POLICIES AND PROCEDURES MANUAL REGARDING PRIVACY AND PROTECTION
OF CLIENTS AND THEIR CUSTOMERS PERSONAL FINANCIAL INFORMATION MATERIAL
It is the intent of Morello & Associates, P.C. to be in full compliance with state and federal laws related to every area of our firm. The procedures established herein are to be utilized as minimum controls for the operation of our firm and for the education of staff in order to (1) follow federal and state consumer protection laws, (2) protect entrusted consumer funds, and (3) protect consumer and/or client non-public personal information. In addition, it is the intent of Morello & Associates, P.C. to embrace the “Title Insurance and Settlement Company Best Practices” (“Best Practices”) standards recommended by the American Land Title Association (ALTA) to illuminate the level of professionalism, promote quality, ethical and professional service, provide for appropriate employee training and exceed all legal and regulatory standards. Our firm already has procedures and policies in place to achieve all of these objectives, which are further detailed and enumerated in the following manual.
1. Firm: Morello & Associates, P.C., being the entity implementing the best practices.
2. Escrow: A transaction in which an impartial third party acts in a fiduciary capacity for the seller, buyer, borrower, or lender in performing the closing for a real estate transaction according to local practice and custom. The escrow holders have fiduciary responsibility for prudent processing, safeguarding and accounting for funds and documents entrusted to them.
3. Escrow Trust Account: An account to hold funds in trust for third parties, including parties to a real estate transaction. These funds are held subject to a fiduciary capacity as established by written instructions.
4. Federally Insured Financial Institutions: A financial institution that has its deposits insured by an instrumentality of the federal government, including the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA).
5. Licenses: A licensing requirement as required by state law, or a license to practice law, where applicable.
6. Non-public Personal Information: Personally identifiable data such as information provided by a Consumer on a form or application, information about a Consumer’s transactions, or any other information about a Consumer which is otherwise unavailable to the general public. Non-Public Personal Information (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.
7. Settlement: In some areas called a “closing.” The process of completing a real estate transaction in accordance with written instructions during which deeds, mortgages, leases and other required instruments are executed and/or delivered, an accounting between the parties is made, the funds are disbursed and the appropriate documents are recorded.
8. Trial Balance: A list of all open individual escrow ledger record balances at the end of the reconciliation period.
9. Three-Way Reconciliation: A three-way reconciliation is a method for discovering shortages (intentional or otherwise), charges that must be reimbursed or any type of errors or omissions that must be corrected in relation to an Escrow Trust Account. This requires the escrow trial balance, the book balance and the reconciled bank balance to be compared. If all three parts do not agree, the difference shall be investigated and corrected.
Establish and maintain current license(s) as required to operate the law firm and conduct the business of title insurance and settlement services.
1. Morello & Associates, P.C. establishes and maintains the following
a. Applicable law firm License(s).
b. Compliance with Licensing, registrations, or similar requirements with the BBO and other applicable state regulatory agencies.
c. Appropriate compliance with ALTA’s Policy Forms Licensing requirement.
2. All required licenses, state regulatory licenses, registrations or similar requirements and ALTA forms licenses are obtained in a timely manner and documented in a log which includes at a minimum licensee, license type, license number, expiration/renewal date.
3. The log is reviewed and updated annually to ensure accurate and timely tracking and renewal of licenses.
4. The Principals and Employees of Morello & Associates, P.C. shall:
a. Maintain the necessary qualifications and requirements to obtain and maintain each required license.
b. Pay, in a timely manner, any and all fees necessary to maintain each required license.
c. Perform any and all professional training and CLE Classes necessary to maintain each required license.
Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.
In addition to following all Massachusetts Rules of Professional Conduct, Rule 1.15 concerning trust accounting, the firm shall follow all of the following policies and procedures regarding Escrow and/or Trust Accounts:
1. Authorized Employees Only
a. Only those employees whose authority has been defined to authorize bank transactions may do so. Transactions are to be conducted by authorized employees only.
b. Appropriate authorization levels are set for employees of the firm and reviewed for updates annually.
c. All employees with access to entrusted funds or NPI undergo pre-hire background checks going back a minimum of five years.
d. Ongoing annual training is performed for all employees with access to entrusted funds or NPI regarding the proper management of the Escrow and/or Trust Accounts.
e. Former employees are immediately deleted as listed signatories on all bank accounts, including removing all computer access privileges to the firm network and/or any online banking functions.
2. Trust Accounts Maintained At Insured Banks
a. Morello & Associates, P.C. maintains all Escrow and/or Trust accounts at federally insured financial institutions.
b. If directed in writing by the beneficial owner of certain funds to be held in trust, the firm may put those funds (and only those funds) in a separate trust account with an institution designated by the beneficial owner of said funds.
3. Separation of Accounts and Duties
a. Regardless of how many Escrow / Trust Accounts are maintained by the firm:
i. Firm funds and entrusted funds are NOT commingled.
ii. Operating accounts are separately maintained from all entrusted funds.
iii. Escrow / Trust accounts are separately maintained from all firm funds and properly identified, including, but not limited to, checks, deposit slips, ledgers, statements and all related supporting documentation.
b. Escrow funds or any other funds which the firm maintains under a fiduciary duty to another are NOT commingled with the firm’s account.
c. Escrow Trust Accounts are properly identified as “escrow” or “trust” accounts.
d. The Escrow / Trust account reconciliation authority and function is performed by someone who does not possess check signing and wire initiation authority and functions.
4. General Governing Rules
a. International Wire Blocks, to prevent any wires from the Escrow / Trust accounts without additional authorization, are used where available.
b. Automated Clearing House Blocks to prevent any ACH Transactions from the Escrow / Trust Account without additional authorization are used where available.
c. Available funds are confirmed before issuing a check.
5. Reconciliation of Escrow Trust Accounts
a. Outstanding file balances are documented.
b. Reconciliation standards:
i. All Escrow / Trust Accounts are reconciled monthly.
ii. Receipts and disbursements are reconciled every day.
iii. Opening balance for the month matches the ending balance for the prior month’s reconciliation or explanation and documentation accompanies the reconciliation.
iv. On at least a monthly basis, Escrow / Trust Accounts are prepared with Trial Balances (“Three-Way Reconciliation”), listing all open escrow balances.
IMPORTANT: Three Way Reconciliation documentation at a minimum includes bank statement, reconciliation sheet/summary page with book balance, outstanding deposits list/deposits in transit, open escrow file listing or trial balance and outstanding disbursements list all as of the reconciliation date. All amounts should equal between the book balance, reconciled bank balance and trial balance.
v. Within TEN (10) days of the completion of the Three-Way Reconciliation, the firm resolves any and all open exceptions or documents reasons for the exception remaining open.
vi. In no event, shall an exception remain unresolved or unexplained from one Three-Way Reconciliation to the next.
vii. Within TEN (10) days of the completion of the Three-Way Reconciliation, the monthly Reconciliation is reviewed by a manager or supervisor of the firm.
c. The results of the Three-Way Reconciliation are available and electronically accessible by the firm’s contracted title underwriter.
PRIVACY AND PROTECTION OF NON-PUBLIC PERSONAL INFORMATION
Adopt and maintain a written privacy and information security program to protect Non-public Personal Information as required by local, state and federal law.
1. Physical security of Non-public Personal Information
i. Restricts access to Non-public Personal Information to authorized employees who have undergone Background Checks at hiring.
ii. Prohibits or controls the use of removable media.
iii. Uses only secure delivery methods when transmitting Non-public Personal Information.
iv. Clean Desk Policy.
v. Locked file room
vi. Locked offices
vii. Locked building
2. Network security of Non-public Personal Information
i. Maintains and secures access to the firm’s information technology.
ii. Developed and maintains guidelines for the appropriate use of the firm’s information technology.
iii. Ensures secure collection and transmission of Non-public Personal Information.
3. Disposal of Non-public Personal Information
i. Adheres to Federal law which requires companies that possess Non-public Personal Information for a business purpose to dispose of such information in a manner that protects against unauthorized access to or use of the information.
4. The firm has an established Disaster Recovery Plan.
5. The firm exercises appropriate management and training of employees to ensure compliance with the firm’s information security program.
6. The firm has oversight of service providers to help ensure compliance with the firm’s information security program.
i. Takes reasonable steps to select and retain service providers that are capable of appropriately safeguarding Non-public Personal Information.
7. Audit and oversight procedures are in place to ensure compliance with the firm’s information security program.
i. Reviews the privacy and information security procedures to detect the potential for improper disclosure of confidential information.
8. Notification of security breaches to customer and law enforcement
i. Posts the privacy and information security program on all firm websites and provides program information directly to the firm in useable form. When a breach is detected, the firm will inform customers and law enforcement as required by law.
REAL ESTATE SETTLEMENT PROCEDURES
Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws as applicable to the settlement process.
1. Recording Procedures
i. Reviews legal and contractual requirements to determine the firm obligations to record documents and incorporate such requirements in its written procedures.
ii. Submits or ships documents for recording to the county recorder (or equivalent) or the person or entity responsible for recording within two (2) business days of the later of (i) the date of Settlement, or (ii) receipt by the firm if the Settlement is not performed by the firm.
iii. Tracks shipments of documents for recording.
iv. Ensures timely responses to recording rejections.
v. Addresses rejected recordings to prevent unnecessary delay.
vi. Verifies that recordation actually occurred and maintains a record of the recording information for the document(s).
2. Pricing Procedures
i. Maintains written procedures to ensure customers are charged the correct title insurance premium and other rates for services provided by the firm. These premiums and rates are determined by a mix of legal and contractual obligations.
ii. Utilizes rate manuals and online calculators, as appropriate, to help ensure correct fees are being charged for title insurance policy premiums, state-specific fees and endorsements.
iii. Ensures discounted rates are calculated and charged when appropriate, including refinance and reissue rates.
iv. Performs quality checks files after Settlement to ensure consumers were charged the firm’s established rates.
v. Provides timely refunds to consumers when an overpayment is detected.
TITLE POLICY PRODUCTION
Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance.
1. Policy Issuance
Title insurance policies are Issued and delivered to clients within thirty days of the later of (i) the date of Settlement, or (ii) the date that the terms and conditions of the title insurance commitment are satisfied.
2. Underwriter Reports and Remittance
By the last day of the month following the month in which an insured transaction was settled, the firm:
a. Reports to the title insurance underwriter all of the policies issued during the current month.
b. Remits to the title insurance underwriter all of the premiums and fees collected and due to the title underwriter.
PROFESSIONAL LIABILTY INSURANCE
Maintain appropriate professional liability insurance and fidelity coverage.
1. The firm maintains and shall continuously maintain professional liability insurance or errors and omissions insurance in an amount of $1,000,000.00 and $2,000,000.00 aggregate through the Massachusetts Bar Association. A Declaration page will be submitted to our clients upon request. This includes but is not limited to:
a. Professional Liability or Errors and Omissions Insurance
b. Fidelity Bond Coverage
c. Surety Bond Coverage
d. Cyber Fraud / Cyber Crime Coverage
e. Other coverages required by state law or the title insurance underwriting agreements in effect.
Adopt and maintain written procedures for resolving complaints.
1. All Complaints are tracked on the standard complaint form below.
2. Timeline for handling complaints:
Consumer Complaint Received.
Complete Complaint Intake Form.
Within 24 Hours Of Receipt.
Complaint Intake Form Delivered To Complaint Officer.
Within 24 Hours Of Completion.
Client is contacted by firm for acknowledgment of receipt of complaint and/or to obtain additional information.
Within 72 Hours of Receipt of Complaint Intake Form.
Status update is made to the consumer If the complaint is not resolvable within 3 additional business days.
By the end of the 5th business day.
Status update every 5th business day thereafter.
By the end of the 8th business day and subsequent days until the complaint is resolved.
Complaint intake form is completed and a copy is either uploaded to server or kept in a separate file along with others.
At resolution of the complaint.
3. Complaint Contact and Responsibilities
a. The complaint contact for the firm is John F. Morello, Esq. The complaint contact is responsible for:
i. Supervising the entire Complaint Process
ii. Ensuring that time requirements for addressing complaints are met;
iii. Administering and maintaining the Complaint log;
iv. Administering and maintaining the Complaint files in an orderly and professional manner, including but not limited to:
1) Complaint Intake Form
2) All correspondence related to the Complaint; and
3) All supporting documentation related to the Complaint.
4. Complaint Intake
a. Every employee is informed and aware that Consumer Complaints may come to Morello & Associates, P.C. in many forms, including but not limited to,:
i. Phone Calls
ii. Letters (Regular Mail)
iii. Certified Mail
v. Voice Mail
vi. Legal Action
b. If an employee hears something that sounds like a Complaint, the Complaint Intake Form shall be completed and processed.