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October 19, 2012

VIA REGULAR AND OVERNIGHT MAIL

Stephen W. RobertsonInsurance Commissioner

Indiana Department of Insurance

311 W. Washington Street, Suite 300

Indianapolis, IN 46204

Re: CFPB Bulletin 2012-03

Service Provider Bulletin & Third Party Vetting

Dear Commissioner Robertson:

I am writing you on behalf of the Indiana Association of Independent Land Title Agents (IAILTA) to

bring your attention to a matter about which we have recently become aware. A number of our members

have told us that they are receiving notices from their warehouse lenders requiring them to pay a third

party as a condition of doing business. We believe that this requirement not only violates federal law

found at RESPA Section 8 and its prohibition against kickbacks in the settlement process but also

contemplates a new, quasi-form of insurance in which the lender would receive indemnity in the event of

a closing agent defalcation or other loss. Because the third party vendors are not licensed insurance

producers, we believe this action violates Indiana law under Title 27 of the Insurance Code and requires

your immediate action.

To better explain this recent phenomenon, please note the following. The third party firm is offering to

vet the title insurance agents on behalf of the lenders who have agreed to participate in this program.

The third party company, known as Secure Settlements, Inc. (SSI) out of New Jersey, is apparently

seeking to charge the title agent an annual flat fee per escrow officer, as well as non-escrow officers who

may play some role in closing the transaction or handling the closing file. Title agents, attorneys, closers,

title searchers, abstractors, surveyors, real estate agents, mortgage brokers, and loan officers will all have

to fall under the SSI vetting program, despite the fact that SSI is not a licensed provider of such services.

SSI has recruited hundreds of warehouse lenders to participate in their vetting scheme. Those

participating lenders have sent out the enclosed correspondence to title agents across Indiana requiring

them to take action that is not otherwise required by law and that is already performed by the agents title

insurance underwriters. The fees for vetting are now being passed along to the consumers in the form of

higher settlement costs with no attendant benefit to the consumer or the insureds.

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2 Letter to Commissioner Stephen Robertson

October 19, 2012

This would be a new significant expense for title insurance companies that could quickly become an

extreme burden if multiple vetting companies enter the market and the Indiana title agent faces the

prospect of having to pay the same fee to several companies in order to be eligible to handle transactions

with multiple lenders.

These demands may be an outgrowth of increased regulatory pressures on lenders, including the enclosed

Consumer Financial Protection Bureau Bulletin 2012-03 which requires lenders to take certain steps tooversee their business relationships with service providers. SSI appears to be offering a supposed safe

harbor to the covered lenders under this Bulletin. However, on October 1, 2012, IAILTA members met

the author of the enclosed CFPB bulletin who assured us that no such intention was ever conveyed to SSInor contemplated by the correspondence. Consequently, we believe that further state action is required

because SSIs approach places an unnecessary burden on title insurance agents and consumers with no

tangible benefit.

As you know, in Indiana, title insurance agents are licensed by the IDOI, required to take continuing

education, undergo extensive background checks and regularly receive thorough annual audits of their

escrow accounts and quality control systems by both the IDOI and their respective title insurance

underwriters. Any perceived benefit to lenders or consumers from the requirement that a private third

party firm duplicate the efforts of IDOI is illusory.

Finally, this type of firm presents a new security concern under both federal and state law. In addition to

the fees charged, SSI is asking for extensive confidential information about the escrow and title personnel

as well as sensitive company information including bank account numbers. Thus, there is a legitimate

concern that this information could be used in a fraudulent manner, creating a risk to consumers and their

escrow funds as well as a solvency concern for Indiana title agents. Additionally, the private information

on their escrow and title personnel that title agents are being asked to release, including social security

number, date of birth and drivers license number, creates potential liability for them as an employer as

well as an identity theft risk for the employees.

These are a few of the concerns that have arisen, and there may well be others. We would like to meet

with you soon to discuss this potential problem further and answer any questions you may have.

Yours truly,

Robert B. Holman, Esq.

Member, Indiana Association of Independent Land Title Agents

Enclosures

Cc: Anthony L. Affatati, Sr., President, NAILTA

Dan Oliver, Esq., Director, Title Insurance Division, IDOI

Justin Ailes, Vice President, Governmental Affairs, ALTA

Kathy Hulbert, Executive Director, ILTA