Skip to main content

We Need Uniform Certification of Settlement Professionals

Andrew Liput
Jul 25, 2016

Now that the settlement industry has come to terms with the Consumer Financial Protection Bureau’s (CFPB) third-party service provider directives (I admit, there are a few holdouts), the industry needs to take the management of settlement agent risk to the next logical step. There is a need for the uniform certification of settlement professionals.

When I began to research and consider the issue of risk to banks and consumers at the closing table way back in 2002, the biggest issue that struck me was the lack of uniformity among those entrusted with funds and documents. This problem stemmed from the fact that those empowered to manage the settlement of a residential mortgage loan closing were very diverse. The group included lawyers, title and escrow agents, notaries, closers and real estate agents. Each of these disciplines had (and still does have) its own licensing, insurance, training, continuing education, and professional disciplinary process. Some, like lawyers, are highly skilled, trained and supervised, yet because closings are often conducted by real estate attorneys, they include people who know a lot about contracts but not much about mortgages. Others, such as notaries, can face either a very stringent licensing process or merely file an application and pay a fee to gain access to a consumer’s records, closing table checks, and even a consumer’s living room. Licensed title producers are highly skilled, independent contractors they send to a closing may not be.

In the absence of a uniform set of expectations, standards and practices, the lending community has for years received varying degrees of professionalism in services, and their consumer clients have likewise observed uneven closing table experiences. So how do we address the matter?

I believe that the various associations, such as the American Bar Association (ABA), American Land Title Association (ALTA), Independent Escrow Association and National Notary Association (NNA) should come together to create a multi-disciplinary Certified Closing Professional Program that takes into consideration the foundations of knowledge, training, experience and education relevant to each group. The program should cover “Mortgage Lending 101,” how to spot, prevent and report mortgage fraud, preparing the closing disclosure, handling document review and closing table questions by consumers, typical closing table issues and problems and how to address them, data privacy and security expectations, and ethical and professional communications with borrowers, among other topics. The designation would require ongoing education and an annual re-certification. Recipients would carry a photo ID card with their identification information and a unique identifier.

Some of these ideas have been addressed by ALTA, but to be successful, a program must cross all disciplines and establish uniform expectations for lenders and consumers. Now that we all agree that settlement agents should be vetted for risk, the time is now to address their performance and professionalism.



Andrew Liput is CEO of Secure Insight, a risk analytics firm offering vendor management services addressing settlement agent risk. He can be reached by e-mail at ALiput@SecureSettlements.com.



This article originally appeared in the June 2016 print edition of National Mortgage Professional Magazine.

Published
Jul 25, 2016
Mortgage Forbearance Changes Create Challenges for Servicers

65% Of All Plans Would Expire By The End of 2021

Regulation and Compliance
Aug 02, 2021
CFPB Reports Trends In Financial Assistance

The latest developments from this study reveal that most consumers have exited the payment assistance they received at the start of the pandemic.

Analysis and Data
Jul 14, 2021
CFPB Orders GreenSky To Refund $9M In Unauthorized Loans

The consent order requires GreenSky to refund or cancel up to $9 million in loans for the customers harmed by this illegal conduct.

Regulation and Compliance
Jul 13, 2021
CFPB Warns Landlords And Consumer Reporting Agencies To Report Accurate Rental Information

Inaccurate rental or eviction information can unfairly block families and individuals from safe, affordable housing.

Regulation and Compliance
Jul 01, 2021
FHFA Mandates Quarterly Fair Lending Reports

FHFA issued orders for all enterprises to submit quarterly Fair Lending Reports with data and information to improve the FHFA’s capabilities. 

Regulation and Compliance
Jul 01, 2021
FHFA Follows CFPB To Protect Borrowers Once COVID-19 Foreclosure And Eviction Moratoriums End

The Federal Housing Finance Agency made it clear that Fannie Mae and Freddie Mac servicers are not permitted to make first notice or filing for foreclosure that would be prohibited by the CFPB protections for borrowers affected by COVID-19.

Regulation and Compliance
Jun 30, 2021