Best Practices

COMPLETE VERSION

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A note from our Compliance Officer:

As the Chief Compliance Officer of Federal Title & Escrow Company, I’m pleased to provide you with our company’s policies and procedures in conjunction with the American Land Title Association’s Best Practices.

Federal Title & Escrow Company was founded in 1996 and operates in the District of Columbia, Maryland, and Virginia. Through continual development in technology platforms over the years and our emphasis on transparency and fairness to the consumer, our company has steadily grown to be the largest independent title company in the Washington, D.C. metropolitan area.

Our company currently employs 18 full-time employees. We make training and continuing education a priority, and we strive to ensure that our employees understand and follow all applicable requirements, such as those created by the Dodd-Frank Act.

These Best Practices are just one part of Federal Title & Escrow Company’s commitment to both excellence in customer service and compliance with industry regulations.

If you have any questions about these policies and procedures, please feel free to contact me directly.

Gregory Fudge
202-362-1500
greg@federaltitle.com

Policies and Procedures
1. LICENSING
 
Purpose To document mandated insurance licenses and corporate registrations (as applicable) so that Close It! Title Services Inc., d/b/a Federal Title & Escrow Company (FTE), is able to remain in good standing with each state in which it conducts business.
Scope These policies and procedures are for all of FTE locations including all potential future satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 1.01 Required Licenses and Registrations

FTE is a corporation duly organized in the District of Columbia. FTE is licensed and registered to conduct business in the District of Columbia, Maryland, and Virginia. FTE currently maintains three office locations located at 5335 Wisconsin Avenue, NW, Suite 700, Washington, DC 20015 and 1803 14th Street, NW, Third Floor, Washington, DC 20009 and 2275 Research Boulevard, Suite 500, Rockville, MD 20850.

These aforesaid registrations and licenses are renewed as needed so that FTE remains in good standing in each of these jurisdictions.

On an annual basis, FTE reviews state licensing requirements to ensure that FTE remains in compliance with the requirements. This review is the responsibility of Chief Compliance Officer, Gregory Fudge

FTE and its employees are licensed in accordance with District of Columbia, Maryland, and Virginia requirements.

FTE's License Monitoring Tracking Report lists all of the licenses and registrations held by FTE and its employees and their expiration dates. This report is maintained by Chief Compliance Officer, Gregory Fudge, as a monitoring control and periodically reviewed by Joseph Gentile, President, to help ensure that the appropriate business professionals are licensed and those licenses are renewed when necessary.

The report as well as current copies of the licenses and registrations are maintained and stored in secure electronic format at https://federaltitle.com/licensing

Licensed individuals complete the necessary continuing education requirements including any necessary ethics requirements. Documentation is maintained by the individuals to evidence that the requirements have been met.
 
Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 15, 2013
Amendment Dates N/A
Date for Next Review May. 12, 2020 (Reviewed on Quarterly Basis)
Related References and Links
 
Policies and Procedures
2. ESCROW/TRUST ACCOUNTING
 
Purpose To document that escrow/trust internal controls are in place to meet requirements for the safeguarding of client funds and to minimize the exposure to loss of client funds.
Scope These policies and procedures are for all of Federal Title and Escrow Company (FTE) locations including all potential future satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 2.01 Escrow Trust Account Controls

Escrow funds and operating accounts are separately maintained.

FTE maintains separate escrow trust accounts for each jurisdiction (District of Columbia, Maryland, and Virginia) for real estate and mortgage loan transactions. Escrow Trust Account lists are maintained and stored at https://federaltitle.com/escrow-accounts

The escrow/trust funds that FTE maintains under a fiduciary capacity are not commingled with FTE’s operating funds or an employee or manager’s personal account.

The controls that FTE has in place to prevent commingling are:

  • The file identification number is noted on all deposits into and disbursements out of Escrow Trust Accounts;
  • All bank fees and charges are paid out of the operating account and not from escrowed funds;
  • All third-party vendor charges for recording services are paid out of the operating account and not from escrowed funds;
  • All authorized escrow trust account signatories are prohibited from processing or administering any facet of a personal real estate transaction or a real estate transaction involving an immediate family member.
Escrow/Trust Accounts are prepared with Trial Balances.

FTE maintains a separate escrow account ledger for each escrow file.

Each escrow account ledger includes a detailed description of every receipt and disbursement, including date, amount, payee/payer, and description of item.

On a daily basis through RynohLive™ software, Escrow Trust Accounts are prepared with Trial Balances (“Three-Way Reconciliation”), listing all open escrow balances.  A trial balance report depicting the balance of a particular customer’s funds can be produced for each escrow/trust account at any time. This report depicts all individual customer file balances that do not have a zero balance. On a daily basis through RynohLive™ software and on a monthly basis through Precision Reconciliation Services, Inc., an independent provider of escrow reconciliation and audit compliance service, FTE reconciles the trial balance report to the bank balance and reconciled book balance in order to create the “three way” reconciliation.

Trial balance reports are produced for each escrow/trust account maintained by FTE.

Escrow/Trust Accounts are properly identified.

Accounts are identified as “escrow” or “trust” accounts. Appropriate identification appears on all account-related documentation including bank statements, bank agreements, disbursement checks, and deposit tickets.

Outstanding file balances are documented.

Customer files that continue to hold funds after the settlement date are reviewed periodically to determine if any disbursements have been made.

Management approval by Joseph Gentile, President, is required for any disbursement from an inactive account. An inactive account is defined as any case file that has had no activity for over 180 days. This approval is documented and maintained.

All Escrow/Trust Accounts are maintained in Federally Insured Financial Institutions.

Positive pay, ACH Blocks, and international wire blocks are used.

The “Positive Pay” feature offered by our financial institution is used on escrow trust accounts. Geramifar, Disbursements Coordinator, reviews the positive pay exception report on a daily basis. All positive pay reports are maintained and any exceptions are documented and explained.

ACH blocks and international wire blocks are placed on all escrow/trust accounts to prevent unauthorized users from withdrawing funds from the escrow/trust account.

2.02 Transactions are conducted by authorized employees only.

Authorization Levels

Only those employees whose authority has been defined to authorize bank transactions may do so. Appropriate authorization levels are set by FTE and reviewed for updates annually.

For each escrow trust account, FTE has established a list of employees authorized to approve financial transactions, sign checks, and initiate wire transfers. FTE has also established limits for the authorizations. Authorized Employees lists are maintained and stored at https://federaltitle.com/accounts-info detailing the authorized employees for each account and the limits on the authorizations. These authorizations are documented in agreements with the financial institutions.

The President establishes these authorizations and limitations. The authorizations and limits are reviewed and updated at least annually.

Former employees are immediately deleted as signatories and authorized wire transfer individuals on all bank accounts.

FTE has controls in place to ensure that bank transactions are conducted by authorized employees only. These controls include:

  • The individual(s) designated as the wire transfer administrator to set-up and change online banking permissions has been authorized by management
  • Authorized check signers and wire individuals do not perform the escrow trust account reconciliations
  • All wire transmissions require a dual control of authorized signatories for initiation and processing.

Background Checks

At least every three years, background checks going back five years are obtained for all employees who have access to customer funds.

Before an individual who will have access to escrow trust accounts or funds is hired, a background check is performed by Randisi & Associates.

Every 3 years a background check is performed on existing employees who have access to escrow/trust account funds.

All background checks date back five years.

2.03 Escrow/Trust Accounts are reconciled.

With the support of RynohLive™ software, it is the responsibility of Precision Reconciliation Services, Inc., an independent provider of escrow reconciliation and audit compliance services, to reconcile the escrow/trust accounts.

On a daily basis, a reconciliation of the receipts and disbursements of all escrow trust accounts is performed.

Account receipts and disbursements activity are reconciled daily (two-way) utilizing RynohLive™ software and certified by Precision Reconciliation Services, Inc.

On at least a monthly basis, the three-way reconciliation is performed reconciling the bank statement, check book and Trial Balances.

Daily, the three-way reconciliation between the bank records, book records, and trial balance is performed. This reconciliation is completed by utilizing RynohLive™ software.

The Three-Way reconciliation includes:

  • A summary page showing whether the account is imbalance
  • A list of deposits in transit
  • A list of outstanding checks
  • A trial balance (list of files with balances) as of the period being reconciled
  • A detailed list of items that need to be adjusted or corrected to bring the account in balance (i.e., reconciling items)

FTE policy and procedure is as follows:

  • Deposits that are listed on the deposits in transit as older than five (5) days are researched and resolved immediately
  • Incoming wires that are listed on the deposits in transit report as older than two (2) days are researched and resolved immediately
  • Payoff checks that are outstanding longer than ten (10) days after issuance are researched and resolved immediately
  • Checks payable for recordings that are outstanding longer than thirty (30) days after issuance are researched and resolved immediately
  • Checks for taxes and hazard insurance payments that are outstanding longer than thirty (30) days after issuance are researched and resolved immediately
  • Underwriter premium payments that are outstanding longer than sixty (60) days are researched and resolved immediately
  • All other checks outstanding longer than ninety (90) days after issuance are researched and resolved immediately
  • All reconciling items are researched and resolved immediately after being identified
  • If the reconciliation reveals a shortage, FTE policy is to fund the shortage within five (5) days

The above items are the responsibility of Sanam Geramifar, Disbursements Coordinator. The items are tracked and monitored by RynohLive™ software.

The previous month’s reconciliation is reviewed and:

  • The outstanding checks from the previous month’s reconciliation are checked against the current bank statement to determine whether they were cleared or remain outstanding
  • The outstanding deposits from the previous month’s reconciliation are checked against the current bank statement to determine whether they were cleared or remain outstanding

Segregation of duties is in place to help ensure the reliability of the reconciliation and reconciliations are conducted by someone other than those with signing authority.

Escrow/trust account reconciliations are performed by Precision Reconciliation Services, Inc. (PRS), an independent provider of escrow reconciliation and audit compliance service. PRS does not have check signing authority or the capability/authority to perform wire transfer transactions.

The escrow/trust bank statement is delivered to and opened by the person performing the reconciliations.

Results of the reconciliation are reviewed by management and are accessible electronically by FTE’s underwriter.

Each month, escrow/trust account reconciliations are reviewed by FTE management within one (1) day of their completion, and evidence of the review is documented. The escrow/trust account reconciliations are available to the title insurance underwriter at any time requested.

Management periodically reviews cancelled checks and disbursement journals for unusual items.

2.04 Ongoing training is conducted for employees in management of escrow funds and escrow accounting.

Each employee that has access to FTE escrow/trust accounts is provided a copy of these policies and procedures on escrow trust accounting when they are hired. When these policies are updated, each employee that has access to FTE escrow/trust accounts is informed of the update and provided a copy.

FTE provides escrow/trust account training on an ongoing basis to individuals handling customer funds and conducting escrow/trust account reconciliations. This training is conducted by Precision Reconciliation Services, Inc. The training includes the following topics:

  • Procedures for handling receipts, disbursements, and wires
  • Procedures for the handling of check stock
  • Authorization of wires and approval of bank transactions
  • Procedures for making deposits
  • Procedures for reconciling the bank statement to the checkbook and the trial balance
  • Procedures for the resolution and approval of reconciling items

All training and continuing education is tracked and maintained by Chief Compliance Officer, Gregory Fudge.

 

Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 1, 2013
Amendment Dates N/A
Date for Next Review May 12, 2020 (Reviewed on a Quarterly Basis)
Related References and Links

 

Policies and Procedures
3. PRIVACY AND INFORMATION SECURITY
 
Purpose To document a privacy and information security program (policies and procedures) to help ensure that Close It! Title Services Inc., d/b/a Federal Title & Escrow Company (FTE) maintains written protocols for the protection of data and Non-public Personal Information (NPI).
Scope These policies and procedures are for all of FTE locations including all satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 3.01 Information Security Program Management

FTE recognizes the importance of protecting NPI. NPI is defined as: Personally identifiable data such as information provided by a customer on a form or application, information about a customer’s transactions, or any other information about a customer that is otherwise unavailable to the general public. NPI includes first name or first initial and last name coupled with any of the following: Social Security Number, driver’s license number, state-issued ID number, credit card number, debit card number, or other financial account numbers.

FTE’s has put in place a formal Information Security and Privacy Policy and Program (“Policy”) that was approved by management and is set forth in these Policies and Procedures.

FTE has designated Gregory Fudge, Chief Compliance Officer, as its Privacy Officer. The Privacy Officer is responsible for coordinating and overseeing the Policy.

As part of this Policy, FTE maintains a Privacy Policy that is posted on FTE’s website (https://federaltitle.com/privacy-policy). A link to the Privacy Policy is e-mailed to each buyer, seller, and real estate agent for each settlement order processed.

Additional information about FTE’s Policy is available to consumers and customers upon request.

Employees are to immediately report Policy violations to the Privacy Officer or the appropriate supervisor.

Limited exceptions from the Policy may be granted by the Privacy Officer, who has the authority to make such exceptions on a case-by-case. The Privacy Officer maintains records of any such exceptions granted.

On a quarterly basis, FTE reviews the Policy and makes updates to reflect changes in operations, legal and regulatory requirements, industry best practices, and available technology. All changes to the Policy are recorded and tracked.

FTE reviews employee compliance with the Policy on an ongoing basis. The Chief Compliance Officer regularly audits NPI processes and files containing NPI.

Employees and temporary contract personnel who violate the Policy are subject to disciplinary action, including termination.

3.02 Risk Identification and Assessment

On a regular basis, FTE reviews its operations to identify and assess external and internal risks to the NPI that FTE stores. This assessment reviews the types of NPI that FTE stores, the location of that information, and how that information can be assessed by authorized and unauthorized users.

This risk assessment reviews internal and external risk and their impact and likelihood. It is performed on all locations, systems, and methods used for storing, processing, transmitting, and disposing of NPI. Areas reviewed include but are not limited to: employee training and management, information systems (including network and software design); information processing, storage, and disposal; detecting, preventing, and responding to attacks, intrusions, or other system failures; and the unique risks presented by employee access to files outside of the office.

The risk assessment identifies the key controls that FTE has in place to prevent improper access to NPI contained on FTE’s computer network. On an annual basis, a third party vendor tests these controls, with a focus on the firewalls. Management reviews the results of this testing. Any vulnerabilities are noted and, where possible, changes made to FTE systems in order to reduce the risk. Where risks are identified that cannot currently be addressed, these risks are noted so that they can be re-visited no later than at the next annual assessment.

All risk mitigation activities are monitored and tracked by the Privacy Officer.

3.03 Employee Training, Management, and Responsibilities

New employees and temporary contract personnel are provided a copy of the Policy as part of the hiring process and are required to sign an attestation that they have read and understand the Policy and the potential consequences of non-compliance, prior to accessing NPI. It is the responsibility of the Privacy Officer to help ensure that FTE has received all employee acknowledgements.

New employees and temporary contract personnel are informed of their responsibilities under the Policy as well as other applicable security policies and procedures, and the potential consequences of non-compliance.

New employees and temporary contract personnel certify, in writing, their acceptance of the Information Technology Policy and are required to recertify this policy annually.

New employees are provided training during orientation regarding the importance of information security and NPI that includes, but is not limited to: the proper use of computer information and passwords, control information and procedures to prevent NPI disclosure to unauthorized parties, and methods for proper disposal of documents containing NPI. Temporary contract personnel are provided training regarding the identification and protection of NPI to protect against disclosure to unauthorized parties. This training is repeated annually for each employee and temporary contract worker. Successful completion and refresh of training is tracked and documented. Training activities and documents are modified, as circumstances dictate, based on the risks perceived, scope and types of activities, and access to NPI.

3.04 Information Security

Physical Security of NPI

FTE has protections in place to prevent unauthorized access to hard copy files and systems storing or processing NPI. Physical security requirements are reviewed annually, and updates are made to the protections, as needed. FTE accounts for contractual and legal requirements in formulating these protections.

  • FTE’s offices are secure.
FTE’s offices are located in a secure office building. During business hours, visitors to the office building must sign in at the lobby desk.

FTE has installed a video camera to monitor the front door to its offices. The camera provides live monitoring and also records. These recordings are saved for approximately two weeks.

Key fob access is required to access FTE offices outside of business hours. Key fob access rights are revoked upon employment termination.

  • Access to NPI is restricted to authorized employees who have undergone background checks at hiring.

FTE utilizes Randisi & Associates, Inc. for background checks for hiring new employees.

FTE limits access to NPI to authorized principals and employees who have undergone a formal background check.

In order to restrict access to NPI to authorized employees, FTE utilizes password protection on all systems including network, database, and individual applications.

Access to NPI is further limited to ensure that individuals with a legitimate business purpose obtain only the minimum access necessary to perform specific job functions.

Periodic reviews are conducted of NPI user-access rights, with more frequent reviews occurring for those with privileged access rights.

Access privileges are immediately reviewed and adjusted (revoked, expanded, or decreased) anytime an employee is terminated or changes job functions and anytime a contractor or third party severs its relationship with the Company.

  • Use of removable media is controlled.

Removable media devices, including but not limited to external hard drives, compact discs, magnetic tapes and USB/flash drives, are issued by FTE with the approval of the Privacy Officer. The use of removable media devices is prohibited unless the Privacy Officer has authorized such use. Removable media is kept in a secure area when not in use, and an inventory of the media is maintained.

FTE employees are not permitted to store NPI on removable media.

  • Only secure delivery methods are used when transmitting NPI.

Hardcopy NPI that is transmitted outside FTE is done so using fastened envelopes sent by secured delivery methods. FTE transmits hardcopy documents to lenders by Federal Express or courier. FTE transmits hardcopy documents to customers by Federal Express.

  • FTE has a Clean Desk Policy.

FTE has a "Clean Desk" policy to ensure that files, documents, and computer files containing NPI are stored in a secure manner when an employee leaves their workstation for the day or an extended period of time. Under this policy, paper files other than the one currently being worked on are to be closed. At the end of the day, and/or if the employee is leaving their workstation for an hour or longer, the employee is required to lock files containing NPI in a desk, file cabinet, or secure room.

When traveling, employees may not leave hard copy files containing NPI in a location that is accessible to others, such as an unlocked vehicle or a hotel room.

  • Security of Computer Hardware

Employees are required to immediately report to the Privacy Officer the loss or theft of a laptop or other supported media device.

Employees, contractors, and other third parties are required to return hardware and software assigned to them upon their separation or termination.

Network Security of NPI

  • Access to FTE information technology is securely maintained.

Dataprise (DP) is FTE’s outside IT provider and Network Administrator. DP hosts all but one of FTE’s file servers (see information re Workflow, below); hosts its e-mail; provides day-to-day computer support to FTE employees; and is responsible for server and software maintenance.

FTE utilizes a software called Workflow to manage all customer files. Data and documents pertaining to settlement transactions are stored in Workflow. This includes NPI. Workflow data is stored on a separate server.

Veris Consulting (VC) hosts the Workflow server and provides server and software maintenance for this server.

At the direction of the Privacy Officer, DP and VC grant appropriate access to FTE’s various computer technology applications.

FTE’s file servers are housed in secure facilities. One of FTE’s servers is located in a locked room located in FTE’s offices. The other servers (including that containing the Workflow data) are located in secure, off-site server facilities. Access to the servers is restricted only to individuals whose access is necessary to perform legitimate business functions.

FTE’s computer network utilizes up-to-date anti-virus, anti-spyware and data encryption software applications. DP and VC are responsible for such software maintenance. Anti-virus software is installed and functioning on servers storing or processing NPI and on user workstations/laptops. Anti-virus signature files are kept up to date. The anti-virus product is configured to scan files when they are accessed/opened, including external media. Controls exist to prevent a user (even if they have administrative rights to their desktop) from disabling anti-virus software. All FTE employees sign a policy agreeing that they will not disable anti-virus software.

DP and VC update systems on a regular basis by, among other things, implementing patches or other software fixes designed to mitigate known security flaws.

Firewalls are used to protect all network entry points.

A network vulnerability check is performed on a monthly basis. Vulnerability check results are documented and kept on file. Discovered vulnerabilities are remediated promptly, with consideration given to the vulnerability’s severity. Vulnerability mitigation efforts are recorded and tracked.

FTE and/or DP test all new technology and updates prior to implementing them, in order to determine whether they meet business needs. System modifications (hardware and software) are consistent with the Policy. System modifications are documented, tested, and approved in accordance with previously outlined business strategies and procedures.

Each employee must have a user ID and password in order to access FTE’s information technology computers and network.

Passwords must be at least eight (8) or more alphanumeric and special characters. Passwords should not contain common 1 2 words, user ID, or first/last name. The system locks out a user after five (5) invalid login attempts. FTE utilizes a computer application that requires employees to change passwords every ninety (90) days. Users are prevented from using any of their prior three (3) passwords.

Access logging is enabled for FTE’s critical application and data storage servers. Access logging captures important user events such as system logon and logoff. Log files are reviewed on a regular basis to detect security breaches. System audit logs are retained in order to assist in access control monitoring and/or investigations.

Access to Workflow is restricted to authorized individuals. Each Workflow user has a unique user ID and an individual password. The password policy above also applies to Workflow.

Workflow is configured to record the user ID of those who access this system.

Employees are required to protect unattended computer equipment by securing or locking the device before leaving it unattended. Also, FTE’s computers run a “screen timeout” application causing automatic system sign off when the system detects no activity for a period of 15 minutes. A password must be re-entered by the user before the session may be resumed.

Workflow also contains a 30-minute timeout feature. A user ID and password must be re-entered by the user before the session may be resumed.

Wireless controls require user authentication to obtain network access via a wireless device. FTE has two separate wireless networks, one for internal access and one for visitors to FTE’s offices.

FTE employees are prohibited from storing NPI on their computer hard drives or personal devices.

“Separation of Duties” is enforced in systems containing NPI, so that users with the ability to add, modify, and remove user access are not assigned to perform business transactions within the system.

  • FTE has guidelines for the appropriate use of FTE information technology.

FTE has an Information Technology Policy, which, among other things, specifies the ways and circumstances under which employees may use FTE-owned technology.

FTE prohibits employees from installing unauthorized software on FTE computers. Prior to installing any software on an FTE computer, the employee must obtain the permission of the Privacy Officer.

Remote user access to networks is permitted only for legitimate business purposes. User remote access is revoked when it is no longer needed.

FTE provides a computer station for use by visitors to its offices. This computer is not connected to the FTE network and is in a well-trafficked, public area.

  • FTE ensures secure collection and transmission of NPI.

Security controls for physical media are used to prevent unauthorized access, misuse, or corruption of NPI while in transit.

NPI information that is collected by FTE via Workflow is encrypted in transit as well as when it resides on the server. Softcopy NPI that is transmitted by FTE (such as a PDF of closing documents) is sent via secured/encrypted e-mail.

3.05 Retention and Destruction of NPI

All NPI data is disposed of in a manner that protects against unauthorized access to or use of the information.

Under FTE’s record retention and disposal policy, all hard copy files are scanned in as soon as the transaction has closed, all disbursements have been made, and the file is no longer active. Once the file has been scanned in, the hard copy is destroyed by shredding (see below). The computer file is retained in an encrypted form on a secure computer server.

FTE has hired an outside vendor, Patriot Shredding (PS), to handle its shredding. PS provides secure shredding bins to FTE and collects and shreds the contents of these bins on a regular basis. PS provides disposal certificates to FTE.

Hard drives that are no longer in use are stored in the secure server room located in FTE’s offices.

When disposing of computers and portable storage devices, FTE uses a software application to erase/wipe clean the device in order to remove NPI. Hard drives/tapes/removable media are destroyed through appropriate measures when equipment containing NPI is no longer usable. This includes physically destroying hard drives and, for other removable media such as disks and CD-ROMs, scratching the surfaces or breaking into pieces.

Where electronic media disposal services are provided by a third party, media destruction service level agreements are included in the contract, and the vendor is required to submit a disposal certificate.

3.06 Oversight of Security Practices of Independent Service Providers Who Have Access to NPI

When FTE provides access to NPI to service providers or other third parties, it oversees the provider to ensure compliance with FTE’s Policy.

FTE selects and retains only those service providers who are capable of appropriately safeguarding NPI. FTE conducts reasonable due diligence on third-party service providers prior to hiring to determine their ability to provide the contracted service and meet privacy requirements. The due diligence includes a review of the third-party service provider’s information security practices, financial resources, and references. FTE may request to review the service provider’s outside audits or Statement on Standards for Attestation Engagements (if any).

Service providers (and subcontractors) are required to undergo a background investigation or provide evidentiary support of a successful background investigation.

FTE provides a copy of its Policy to all service providers who receive NPI.

FTE designates an employee to coordinate with each service provider that has access to NPI. This designated employee monitors the service provider’s performance on a regular basis to determine whether the provider is continuing to provide the contracted service and meet privacy requirements.

FTE’s contracts with service providers include provisions establishing appropriate performance and privacy requirements with appropriate remedies when FTE discovers that the provider is not meeting the targets.

Service providers (and subcontractors) are required to implement and maintain appropriate information security standards for NPI. Written assurances are obtained from each third-party service provider regarding the handling of NPI.

Service providers (and subcontractors) are required to provide proof of insurance.

Depending on the nature and level of services they provide, they may also be required to provide additional written documentation such as an Acceptable Use Policy, a Password Policy; a Business Continuity and Disaster Recovery Policy; procedures for monitoring and detecting attacks into information systems; an Incident Response Plan or procedures; Information Classification, Handling, and Destruction policy or procedures; Log Review Policy or procedures; and Change Management procedures

Service providers (and subcontractors) are required to provide immediate notification to FTE following the discovery of any breach or suspected breach involving NPI.

Service providers who violate the Policy are subject to termination.

3.07 Notification of Security Breaches to Customers and Law Enforcement.

FTE, DP, and VC monitor systems containing NPI in order to detect attacks/intrusions. Attacks/intrusions detected by DP and VC are reported to FTE.

FTE reports the intentional and unintentional release or breach of NPI in accordance with applicable legal and regulatory requirements. If security breaches occur, notification is provided to customers and law enforcement in accordance with FTE’s Security Incident Response Plan.

This plan has been distributed to the appropriate employees and service providers. The plan describes how actual and suspected data-breach incidents are to be reported, investigated, and handled. As part of the plan, there are incident-management procedures to collect incident-related data when a breach occurs.

Security incidents are monitored and internally escalated to management as needed.

3.08 Business Continuity and Disaster Management Plan

FTE has a Business Continuity and Disaster Recovery Plan to help ensure adequate back-up, recovery and business continuation procedures.  This plan covers all critical business processes and addresses the following:

  • the timely resumption from and, if possible, prevention of interruptions of business activities and processes caused by information-system failure;
  • protection and recovery of physical facilities and equipment from loss, damage, theft, or compromise; and
  • recovery of electronic data from loss, damage, theft, or compromise.

The plan is distributed to all individuals who would require it in the case of an emergency and includes:

  • detailed, up-to-date contact information for key individuals required for executing the plans;
  • a schedule of principle tasks to be completed, responsibilities for each task, and a list of services to be recovered; and
  • a prioritization of the services to be recovered based on importance.

The plan is periodically tested, and the results are documented.

The plan accounts for the loss of critical vendors.

FTE also maintains insurance coverage (commercial insurance) for such circumstances.

The disaster management plan is reviewed on an annual basis by the Privacy Officer and updated as appropriate.

 

Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 15, 2013
Amendment Dates N/A
Date for Next Review May 12, 2020 (Reviewed on a Quarterly Basis)
Related References and Links Internal Company Policies:

 
Policies and Procedures
4. Document Recordation / Title & Settlement Pricing
 
Purpose Document recordation and rate/pricing procedures and policies to assist Federal Title and Escrow Company (FTE) in complying with applicable contractual obligations and Federal and State Consumer Financial Laws.
Scope These policies and procedures are for all of FTE locations including all potential future satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 4.01 Recording Procedures

For the majority of transactions (approximately 90% of recordings), FTE utilizes E*recording software and documents are submitted for recordation within 3-4 hours of the completion of a closing transaction. In all other transactions, documents are submitted or shipped for recording to the county recorder (or equivalent) or the person or entity responsible for recording no later than two (2) business days of settlement.

Prior to submitting documents for recordation, FTE quality checks each document to ensure that it is in recordable form and that all instruments contain the proper jurisdictional-specific data requirements.

Prior to submitting documents for recordation, FTE confirms the correct amount of recording fees to ensure that the documents are not rejected by the recorder for insufficient payment of fees.

FTE tracks shipments of documents for recording.

When E*recording is not utilized, documents are shipped for recording via either courier or Federal Express. Courier is used for Montgomery County, Maryland when E*recording is not used, and it is used for all Virginia recordings. The courier sends a confirmation of delivery to FTE. Federal Express provides tracking information to FTE.

FTE ensures timely responses to recording rejections in order to address rejected recordings and prevent unnecessary delay.

After documents are sent for recordation, FTE maintains contact with the appropriate personnel and parties to resolve any problems. FTE responds to issues relating to rejected recordings as soon as possible after learning of the issue. All rejected and cured documents are resubmitted for recording within thirty (30) days of correction or rejection, whichever occurs later.

FTE verifies that recordation actually occurred and maintains a record of the recording information.

FTE verifies that recordation actually occurred and maintains a record of the recording information for each document. After documents are recorded, an image, or electronic copy, of each recorded instrument/document (containing the recordation number and date of recording) is uploaded to the respective electronic file within FTE’s proprietary WorkFlow management system.

Additionally, a universal electronic spreadsheet of all instrument/document recordings, updated monthly, is stored within FTE’s proprietary WorkFlow management system and is accessible by authorized staff members,

4.02 Pricing Procedures

FTE utilizes rate manuals and fully transparent instant, online calculators, as appropriate, to help ensure correct fees are being charged for title insurance policy premiums, state-specific fees and endorsements.

Employees are aware of contractual and statutory rate and pricing requirements. Title insurance policy premiums, state-specific fees and endorsements are calculated in accordance with the title insurance underwriter or regulatory or promulgated rate manual through FTE’s software and/or through the use of title insurance underwriter rate calculators.

FTE verifies that fee calculations are correct before they are charged to the customer. Prior to, and at the point of transaction order, FTE delivers, via email, a guaranteed rate/fee quote to all prospective consumers. All fees and charges are recorded in the respective file.

FTE ensures discounted rates are calculated and charged when appropriate, including refinance or reissue rates.

FTE reviews each order to determine whether any rate discounts, such as refinance or reissue rate, are applicable. Where applicable, the discount is calculated in accordance with the requirements in the rate manual.

FTE quality checks files after settlement to ensure consumers were charged the company’s established rates.

Throughout the year a representative sample of closed files is subject to a post-closing review by Gregory Fudge, Chief Compliance Officer, to confirm that fees were correctly charged.

FTE provides timely refunds to customers when an overpayment is detected.

When an overpayment is detected, FTE immediately provides a refund to the consumer. On average, FTE provides such refunds within 3 business days following discovery.

4.03 FTE Training

FTE provides a copy of these recording and pricing policies to all new employees. FTE provides any updates to these policies to all employees.

FTE trains its staff on its recording and pricing policies. This training addresses the proper handling of documents for recording, the calculation of recording and transfer fees, and the proper determination of fees for services.

 
Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 1, 2013
Amendment Dates N/A
Date for Next Review May 12, 202 (Reviewed on a Quarterly Basis)
Related References and Links
  • Recording Log is maintained and stored at FTE’s proprietary WorkFlow management system (URL and temporary log-in credentials provided upon request/demand to mortgage/banking institutions and FTE’s title insurance underwriters for audit compliance)
  • Rate manuals are maintained and stored electronically both through the website (federaltitle.com) consumer interface quote feature and within FTE’s proprietary WorkFlow management system
  • Post-Closing reviews are maintained and stored electronically within FTE’s proprietary WorkFlow management system
 
Policies and Procedures
5. Title Policy Production/Premium Remittance
 
Purpose Maintain written procedures related to title policy production, delivery, reporting and premium remittance to the insurer to help ensure Federal Title and Escrow Company (FTE) meets its legal and contractual obligations.
Scope These policies and procedures are for all of FTE locations including all potential future satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 5.01 Title Policy Production and Delivery.

Owner’s title policies are issued and delivered to homebuyers on the same day of closing in both hard copy and encrypted/secure electronic form.

Lender’s title policies are issued on the same day of closing and delivered to the lender in hard copy form within 3 business days from the date of closing.

FTE ensures that all title policies are issued and delivered no later than thirty (30) days of the date of settlement if terms and conditions of the title insurance commitment have been met, and if the terms and conditions have not been met, within thirty (30) days from the date on which they have been met.

For purchase/re-sale transactions, FTE’s practice is to issue the lender and homebuyer’s title policies at settlement. A hard copy of the homebuyer’s policy is hand-delivered to the homebuyer at the settlement table and an electronic image is delivered via an encrypted/secure email. A hard copy of the lender’s policy is delivered, via overnight courier, to the lender along with the lender’s closing package within one (1) business day from the date of closing. In the rare case where issuance at settlement is not possible, FTE’s practice is to issue and deliver the title policies within seven (7) days after the date of settlement.

For refinance transactions, FTE’s practice is to issue and deliver the lender title policy immediately upon disbursement of the file.

All issued title policies are imaged and uploaded to the respective electronic file within FTE’s proprietary WorkFlow management system.

5.02 Policy Reporting

Policies are reported (including a copy of the policy) to the underwriter no later than by the last day of the month following the month in which the insured transaction was settled.

Policy reporting duties are the responsibility of Sanam Geramifar, Disbursements Coordinator.

Utilizing E*jackets software, a format and platform approved by the insurer, FTE reports all title insurance policies to the insurer and delivers a copy electronically immediately upon the completion and disbursement of each closing transaction. FTE’s policies ensure that policies are reported in accordance with these requirements.

Through the above-referenced software, FTE maintains a policy register, listing all policies issued by FTE.

5.03 Premium Remittance

Premiums are reported to the underwriter no later than by the last day of the month following the month in which the insured transaction was settled.

Premium remittance duties are the responsibility of Sanam Geramifar, Disbursements Coordinator.

Utilizing E*remittance software, a format and platform approved by the insurer, FTE reports and remits all title insurance premiums to the insurer and delivers a copy electronically immediately upon the completion and disbursement of each closing transaction. FTE’s policies ensure that remittances are reported in accordance with these requirements.

Through the above-referenced software, FTE maintains a register of all remitted premiums, detailing all premiums remitted by FTE.

FTE’s policies ensure that premiums are remitted in accordance with these requirements.

FTE reviews each file to ensure that it collected and remitted the correct amount of the premium to the underwriter given the policy data reported to the underwriter.

FTE reconciles the premiums and amounts charged to its customers with the premiums and fees remitted to the insurer.

 
Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 1, 2013
Amendment Dates N/A
Date for Next Review May 12, 2020 (Reviewed on a Quarterly Basis)
Related References and Links
  • Policy Register is maintained and stored through E*jacket and E*remittance software.
  • Policy Inventory is maintained and stored through E*jacket and E*remittance software.
 
Policies and Procedures
6. Professional Liability Insurance and Fidelity Coverage
 
Purpose To document procedures for review of professional liability coverage (errors and omissions insurance, fidelity and surety bond) to ensure that Federal Title and Escrow Company (FTE)  has the financial capacity to cover its professional services obligations.
Scope These policies and procedures are for all of FTE locations including all potential future satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 6.01 Professional Liability Insurance and Fidelity Coverage

FTE’s existing insurance coverages, including the type of coverage (professional liability/errors and omissions, fidelity bond, surety), the insurer, and amount of coverage is maintained and stored in electronic format at https://federaltitle.com/insurances. Gregory Fudge, Chief Compliance Officer, is responsible for tracking and renewing each of these insurance coverages.

FTE furnishes copies of all the insurance policies to its title underwriter(s), including all endorsements and proof of payment of the current premium.

On an annual basis, FTE reviews the legal requirements for minimum insurance coverage for the jurisdictions in which it does business (the District of Columbia, Maryland, and Virginia) to confirm that its insurance coverages meet or exceed these requirements.

On an annual basis, FTE reviews the insurance coverages required by its insurance underwriting agreements to confirm that its insurance coverages meet or exceed these requirements.

FTE’s management periodically reviews its errors and omissions insurance policies to determine whether they cover all of the professional services offered by FTE.

FTE periodically evaluates whether its professional liability, fidelity bond, and surety coverage is appropriate based on applicable risk factors, such as scope of operations, volume of transactions, number of employees, and internal controls and procedures.

 
Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 1, 2013
Amendment Dates N/A
Date for Next Review May 12, 2020 (Reviewed on a Quarterly Basis)
Related References and Links
 
Policies and Procedures
7. Consumer Complaints
 
Purpose To establish a process for receiving and addressing consumer complaints to help ensure that Federal Title and Escrow Company (FTE) addresses any instances of poor service or non-compliance.
Scope These policies and procedures are for all of FTE locations including all potential future satellite offices. These procedures are to be followed by all employees and independent contractors where applicable.
Procedures 7.01 Consumer Complaint Intake, Documentation, and Tracking

FTE has a written policy for accepting and administering consumer complaints which can be found in electronic format at https://federaltitle.com/submission/feedback

This policy is made available to consumers on FTE’s website.

FTE defines a consumer complaint as one in which a party to a closing transaction reports any type of dissatisfaction with services or products provided by FTE, or its agents.

FTE’s consumer complaint policy is reviewed on an annual basis and revisions made as needed. On a regular basis, FTE reviews its handling of consumer complaints to ensure that it is handing the complaints in accordance with the policy.

FTE has a standard consumer complaint form that identifies information that connects the complaint to a specific transaction.

FTE has a standard consumer complaint intake form, which hosted at https://federaltitle.com/submission/feedback. FTE uses this form to record any consumer complaints. This form includes the following information:

  • the date the complaint was made;
  • the contact information of the consumer making the complaint;
  • information allowing FTE to tie the complaint to a specific closing and/or file/policy;
  • a brief description of the complaint;
  • a brief description of the resolution requested by the consumer;
  • the amount of fees associated with the transaction; and
  • who at FTE is responsible for investigating the complaint.
The form allows FTE to track the resolution of the complaint.

As circumstances warrant, supporting documents are attached to the complaint form to provide additional information, including communications, facts, or specific details.

Complaint records are retained for a period not to exceed ten (10) years.

FTE has a single point of contact for consumer complaints.

FTE has designated Gregory Fudge, Chief Compliance Officer, as the single point of contact at FTE for consumer complaints.

FTE has procedures for forwarding complaints to appropriate personnel.

The nature of the complaint determines the appropriate personnel at FTE to which the complaint will be forwarded. Complaints are escalated as necessary.

7.02 Reporting

FTE maintains a log of consumer complaints that includes whether and how the complaint was resolved.

FTE maintains a Consumer Complaint Log with information on all consumer complaints. This log tracks the status of all open complaints. It records how (e.g., call, e-mail, verbal, written) and when each complaint has been resolved.

FTE management reviews the status of all open complaints every five (5) business days.

In cases (if any) where FTE has agreements with lenders requiring FTE to permit lenders to review consumer complaints, FTE allows the lenders to see only those complaints relating to the lender’s loans.

7.03 FTE Complaint Analysis

On a regular basis, FTE analyzes the complaints it has received in order to determine whether changes in its operations and procedures are warranted. This analysis is performed by Gregory Fudge, Chief Compliance Officer, and involves a review of the frequency of the type of complaint and the types of risks (legal, regulatory, reputation, financial) the complaint presents to the company.

Upon request, FTE provides its complaint analyses to lenders.

7.04 FTE Employee Training

FTE provides a copy this policy to each new employee. FTE provides all of its employees with any updates to the policy.

FTE provides training to employees to ensure that consumer complaints are handled in accordance with the consumer complaint policy.

 
Contact Officer Gregory Fudge, Chief Compliance Officer
Date Approved November 1, 2013
Date of Commencement November 1, 2013
Amendment Dates N/A
Date for Next Review May 12, 2020 (Reviewed on a Quarterly Basis)
Related References and Links

Federal Title & Escrow Company

For nearly 25 years, our independently owned title company has leveraged technology to streamline the closing process, providing top-notch service at a competitive price for buyers, sellers, agents and lenders across the District of Columbia, Maryland and Virginia.

  • We are proud pioneers of creating a better closing experience for buyers, sellers, agent and lenders.
  • Our instant REAL Credit™ for ordering settlement services online has saved our neighbors upward of $18 million to date.
  • Our paperless, custom-built closing workflow software allows us to proactively keep customers in the know and avoid settlement surprises.
  • Our free mobile app Close It!™ helps homebuyers and their agents better understand the complete cost to be paid at closing.
    • Often imitated but never replicated – we set the bar other title companies aspire to reach.

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