NMP - September 2016 - 58

✒ If an Insured Closing Letter Is Not Insurance, What Is It? By Andrew Liput A SEPTEMBER 2016 n National Mortgage Professional Magazine n NationalMortgageProfessional.com 58 frequent question I often hear from lenders who have a claim related to a title or closing agent is: "What is the insured closing letter all about?" When I turn the tables and ask them what they think it is, the answers I usually receive are: l A part of the title insurance; l An insurance policy covering the settlement agent; and l More typically "I have no idea." Considering that in many states, title insurers may charge a borrower between $25 and $100 for the privilege of the issuance of this letter in connection with a transaction, it seems that lenders should make it a point to become educated regarding the matter. Title insurers are licensed by states to issue insurance policies, just like any insurance provider. However, the nature of title insurance is a form of property and casualty product. It covers for losses incurred where real property is impaired by claims against title. In an era of electronic records and recording, this rarely happens; title claims are not very common today. When they do occur most instances involve minor defects, such as mis-recorded documents or missed liens which can be remedied without a total loss or major claim. Title insurers are not licensed to issue fidelity coverage or errors and omissions insurance, the type of coverage one would look to when a person or firm engages in intentional or negligent acts causing harm. This includes losses from stolen funds, coordinated fraud, looking the other way, or selling consumer private data. Thus, the insured closing letter was born. In some states, it is known as the Closing Protection Letter (CPL). It is merely a letter from the title insurer warranting that in certain circumstances, they will cover a lender and the borrower from actual losses caused by the settlement agent who may or may not be their employee. Simple right? Not really. A warranty letter is not an insurance policy. It is not governed by insurance laws and contract laws in the same way. It is not subject to the same insurance claim procedures and statutory rights governing bad faith claims practices. In the case of a serious claim, coverage will likely be excluded (theft of funds is an exception) and may require costly litigation to resolve issues of liability and damages. The takeaway from all of this is the following: The insured closing letter is not insurance and it is not a substitute for good risk management. Settlement agents are in a lender's highest risk bucket. Manage that risk carefully because if you are hoping that a CPL will protect you, chances are it will not do so. 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. SPONSORED EDITORIAL the millennial mindset your publicity and marketing should also fit the bill. Personally, I would aim toward simple, sleek and contemporary-no Times New Roman. I would also consider hiring a photographer or freelance filmmaker who could whip up a series of photographs and a short video featuring hip, young adults embarking on their mortgage journey. Planting the seed As I said before, we most likely will not approach you until we are in the thick of our struggle. With that said, have you ever heard of priming? It is a psychological term referring to an implicit memory effect in which exposure to a stimulus influences a response to a later stimulus. In other words, if you plant the seed early on, the first time we hear the term "APR" in our newfound house-hunting mental state, XYZ Mortgage Group will be the first resource we seek out. So how exactly do you go about planting this seed? l Avenue A: Contact places like UCLA's Bruin Resource Center which offers a variety of services to UCLA students and alumni, running the gamut from Career Help to Housing Support. You can relay the information regarding your program to these centers, leave a little swag at the front door, as well as a schedule for those upcoming two-hour workshops, and before you know it, by forming a relationship with these collegiate resource centers, you have formed a relationship with us college students. If our university has trust in you, why shouldn't we? l Avenue B: While not every Millennial is fortunate enough to have the input of their parents, many of us are, and although it seems as though we repel the involvement of our elders in an effort to cultivate our angst-ridden and rebellious image...if we are continued from page 51 lazy and clueless, we will more often than not heed our parents advice (even if we're 30, we're actually 30-going-on-16). Therefore, I would recommend establishing some sort of parent/child program in which you inform your current, fullfledged adult clients of your new program: "By the way, you mentioned you have an 18-yearold daughter. I just wanted to let you know about our Millennial Mortgage Prep program ..." and get them to pass along the information-perhaps you even hold a joint consultation. l Avenue C: Last, but certainly not least, Instagram ads. It might seem specific, but I guarantee it is worth a shot. Everyone, and I mean everyone, has an Instagram. And fortunately for you, the CEOs recently decided to feature advertisements that show up in everyone's feed. This means that when your precious Millennials are scrolling through the posts of the day, they might stop to watch a 30-second video of a cute, young couple sitting in their old Volkswagen Van with a piggy bank, counting change brainstorming ways to consolidate their finances (a cool new song plays in the background). At the end, the girl jumps into his arms and they spin around revealing their adorable, newly purchased home, at which point the following tagline flashes across the screen: "XYZ Mortgage Group ... Making the impossible, possible." At the end of the day, it is important that you take my advice with a grain of salt. As I said before, I am a clueless college student-what do I know? With that said, I think that shifting your approach to cater to exactly that-the clueless college student-will get you one step closer to transforming our Millennial Mindset into a Millennial Mortgage Mindset. Amanda Lucido is a student at the University of California, Los Angeles (UCLA) where she works as an editor and contributor for several literary and art publications, as well as a part-time assistant at the UCLA Extension Writers' Program. She is the daughter of Paul Lucido, national marketing director at Paramount Residential Mortgage Group (PRMG). http://www.NationalMortgageProfessional.com

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