Between regulatory shifts that redefine operating norms to new fraud tactics that push the boundaries of today’s security measures, the title industry is ever-changing. In this blog, we revisit our recent discussion with Brooklee Han, a journalist at HousingWire, about the significant narratives influencing our industry. Whether it’s staying proactive amid interest rate fluctuations or grasping emerging market trends, we have the stories to ensure you’re keeping your finger on the pulse of the title industry.
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A Little Bit About Our Guest
Brooklee Han is a journalist for HousingWire, reporting on Title Industry news since the Fall of 2021. Before reporting, she was an international figure skater representing Australia at the 2014 Winter Olympics. Brooklee brings a keen eye for uncovering the stories that matter most in the title industry.
Navigating Today’s Regulatory Changes
Alternatives to Title Insurance
Unregulated title insurance has been a hot topic for a few years now ever since Freddie Mac announced the acceptance of attorney opinion letters (AOLs) for certain transactions (like certain refinances) in May 2020. An Attorney Opinion Letter (AOL) is a written statement from a qualified real estate attorney that provides an opinion on the status of a property’s title. Fannie Mae fell in line earlier this year when they announced a new pilot program that would eliminate the requirement for title insurance altogether in specific circumstances.
Earlier this month, Fannie Mae announced that they are scrapping the controversial title insurance waiver pilot. While Fannie Mae is no longer considering a pilot program that would bypass traditional title insurance, it’s still important to keep an eye out for policies that encroach on title from the GSEs. Despite scrapping this pilot program, GSEs will continue to look for ways to improve housing affordability.
Please note: This live session was recorded on June 20, 2023, before the waiver pilot was scrapped.
There are still unregulated title insurance alternatives emerging, including certain attorney opinion letters.
Staying involved in how our industry can move towards lowering costs while keeping risks low.
RESPA and Digital Marketing Compliance
During a downturn in our market and trying to gain new business, it can be easy to fall into the “gray area” of RESPA compliance.
As of late, the Consumer Financial Protection Bureau (CFPB) has been increasingly vigilant in addressing RESPA violations and recently was involved with its first enforcement action associated with the 1974 Real Estate Settlement Procedures Act in 6 years. Freedom Mortgage now owes $1.75 million to the CFPB’s victim relief fund for providing kickbacks to real estate brokers and agents in exchange for agent and broker referrals for mortgage loan offerings.
The last company to be fined over a RESPA violation was in 2017.
The crackdown has become more common under the Biden Administration with the FTC taking serious measures to shut down Mergers and Acquisitions that they deem anti-competitive.
While unsuccessful, the FTC has also gone after the ICE and Black Knight deal and brought a couple of concerns to light:
- Potential to raise costs to lenders which would then be passed to homebuyers
- Elimination of competition for product, pricing, and eligibility engines (PPEs), and other various ancillary services
Keeping up with the latest on RESPA violations is especially important for title companies who are contemplating growing their business and entering business relationships with real estate agents or lenders.
Staying informed on the latest RESPA violations may help steer clear of similar lawsuits and get a better understanding of where exactly the line falls with certain partnerships.
- Compliance experts on navigating RESPA in a digital world
- The CFPB is stepping up RESPA enforcement
- CFPB fines Freedom Mortgage and Realty Connect nearly $2 million for illegal kickbacks
Fraud and Cybersecurity Concerns
Seller Impersonation Fraud
The never-ending war with fraud continues as the newest scheme, Seller Impersonation Fraud, has affected more than half of title companies in the last six months. Seller impersonation fraud is a type of fraud in which scammers impersonate property owners and attempt to sell property they don’t own. These scammers are using the real property owner’s driver’s license number, social security number, as well as legitimate notary credentials, which
can be applied without the notary’s knowledge. Some signs include:
- The seller wants to sell quickly
- The seller refuses to attend the signing and claims to be out of town
- The seller is hard to reach
- The seller refuses or is unable to complete multifactor authentication or identity verification
- The seller wants to use their own notary
Read more about red flags to look out for here.
Staying updated on seller impersonation fraud stories and cases can help title professionals understand the latest tactics and techniques used by fraudsters. By recognizing red flags and learning from real-life examples of fraud, title agents can better anticipate the methods scammers use to manipulate transactions.
- The title industry’s latest cat-and-mouse game: Seller impersonation fraud
- Seller impersonation fraud threatens American homeownership
Wire fraud incidents seem to become more sophisticated by the day, and staying informed is one of the most important ways to protect consumers from falling victim to these increasingly elaborate schemes.
There are some new techniques, highlighted in ALTA’s The State of Wire Fraud in the Title Industry recording, that are being used by scammers who have access to more resources than ever to perfect the attacks that lead to wire fraud.
- SpoofCard (Call back spoofing): This is when a caller deliberately falsifies the information transmitted to your caller ID display to disguise their identity. Scammers often use neighbor spoofing so it appears that an incoming call is coming from a local number, or spoof a number from a company or a government agency that you may already know and trust. If you answer, they use scam scripts to try to steal your money or valuable personal information, which can be used in fraudulent activity.
- Deepfake (AI voice replication): Artificial intelligence voice cloning is a deepfake technique that can analyze and replicate a human’s voice. All it requires is a short voice sample of the human voice you want to replicate, and the AI will learn it instantly.
- Influence Bots (open-source intelligence): Social bots are a current phenomenon in social media and are increasingly used to influence users of social platforms.
- SIM swap (SS7 Network): This is a type of account takeover fraud that generally targets a weakness in two-factor authentication and two-step verification in which the second factor or step is a text message (SMS) or call placed to a mobile telephone.
- AI-generated attack emails: Chat GPT AI text-generating interfaces are being used to create malicious messages designed to spear phish, scam, harass and spread fake news. These AI-based systems can also be used for BEC scams.
Staying up to date on wire fraud stories is one of the best ways that title professionals can protect their clients, maintain their reputation, comply with legal and ethical obligations, and stay ahead of evolving fraud tactics.
- CertifID report finds that the firm stopped $12 million in mortgage payoff fraud in Q2 compared to $1.9 million in Q1
- FinCEN crackdown on real estate money laundering expected this month
- For the title industry, new tech means new opportunities for fraudsters
How to Stay in the Know
Engage with Regulatory Webinars
Participate in webinars offered by regulatory agencies, industry associations, and legal firms. These sessions are designed to provide in-depth insights into new regulations, compliance best practices, and strategies for adapting to changes. They also often provide opportunities for Q&A sessions, allowing you to clarify any doubts directly with experts.
Get Involved with a Committee
Staying actively engaged in committees is a powerful way to contribute to the growth and development of the title industry. Joining committees dedicated to matters like regulatory affairs, technology advancements, or industry standards provides an avenue to share your expertise, collaborate with like-minded professionals, and influence crucial decisions. By participating in discussions, offering insights, and collectively addressing challenges, you play a pivotal role in shaping the industry’s future. Committee involvement not only amplifies your voice but also offers a platform to stay informed about emerging trends, network with industry leaders, and actively contribute to meaningful initiatives that elevate the entire title sector.
ALTA and State Title Associations are a great place to start when looking for a committee to get involved in.
Stay up to date on Federal and State Regulations
Stay up to date on Federal and State Regulations by being aware of key dates and legislative schedules. In Florida, for example, the effective dates of new laws often fall on July 1, October 1, and January 1. To stay ahead of regulatory changes, it’s crucial to stay informed about your state’s legislative session start date. By marking the beginning of these sessions on your calendar, you can proactively track the introduction, progression, and adoption of regulations that could impact the title industry. This foresight ensures you have ample time to understand, prepare for, and adapt to any changes in regulations, enabling your title operations to remain compliant and efficient.
Word of Mouth
Staying deeply connected to the pulse of the title industry involves more than just following news articles; it’s about harnessing the power of word of mouth and engaging in meaningful conversations. LinkedIn, the professional networking platform, offers an excellent avenue to achieve this. By actively connecting with industry peers, thought leaders, and professionals, you can create a dynamic feed of title industry updates and discussions.
Additionally, attending networking events is paramount. Engaging in conversations at events fosters a deeper understanding of current challenges, trends, and innovations, enabling you to gather diverse perspectives and strengthen your grasp of the ever-evolving landscape of the title industry.
Attend Conferences & Tradeshows
ALTA ONE: Hosted by the American Land Title Association (ALTA), ALTA ONE is a premier event for professionals in the title and settlement services industry. It focuses on the latest industry trends, technology, and regulatory updates.
Typically hosted at the beginning of the year, his conference is designed to foster collaborative discussions and brainstorming sessions, propelling the title industry forward.
Typically hosted mid-year, attending ALTA’s Advocacy Summit helps you stay informed about policy developments, advocacy efforts, and their impact on the title industry.
NS3 – National Settlement Services Summit: NS3 is an annual conference that brings together professionals from the real estate transaction industry. It covers a wide range of topics including RESPA, technology, compliance, and business strategies.
State LTA Tradeshows
Keep an eye out for tradeshows organized by your state Land Title Associations (LTAs). Most state LTAs host an annual conference to provide a valuable platform for regional networking, knowledge sharing, and staying updated on state-specific industry dynamics.
Participating in these conferences and tradeshows opens doors to new perspectives, fosters invaluable connections, and equips you with the tools to navigate the evolving landscape of the title industry.
Stay Connected Online
Social media and email newsletters are great ways to stay informed. Dedicating even just an hour of your time during your week to read up on the latest updates, industry insights, and trends can significantly contribute to your knowledge and expertise. Click here to learn more about some great sources for title professionals like yourself to include in your reading routine.
In addition to the sources provided above, you can stay connected with the resources we offer here at PropLogix. You can explore our podcasts, webinar recordings, and blogs on our resources page found here.
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Share your Experience
PropLogix launches an annual State of the Title Industry survey where professionals like yourself can share their experiences and stories to help our industry understand the ever-changing role of the title professional.
This is the sixth year that we are surveying title professionals, and data from the survey is used to create the State of the Title Industry report, which will be made available this fall.
Our 2023 State of the Title Industry Survey is now open
Each day brings new challenges and opportunities to our industry, and being informed isn’t optional—it’s essential. It’s the key to staying ahead of shifts and contributing to positive change. Recent victories like the abandoned Fannie Mae pilot program are just one example of the tangible impact of awareness and action.