What’s the difference between Alta’s SOC1 and SOC2? And why it matters.

The American Land Title Association (ALTA) created a Best Practices Framework to assist lenders in identifying reputable third-party associates, such as title companies. ALTA’s Best Practices Framework mitigates risk by identifying its seven pillars. They include:

Licensing. The (title) company should have a valid and up-to-date license to perform title work.

Escrow Trust Accounting. Have written procedures and controls for Escrow Trust Accounts and electronic verification on reconciliation.

Protecting Non-public Personal Information. Create and maintain a written privacy and information security policy as required by local, state and federal law.

Settlement Processing. Maintain standard real estate settlement procedures as required by law.

Policy Production. Maintain written procedures on title policy production, delivery, reporting, etc.

Insurance. Carry professional liability and fidelity coverage.

Consumer Complaints. Create written procedures for addressing consumer complaints.

While it’s not required, it is also suggested that title companies maintain procedures and policies by mitigating these risks as set forth in the Best Practices Framework .

If a title company using technology for closings wants to illustrate its compliance with best practices, they conduct a Service Organization Control (SOC) 2 audit. While there are two types of audits, the SOC 2 is specifically designed for the security, process integrity, confidentiality and privacy for organizations using technology to provide financial services. The audit is conducted by an independent third party.

Types of SOC Audits

SOC 1 audit regulates and reports on the controls of an organization’s financial services for fairness, compliance and security. A SOC 1 audit ensures adequate controls and safeguards are in place to ensure the security of customer’s non-public, personal information and the integrity of the overall financial process. SOC 2 audits affect the policies and procedures not directly related to revenue but the application of technology throughout the process of the transactions or financial services.

What these Certifications Mean for the Customer

The process of obtaining SOC 1 and SOC 2 audits is time-consuming. It can take between a year and a year and a half to have the systems and processes thoroughly audited. This is a large investment for the title company in time and resources. Customers can be assured their non-public information is being handled in the safest way possible when a title company has undergone an audit of this magnitude. Both types of audits ensure the title company is operating within industry best practices.

Title companies that have chosen to undergo this sort of rigorous audit have exemplary safeguards in place for protection (so that’s one less thing for the customer to be concerned about).

Bay National Title Company has performed a self assessment of the ALTA Best Practices, and has also developed policies and procedures in accordance with their directives to move towards full certification. If you want to establish confidence by working with a ‘best practices’ title company, contact Bay National Title Company today. Your information is safe and secure, and we’ll take good care of you. Our customers come first.