Due Diligence and Ongoing Monitoring

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  • 1.  Title Insurer Oversight

    This message was posted by a user wishing to remain anonymous
    Posted 02-16-2021 04:06 PM
    This message was posted by a user wishing to remain anonymous

    As a lender we conduct both initial and ongoing due diligence for the Title Companies and Attorneys that of whom we are engaging with to conduct settlements. Within the past few years, there has been the question presented if we should also be conducting a form of due diligence on the Title Insurers.

    I am looking for feedback from others and if you conduct due diligence on Title Insurers. If so,  what is it you require from a due diligence perspective when it comes to overseeing them?

    Thanks!


  • 2.  RE: Title Insurer Oversight

    Posted 02-18-2021 03:38 PM
    ​Hello,

    RIght now, this is not scoped in our Vendor Mgmt Program, however, proactively taken some action after reviewing the FNMA Seller Guide as it provides Title Insurer Requirements.

    One thing we have done is ensure we pull a Demotech for our title insurers.  We also have attempted to collect a level of due diligence from the Title Insurer about their agent program much like a vendor management program to our other vendors.  This allows us to better understand their requirements, cycle for audit of their agents.  We also send them a list of title companies we have identified as agents for a annual validation.  Yes, we can spend the time to manual verify each but most are responsive this bulk method as well.  As their technology capabilities improve, I would like to seen a bulk import or export option from their agent portals (First Am, etc.) that we use for CPL validation.

    The larger the Title insurer the more compliant they are to our request, especially those who other contracted services they are providing.

    Some will say this is confidential, but we are not asking for full reports simply a summary stating last evaluation. If findings were identified, were they remediated and the vendor remained in active agent status.

    Link to Fanniemae -   B7-2-02, Title Insurer Requirements (06/05/2019)
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    B7-2-02, Title Insurer Requirements (06/05/2019)
    Introduction This topic contains the following: A title insurer must be: duly authorized and licensed, as required, to issue title insurance in the state where the property is located; and further evaluated in accordance with the lender's procedures for title insurer approval, which may include factors such as an acceptable rating from a rating agency, financial strength of the title insurer, adequate reserves, record related to satisfactory title claim resolution, or strength of a reinsurance arrangement subject to the guidelines below.
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    Rachel Kenyon
    Division Third Party Risk Management Senior Analyst
    CRVPM IV
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