forms – a “lender’s policy” and an “owner’s policy.” The typical commercial developer will find himself
Title Certificates, Reports, Commitments and Policies: The Difference May Be Your Job!Molly Jeffcoat Moody, Attorney, Watkins & Eager PLLC Ben Williams, Attorney, Watkins & Eager PLLC
TITLEGRAM FALL 2015 • 9
reluctantly purchasing a lender’s title insurance policy because the bank requires it. The commercial developer occasionally passes on the owner’s policy because (a) it was not in the budget [true], (b) it will cut costs [we’ll find out in a few years], and (c) the lender’s policy will protect the owner as it is the same real property [false].
A lender’s policy merely insures the bank’s mortgage. Over time, the mortgage will get paid down, with the insurance company’s exposure reducing commensurately. When the loan is paid off, the lender’s title insurance coverage ends. By contrast, an owner’s policy insures the owner as to his title and, without regard to the merits of the claim, provides the owner with legal representation to defend against claims and cure title issues – even years after he sells the property.
To reduce costs and expedite service, the parties to a transaction should locate all prior surveys, title reports, certificates and policies and deliver those to a commercial title attorney to obtain a quote and time estimate. If you are unsure whether a title policy was purchased in the past, review the closing statements from the original purchase and any refinances. The time spent locating these old documents will be worth it.
Caveat emptor!
Ben Williams and Molly Jeffcoat Moody are attorneys in a commercial law practice at Watkins & Eager PLLC (watkinseager.com). Ben and Molly are both recognized by Chambers USA and Best Lawyers in America. Ben was selected as Best Lawyer’s 2016 Project Finance Lawyer of the Year in Jackson, Mississippi. Ben Williams can be contacted at [email protected] (http://watkinseager.com/attorneys/m-binford-williams,-jr.aspx). Molly can be contacted at [email protected] (http://watkinseager.com/attorneys/molly-jeffcoat-moody.aspx).This article was published in Mississippi Business Journal (MBJ) on March 6, 2015 and is reprinted with permission. http://msbusiness.com/2015/03/ben-williams-and-molly-jeffcoat-title-certificates-reports-commitments-policies-the-difference-may-be-your-job/
Minnesota Department of Revenue receives award for nation-leading online system for filing Certificates of Real Estate Value Recently, the Minnesota Department of Revenue accepted a State Innovation Award for its work on Electronic Certificate of Real Estate Value (eCRV). The award, presented by the University of Minnesota’s Humphrey School of Public Affairs and the Bush Foundation, recognizes the agency’s new online system for processing and cataloging real estate transactions in Minnesota. Minnesota is the among the first states in the nation to offer the certificate online.
“Minnesota Revenue is leading the way in finding new ways to serve our customers by utilizing technology to improve their experience and save resources,” said Revenue Commissioner Cynthia Bauerly. “Customers now have access to this easy and convenient online system for filing and retrieving certificates of real estate value and we’re saving 600,000 pieces of paper each year.”
Minnesota requires that all real estate transactions over $1,000 file a Certificate of Real Estate Value (CRV). Implemented in 1978, filing a CRV used a four part paper form. Minnesota counties reviewed the submitted form and then transferred it to the state. This process took both time and resources for the submitters, the counties, and the state.
The department streamlined the process and became national leader by creating an electronic system for processing and storing real estate transactions. The change has made the process more convenient, secure, accessible, transparent, and efficient. Learn more about eCRV by visiting our website.
This is the second Minnesota State Government Innovation Award won by Revenue. The department was recognized last year for its plain language work. Watch a video overview of the Department of Revenue’s plain language effort.
To learn more about the State Innovation Awards as well as the individual award winners and their innovations, visit http://sgia.umn.edu/home/2015-award-winner.
Award recipients, from left to right: Jon Klockziem, Cynthia Rowley, Teresa Mitchell, Revenue CIO Greg Tschida, Assistant Commissioner for Business Taxes Jenny Starr, Revenue Commissioner Cynthia Bauerly, Jeff Holtz, and Jim Biggs.
TITLEGRAM FALL 2015 • 10
Yet another version, ALTA 3.2-06, applies to land under development.
Restrictions, Encroachments, Minerals. ALTA 9-06 through 9.10-06 is a series of endorsements available under the “ALTA 9” umbrella. These endorsements insure, generally, against: (a) existing violations of any covenant, condition, or restriction; (b) existing encroachments across property lines or onto easements; (c) damage to improvements that may result from the exercise of easement rights or mineral interests; and (d) a final court order requiring the removal of an encroachment or denying the right to maintain an existing building because of the violation of a private building setback line or other private restriction.
Access. ALTA 17-06 provides insurance against loss or damage suffered as a result of the insured land not having actual vehicular and pedestrian access to and from a public street via existing curb cuts to the street. Relatedly, ALTA 17.1-06 addresses indirect access to a public street via a private access easement.
Single Tax Parcel. ALTA 18-06 insures against loss resulting from the property not constituting a single parcel for real estate tax purposes, separate and apart from other property, or in the event that the permanent tax number identified in the endorsement affects other land in addition to the insured land.
Contiguity – Multiple Parcels. ALTA 19-06 insures against loss resulting from two parcels of land not being contiguous with one another.
Survey. ALTA 25-06 ensures that the land described in the policy is the same as that identified on the survey.
Subdivision. ALTA 26-06 insures against loss resulting from the failure of the property to be a lawfully created parcel (aka subdivision) pursuant to applicable state and local laws and ordinances.
There is a host of other endorsements available to cover all sorts of other issues that could arise in a commercial real estate transaction. A discussion of all available endorsements is beyond the scope of this article. The appropriate selection of endorsements is best made after a review of title, survey and construction plans.
Although often overlooked, title policy endorsements are an integral part of a commercial real estate title insurance policy. These optional add-ons greatly enhance the coverage and protection provided to an insured owner or lender.
My law partners Molly Jeffcoat Moody and Ben Williams, discussed in a prior column the differences in title certificates, title commitments and title policies. (See “Title certificates, reports, commitments & policies: The difference may be your job!”) This column expands on the subject with a discussion of title policy endorsements.
WHAT IS AN ENDORSEMENT?Endorsements are addenda to a title insurance policy that expand, limit or otherwise modify the coverage afforded by a policy. Endorsements are typically used to provide more comprehensive coverage and to address particular title issues affecting, or potentially affecting, the real estate. They are available for both owner’s and loan title policies.
Endorsements are not automatically issued. Instead, the parties must specifically request them. Most traditional lenders have a standard, short list of required endorsements. Permanent lenders often have a long laundry list of requested endorsements covering every imaginable scenario (and then some).
WHAT KINDS OF ENDORSEMENTS ARE AVAILABLE?The American Land Title Association (ALTA) has promulgated over 75 conveniently numbered standard or uniform endorsements. See http://www.alta.org/forms/. While the ATLA forms are routinely used in Mississippi, several states use different or revised forms. A title company’s ability to issue a particular endorsement will vary from state to state and from transaction to transaction, depending on whether the endorsement is even allowed in that state and the specifics of the particular transaction.
The most common endorsements requested in commercial real estate transactions are:
Zoning. ALTA 3-06 provides insurance as to the zoning classification in which the land is located and the uses permitted in that zone. ALTA 3.1-06 applies only to improved property and adds coverage regarding physical characteristics of the improvements, such as the area, height, width, and depth of the structure, the property setbacks, and the number of parking spaces.
Enhancing a Title Policy with EndorsementsRoger Williams, Attorney, Watkins & Eager PLLC
TITLEGRAM FALL 2015 • 11
WHAT ARE THE CONDITIONS AND COSTS TO OBTAIN AN ENDORSEMENT?Depending on the type of endorsement requested and the nature of the transaction, the level of underwriting required can vary substantially. Some endorsements require almost no underwriting. For many endorsements, a current survey will be required. Affidavits from different parties may also be necessary, as well as letters or documentation from governmental entities or offices (such as to confirm the zoning). Often, loan documents must be reviewed. Construction lien issues – and endorsements addressing such issues – may require a special application. In a few instances, the underwriting may be time-consuming and expensive.
The cost of endorsements varies widely. Some endorsements are free, while others range from a nominal amount to potentially several thousand dollars. In Mississippi, the rates for endorsements are frequently negotiable, based in part on the size of the transaction, the number of endorsements requested and many other factors. Other states, in contrast, are “filed rate” states, with the cost of each endorsement set by the state insurance department.
Most borrowers will purchase endorsements because their lender requires it on a lender’s policy. Commercial property owners are somewhat reluctant to purchase an endorsement not otherwise required by a lender. Endorsements, however, can be a bargain. The low cost of an endorsement is often an economical way to supplement the general title coverage.
SUMMARYEndorsements can greatly enhance coverage and limit risk. Owners and lenders should carefully consider the available endorsements to an owner’s or lender’s title insurance policy. As Joe Namath said, “If you aren’t going all the way, why go at all?”
Roger Williams is an attorney in a commercial law and real estate practice at Watkins & Eager PLLC. Roger is recognized by Chambers USA and Best Lawyers in America in the area of Real Estate Law. Roger can be contacted at [email protected] (http://watkinseager.com/attorneys/roger-w-williams.aspx). This article was published in Mississippi Business Journal (MBJ) on August 27, 2015 and is reprinted with permission.
http://msbusiness.com/2015/08/commercial-finance-701-enhancing-a-title-policy-with-endorsements/
Cybersecurity Resources for Consumershttp://www.businessidtheft.org/Resources/PersonalCreditProtection/ExtendedFraudAlerts/tabid/111/Default.aspx
https://www.privacyrights.org/
https://www.identitytheft.gov/info-lost-or-stolen.html
http://www.usa.gov/directory/stateconsumer/index.shtml
https://www.identitytheft.gov/know-your-rights.html
http://www.consumer.ftc.gov/media/video-0023-what-identity-theft
https://bulkorder.ftc.gov/system/files/publications/pdf-0009-taking-charge.pdf
https://bulkorder.ftc.gov/publications
http://www.naic.org/state_web_map.htm
PRIA’s Notary Work Group White Paper Posted for 30-day Review The eNotary Work Group announces the draft of a white paper, “Traditional Assurances for Electronically Recorded Documents.”
This paper was developed over a one-year time frame that included frequent meetings and working sessions at conferences.
Comments should be submitted to Marc Aronson or Kay Wrucke, co-chairs of the eNotary Work Group, no later than Thursday, October 22, 5 p.m., ET.
To access the paper, click here.
Additional PRIA Standards and Publications
http://www.pria.us/i4a/doclibrary/index.cfm?pageid=3281&showTitle=1
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Join the ALTA Community
ALTA EVENTSAnnual ConventionWednesday-Saturday, October 7-10, 2015 Westin Copley Place, Boston, MAhttp://meetings.alta.org/annual/
Webinar - Data Security Essentials: Strategies to Protect Non-public Personal InformationWednesday, October 28, 2:00-3:00 p.m. EDT http://www.alta.org/titletopics/
Homebuyer Outreach Program (HOP) WorkshopTuesday, December 1, 2015Kentucky Land Title Association (KYLTA)http://meetings.alta.org/hop/
Business StrategiesWednesday-Friday, March 16-18, 2016JW Marriott Indianapolis, Indianapolis, IN http://meetings.alta.org/bsc/
Federal Conference & Lobby DayMonday-Wednesday, May 16-18, 2016Renaissance Downtown, Washington, DChttp://meetings.alta.org/federal/
2015-16 BOARD OF GOVERNORS NOMINATIONS
President: John Hollenbeck NTP (Santa Ana, Calif.)President-elect: Dan Mennenoh (Galena, Ill.)Treasurer: Steven Day (Jacksonville, Fla.)Chair of Finance Committee: Jack Rattikin IIIAgents Section Chair: Cynthia Blair NTP (Columbia, S.C.)Agents Section Representative: Bill Burding (Santa Ana, Calif.)Agents Section Representative: Richard Welshons (Hastings, Minn.)Underwriters Section Chair: Stewart Morris Jr. (Houston, Texas)Underwriters Section Representative: Mary O’Donnell (Winter Park, Fla.)Underwriters Section Representative: Dan Wold (Minneapolis, Minn.)Immediate Past President: Diane Evans NTP (Denver, Colo.)
ABSTRACTERS AND TITLE INSURANCE AGENTS EXECUTIVE COMMITTEE
Chair: Cynthia Blair NTP (Columbia, S.C.)Vice-Chair: Craig Haskins (Milwaukee, Wis.)Secretary: Eric Schneider NTP (Columbia, Md.)Three-year term: Jack Robichaux NTP (Lake Charles, La.)Three-year term: Tom Richardson (Ann Arbor, Mich.)Three-year term: Maureen Pfaff (Port Angeles, Wash.)Two-year term: Craig Haskins (Milwaukee, Wis.)Two-year term: Amy Niesen (Birmingham, Ala.)Two-year term: Eric Schneider NTP (Columbia, Md.)One-year term: Dean Hoag Jr. (Des Moines, Iowa)One-year term: Bill Burding (Santa Ana, Calif.)One-year term: Richard Welshons (Hastings, Minn.)Board Finance Chair: Jack Rattikin III (Fort Worth, Texas)
TITLE INSURANCE UNDERWRITERS EXECUTIVE COMMITTEE
Chair: Stewart Morris Jr. (Houston, Texas)Vice-Chair: Ted Rogers (Baltimore, Md.)Secretary: Mary O’Donnell (Winter Park, Fla.)Three-year term: Bob Grubb (Longmont, Colo.)Three-year term: Hank Shulruff (Chicago, Ill.)Three-year term: Ted Rogers (Baltimore, Md.)Two-year term: Morris Fine (Chapel Hill, N.C.)Two-year term: Mary O’Donnell (Winter Park, Fla.)Two-year term: David Townsend NTP (Columbia, Mo.)One-year term: Don O’Neill (Portland, Ore.)One-year term: Richard Patterson (Rocky Hill Conn.)One-year term: Dan Wold (Minneapolis, Minn.)Board Treasurer: Steven Day (Jacksonville, Fla.)
http://www.alta.org/news/news.cfm?newsID=28968
2015-16 Nominations for ALTA Board and Executive CommitteesALTA’s Nominating Committee is pleased to present the list of nomina tions for the 2015-16 ALTA Board of Governors, as well as the Abstracters and Title Insurance Agents Executive Committee and the Title Insurance Underwriters Executive Committee. Nominations will be voted on during the 2015 Annual Conven tion, which will be held Oct. 7-10 in Boston. Here is the slate for the Board of Governors and Section Executive Committees.
ALTA
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CONSUMERS � Borrower Do’s and Dont’s for TRID � Survey Shows Consumer Demand to View Closing
Documents in Advance, Sign Electronically � CFPB Study Finds E-closings Can Improve Consumer
Experience
REALTORS � Realtors Confident in Title Companies’ TRID
Preparedness � Key TRID Items to Discuss With Real Estate Agents � CFPB Provides TRID Guide for Real Estate Agents
ECONOMY � A Fresh Batch of Housing Market Forecasts and
Predictions for 2016
ALTA BEST PRACTICES � Agents Can Use ALTA Management Report to Show
Best Practice Compliance � Lender Requirements for ALTA Best Practices � Survey Shows Majority of Title Professionals Working
Toward Best Practice Compliance
ALTA TRID RESOURCES � Download ALTA’s Model Settlement Statements to
Use for TRID � Helpful Chart to comply with TRID Three-day Delivery
Rule � ALTA TRID Townhall Provides Answers to Industry
Questions � How to Disclose Title Insurance Premiums in Seller-
Pay Scenarios
TRID NEWS � TRID Preparedness Checklist � CFPB Clarifies TRID Good-Faith Enforcement � FHA to Allow Changes to Settlement Certification Due
to TRID � FHA Proposes New Deadline for Lenders to File
Claims � Mortgage Information Services Integrates Title and
Settlement Fees into Ellie Mae � How to Disclose Survey Fees on TRID � ComplianceEase: 17 Percent of Loans Fail for TILA
and 6 Percent for RESPA Tolerances � CFPB Provides Question Index for TRID Webinars � Tolerances with the TILA-RESPA Integrated
Disclosures � Completing TRID Old School: Can Disclosures Be
Completed By Hand? � CFPB Updates TRID Implementation Materials � Is Owner’s Title Insurance Subject 10 Percent
Tolerance? � CFPB Releases Spanish Version of TILA-RESPA
Form Guide � Ellie Mae Publishes TILA-RESPA Guide
Industry Headlines
Follow ALTA’s Blog for Answers to TRID QuestionsAnswers to questions asked during the townhall http://blog.alta.org/mortgage-disclosures/
ALTA’s TRID Townhall Recording
More than 500 industry professionals participated in ALTA’s TRID Townhall, which was held on its Facebook page on July 28. The townhall discussed what industry participants should be doing now to prepare for the implementation of the TILA-RESPA Integrated Disclosures rule.
Video recordinghttps://www.youtube.com/watch?v=Mdchholo_pc
Webinar - Data Security Essentials: Strategies to Protect Non-public Personal InformationWednesday, October 28 2:00-3:00 p.m. EDT
Speakers to be announced
http://www.alta.org/titletopics/
ALTA Endorsement 46-06 Published In Final; Technical Corrections AnnouncedALTA Endorsement 46-06 (Option), which was approved by ALTA’s Board in June, has passed through the comment period and is now published in final.
A real estate option is a written agreement or contract giving the holder of the option the right, but not the obligation, to acquire an interest in real property for an agreed upon price and within a certain time frame. There is a market need for an endorsement that provides basic coverage to the insured for loss resulting from certain risks associated with an option. The endorsement can be used in situations where the insured named in a policy is also the holder of a specific option identified in the endorsement.
Additionally, technical corrections have been made to the ALTA Short Form Commitment and ALTA Endorsement 15.2-06. All forms are available at www.alta.org/forms.
If you have comments or concerns, forward them to Kelly Romeo, the staff liaison for the Forms Committee, at [email protected].
http://alta.org/news/news.cfm?newsID=29257
TITLEGRAM FALL 2015 • 14
Supervision and Examination ManualThe CFPB Supervision and Examination Manual is the CFPB’s guide for examiners to use in overseeing companies that provide consumer financial products and services. The manual describes how the CFPB supervises and examines these providers and gives CFPB examiners direction on how to determine if companies are complying with consumer financial protection laws.
Version 2.0 of the manual was released in October 2012. Since then, the CFPB has released new and/or updated chapters. Ensure you are working with the most current documents by reviewing the CFPB website often at:
http: / /www.consumerf inance.gov/guidance/supervision/manual/
September 15, 2015 – TILA ProceduresTILA RESPA Integrated Disclosures (applicable for examinations after the October 2015 effective date)
TILA Examination Procedures begin on page 146.
http://files.consumerfinance.gov/f/201509_cfpb_truth-in-lending-act-exam-procedures.pdf
September 15, 2015 – RESPA ProceduresTILA RESPA Integrated Disclosures (applicable for examinations after the October 2015 effective date)
TILA Examination Procedures begin on page 54.
http://files.consumerfinance.gov/f/201509_cfpb_regulation-x-real-estate-settlement-procedures-act-exam-procedures.pdf
CFPB Releases TRID Readiness Guide to Aid ComplianceThe CFPB released a Readiness Guide to help companies evaluate their readiness and help them comply with mortgage rule changes, including TRID. Topics addressed include:
� Developing an Implementation Plan � Policies and Procedures � Training � Monitoring and Corrective Action � Complaints � Compliance Audit � Service Provider Oversight
http://files.consumerfinance.gov/f/201509_cfpb_readiness-guide_mortgage-implementation.pdf
http://alta.org/news/news.cfm?newsID=29225
CFPB Governance Structure Discussed by Joint Trade Groups excerpted from ALTA Advocacy Update 9/21/15 by Michelle L. Korsmo, ALTA CEO
ALTA is participating in a coalition that includes the American Bankers Association, the Consumer Bankers Association, the Credit Union Association, the Financial Services Roundtable, the Independent Community Bankers, and the National Association of Federal Credit Unions. The main goal of this coalition is to encourage legislation that would transition leadership of the CFPB from a sole director to a bipartisan commission.
Coalition-supported legislation, H.R. 1266, the Financial Product Safety Commission Act, has been introduced in the House of Representatives by Rep. Randy Neugebauer (R-TX) and Rep. Kyrsten Sinema (D-AZ). ALTA and the associated trade groups mentioned above believe a bipartisan commission would provide a balanced and deliberative approach to supervision, regulation, and enforcement as well as offer a stable form of leadership that would preserve the CFPB as a strong and effective regulator, regardless of which political party is in the White House. A bipartisan commission would also encourage robust debate with multiple viewpoints that would strengthen consumer choice and access to credit.
The House Financial Services Committee could consider H.R. 1266 in the coming weeks. If you have questions about the bill or wish to get in contact with your Member of Congress to offer your support please contact ALTA’s Director of Government Affairs, Ben Lincoln, at 202-296-3671 or [email protected].
CFPB should be bipartisan commissionht tp: / / thehi l l .com/blogs/congress-blog/ the-administration/255322-cfpb-should-be-bipartisan-commission
Get heard by getting involved! ALTA’s Title Action Network (TAN) makes expressing your opinions about legislative issues easy, and joining is free ! New! Text alerts are now available. Login in to sign up.
http://www.titleactionnetwork.com/
TITLEGRAM FALL 2015 • 15
Securities Industry and Financial Markets Association (SIFMA) SIFMA is the voice of the nation’s securities industry. It advocates for effective and resilient capital markets.
SIFMA’s Principles for Effective Cybersecurity Regulatory GuidanceAs part of SIFMA’s ongoing Cybersecurity initiative, SIFMA puts forward the following ten principles that should guide agency review and facilitate the dynamic partnership between financial regulators and industry that is essential for each to achieve their shared goals of protecting critical infrastructure and the assets and data of the public.
Principle 1: The U.S. Government Has a Significant Role and Responsibility in Protecting the Business CommunityPrinciple 2: Recognize the Value of Public–Private Collaboration in the Development of Agency GuidancePrinciple 3: Compliance with Cybersecurity Agency Guidance Must be Flexible, Scalable and PracticalPrinciple 4: Financial Services Cybersecurity Guidance Should be Harmonized Across AgenciesPrinciple 5: Agency Guidance Must Consider the Resources of the FirmPrinciple 6: Effective Cybersecurity Guidance is Risk-Based and Threat-InformedPrinciple 7: Financial Regulators Should Engage in Risk-Based, Value-Added Audits Instead of Checklist ReviewsPrinciple 8: Crisis Response is an Essential Component to an Effective Cybersecurity ProgramPrinciple 9: Information Sharing is Foundational to Protection, Must Be Limited to Cybersecurity Purposes, and Must Respect Firms’ ConfidencesPrinciple 10: The Management of Cybersecurity at Critical Third Parties is Essential for Firms
http://www.sifma.org/issues/item.aspx?id=8589951691
SIFMA Cybersecurity Resource Centerhttp://www.sifma.org/issues/operations-and-technology/cybersecurity/resources/
Cybersecurity ResourcesThe third pillar of ALTA’s Best Practices: ”Title Insurance and Settlement Company Best Practices” provides guidance on network security of non-public personal information (NPI).
� NAIC’s “Principles for Effective Cybersecurity: Insurance Regulatory Guidance” have been derived from SIFMA’s “Principles for Effective Cybersecurity Regulatory Guidance.”
� ALTA provides and overview of the FFIEC Cybersecurity Assessment Tools at http://alta.org/news/news.cfm?newsID=28453#sthash.XKIOnrSB.dpuf
Federal Financial Institutions Examination Council (FFIEC) The Federal Financial Institutions Examination Council (FFIEC) released a Cybersecurity Assessment Tool to help institutions identify their risks and assess their cybersecurity preparedness.
Financial institutions of all sizes may use the assessment and other methodologies to perform a self-assessment and inform their risk management strategies. The release of the Cybsercurity Assessment Tool follows last year’s pilot assessment of cybersecurity preparedness at more than 500 institutions. The FFIEC plans to update the assessment as threats, vulnerabilities and operational environments evolve.
In addition to the assessment, the FFIEC has also made available an executive overview, a user’s guide, an online presentation explaining the assessment and appendices mapping the Assessment’s baseline maturity statements to the FFIEC Information Technology Examination Handbook.
The FFIEC members are also encouraging institutions to comment on the Assessment through an upcoming Paperwork Reduction Act notice in the Federal Register.
The FFIEC said the assessment t will help companies:
� identify factors contributing to and determining the institution’s overall cyber risk.
� assess the institution’s cybersecurity preparedness.
� evaluate whether the institution’s cybersecurity preparedness is aligned with its risks
� determine risk-management practices and controls that are needed or need enhancement and actions to be taken to achieve the desired state.
� inform risk management strategies.
The assessment consists of an Inherent Risk Profile and Cybersecurity Maturity. Upon completion of both parts, according to the FFIEC, management can evaluate whether the institution’s inherent risk and preparedness are aligned.
http://www.ffiec.gov/cyberassessmenttool.htm
FFIEC Cybersecurity Awareness Home Page http://www.ffiec.gov/cybersecurity.htm
TITLEGRAM FALL 2015 • 16
NAIC Cybersecurty Regulatory Principles and Insurer ExaminationsThe National Association of Insurance Commissioners’ (NAIC) recently announced that its Cybersecurity Task Force will be coordinating with state insurance regulators to conduct examinations of insurers for the purpose of verifying whether companies are taking appropriate steps to protect consumers’ sensitive data, including confidential personal information.
The NAIC recently adopted the Guiding Principles for Cybersecurity and it released a Consumer Cybersecurity Bill of Rights which is intended to set standards for helping consumers if their personal information is compromised. It is in the process of developing new reporting requirements for insurers to better track cyber insurance policies issued in the marketplace.
Download Guiding Principles for Cybersecurityhttp://www.naic.org/documents/committees_ex_cybersecurity_tf_final_principles_for_cybersecurity_guidance.pdf
Download Consumer Cybersecurity Bill of Rightshttp://www.naic.org/documents/committees_ex_cybersecurity_tf_exposure_draft_cybersecurity_bill.pdf
Related press releases:NAIC Cybersecurity Task Force Adopts Regulatory Principles, April 17http://www.naic.org/Releases/2015_docs/naic_cybersecurity_task_force_adopts_regulatory_principles.htm
NAIC Membership Advances Regulatory Priorities, June 18http://www.naic.org/Releases/2015_docs/naic_membership_advances_regulatory_priorities.htm
State Insurance Regulators Taking Intiative on Cybersecurity Isues, July 28http://www.naic.org/Releases/2015_docs/state_insurance_regulators_initiative_cybersecurity.htm
NAIC Accepting Applications From Prospective 2016 Cconsumer Liaison Representatives
The National Association of Insurance Commissioners (NAIC) is now accepting applications for its 2016 Consumer Liaison Program.
Established in 1992, the program promotes consumer representation by providing qualified consumer representatives of consumer organizations with the opportunity to participate in NAIC meetings. The NAIC defines a consumer organization as a national, state or local organization serving to protect the consumers’ insurance regulation interests.
“Consumer liaison representatives bring a necessary perspective to our regulatory dialogues,” said Monica J. Lindeen, NAIC President and Montana Insurance Commissioner. “We appreciate all they do and urge interested parties to apply to help the NAIC continue to educate and protect fellow consumers.”
The NAIC provides travel expense reimbursement to consumer representatives to enable them to participate in NAIC meetings. Qualified candidates must meet the following criteria: have a commitment to representing consumer interests in insurance regulation, represent a non-profit organization, be willing to fully participate in NAIC meetings and conference calls, have demonstrated expertise and experience on insurance-related issues, not have conflicting obligations or commitments to an industry that limit his/her ability to represent consumer interests and require NAIC funding.
Interested parties who do not want or need backing for a consumer representative position, may apply to be an unfunded consumer representative.
The NAIC’s website provides additional information about the Consumer Liaison Program and describes the application process to become a funded or unfunded consumer representative.
The application deadline is 5 p.m. Central time, Oct. 31, 2015. All candidates must complete the application and attach all documents requested. Applicants will be notified in mid-December of 2015 regarding their selection as funded or unfunded consumer representatives for the 2016 calendar year.
http://www.naic.org/Releases/2015_docs/naic_accepting_apps_consumer_reps.htm
NAIC’s Title Insurance Task Force Working Groups:Title Insurance Financial Reporting Working GroupTitle Insurance Guaranty Fund Working Grouphttp://www.naic.org/committees_c_title_tf.htm
Map of NAIC States & Jurisdictionshttp://www.naic.org/state_web_map.htm
TITLEGRAM FALL 2015 • 17
NAIC Principles for Effective Cybersecurity: Insurance Regulatory Guidance1
Due to ever-increasing cybersecurity issues, it has become clear that it is vital for state insurance regulators to provide effective cybersecurity guidance regarding the protection of the insurance sector’s data security and infrastructure. The insurance industry looks to state insurance regulators to aid in the identification of uniform standards, to promote accountability across the entire insurance sector, and to provide access to essential information. State insurance regulators look to the insurance industry to join forces in identifying risks and offering practical solutions. The guiding principles stated below are intended to establish insurance regulatory guidance that promotes these relationships and protects consumers.
Principle 1: State insurance regulators have a responsibility to ensure that personally identifiable consumer information held by insurers, producers and other regulated entities is protected from cybersecurity risks. Additionally, state insurance regulators should mandate that these entities have systems in place to alert consumers in a timely manner in the event of a cybersecurity breach. State insurance regulators should collaborate with insurers, insurance producers and the federal government to achieve a consistent, coordinated approach.
Principle 2: Confidential and/or personally identifiable consumer information data that is collected, stored and transferred inside or outside of an insurer’s, insurance producer’s or other regulated entity’s network should be appropriately safeguarded.
Principle 3: State insurance regulators have a responsibility to protect information that is collected, stored and transferred inside or outside of an insurance department or at the NAIC. This information includes insurers’ or insurance producers’ confidential information, as well as personally identifiable consumer information. In the event of a breach, those affected should be alerted in a timely manner.
Principle 4: Cybersecurity regulatory guidance for insurers and insurance producers must be flexible, scalable, practical and consistent with nationally recognized efforts such as those embodied in the National Institute of Standards and Technology (NIST) framework.
Principle 5: Regulatory guidance must be risk-based and must consider the resources of the insurer or insurance producer, with the caveat that a minimum set of cybersecurity standards must be in place for all insurers and insurance producers that are physically connected to the Internet and/or other public data networks, regardless of size and scope of operations.
Principle 6: State insurance regulators should provide appropriate regulatory oversight, which includes, but is not limited to, conducting risk-based financial examinations and/or market conduct examinations regarding cybersecurity.
Principle 7: Planning for incident response by insurers, insurance producers, other regulated entities and state insurance regulators is an essential component to an effective cybersecurity program.
Principle 8: Insurers, insurance producers, other regulated entities and state insurance regulators should take appropriate steps to ensure that third parties and service providers have controls in place to protect personally identifiable information.
Principle 9: Cybersecurity risks should be incorporated and addressed as part of an insurer’s or an insurance producer’s enterprise risk management (ERM) process. Cybersecurity transcends the information technology department and must include all facets of an organization.
Principle 10: Information technology internal audit findings that present a material risk to an insurer should be reviewed with the insurer’s board of directors or appropriate committee thereof.
Principle 11: It is essential for insurers and insurance producers to use an information-sharing and analysis organization (ISAO) to share information and stay informed regarding emerging threats or vulnerabilities, as well as physical threat intelligence analysis and sharing.
Principle 12: Periodic and timely training, paired with an assessment, for employees of insurers and insurance producers, as well as other regulated entities and other third parties, regarding cybersecurity issues is essential.1 These principles have been derived from the Securities Industry and Financial Markets Association’s (SIFMA) “Principles for Effective Cybersecurity Regulatory Guidance”
© 2015 National Association of Insurance Commissioners 2 4/17/15
TITLEGRAM FALL 2015 • 18
MLTA Leadership 2015 - 2016OFFICERS AND DIRECTORS
PresidentSue BasiagoMidland Title7760 France Avenue South, Suite 140Richfield, MN 55435-5833(612) [email protected]
President-ElectNancy LandmarkCommercial Partners Title, LLC200 South Sixth Street, Suite 1300Minneapolis, MN 55402(952) [email protected]
Board of Directors - 1 Year TermKaren DrillBurnet Title5151 Edina Industrial Blvd., Suite 500Edina, MN 55439(952) [email protected] Board of Directors – 2 Year TermNicholas KoesterFidelity National Title Group7701 France Ave. South, Suite 120Edina, MN 55435(952) [email protected] Board of Directors - 3 Year TermDan PearsonEdina Realty Title, Inc.6800 France Avenue SouthEdina, MN 55435(952) [email protected]
Immediate Past PresidentJim MilinkovichFirst American Title Insurance Company701 Xenia Avenue South, Suite 450Golden Valley, MN 55416(763) [email protected]
Secretary-TreasurerRichard WelshonsDCA Title1250 North Frontage RoadHastings, MN 55033(651) [email protected]
COMMITTEE CHAIRS
Current Issues Advisory CommitteeBrandt KeefeStewart Title Guaranty Company1650 West 82nd Street, Suite 100Bloomington, MN 55431(952) 948-3218 [email protected]
Education Committee
Brandt KeefeStewart Title Guaranty Company1650 West 82nd Street, Suite 100Bloomington, MN 55431(952) [email protected]
David WelshonsDCA Title1250 North Frontage RoadHastings, MN 55033(651) [email protected]
Legislative Committee
Dan PearsonEdina Realty Title, Inc.6800 France Avenue SouthEdina, MN 55435(952) [email protected]
Chad NovakOld Republic National Title Insurance Company400 Second Avenue SouthMinneapolis, MN 55401-2499(612) [email protected]
Nancy LandmarkCommercial Partners Title, LLC200 South Sixth Street, Suite 1300Minneapolis, MN 55402(952) [email protected]
Membership and Public RelationsCommitteeKathy AustenChicago Title Insurance Company7701 France Avenue South, Suite 120Edina, MN 55435(952) [email protected]
Nominating CommitteeEdith MichalskiArrowhead Abstract & Title Co.314 West Superior StreetDuluth, MN 55802(218) [email protected] Technology CommitteeManoj PurohitNorth American Title Insurance Company10150 Mallard Creek Road, Suite 505Charlotte, NC 28262(312) [email protected]
LIAISONS
County Recorder LiaisonDarlene MisslerFirst American Title Insurance Company701 Xenia Avenue South, Suite 450Golden Valley, MN 55416(763) [email protected]
ERER Commission LiaisonJeff CarlsonIndecomm Global2925 Country DriveSt. Paul, MN 55117(952) [email protected]
2016 CONVENTION HOST
Linda LarsonOld Republic National Title Insurance Company400 Second Avenue SouthMinneapolis, MN 55401-2499(612) [email protected]
BOARD COUNSEL
James L. WiantRinke Noonan Attorneys at LawUS Bank Plaza, Suite 300St. Cloud, MN 56302(320) [email protected]
LOBBYIST
Nancy HyldenFaegre Baker Daniels2200 Wells Fargo Center90 S. Seventh StreetMinneapolis, MN 55402(612) [email protected]
