Considering that Florida leads the nation in overall fraud and South Florida is number one in the country for mortgage fraud, learning how to mitigate fraud for your Florida title company is a smart idea. The major hurdle here is that despite the increase in digital records available from courthouses and other institutions, title companies operate in a largely decentralized industry. The nature of searches performed by your average Florida title company often calls for dealing with unlicensed individuals to gain access to specific documents. Additionally, the large transactions of escrow accounts — both in number and amount — creates opportunities for unsavory characters to commit title insurance fraud.
Until the industry as a whole becomes more centralized and well-regulated, it’s a good idea to learn how to mitigate fraud and implement healthy practices that result in title fraud protection for your Florida title company. Performing an annual security checkup can be just what the doctor ordered.
One of the most comprehensive documents on title fraud protection is Title Escrow Theft and Title Insurance Fraud from the National Association of Insurance Commissioners (NAIC). Overall, the NAIC reminds title companies that it is the responsibility of everyone involved in title and escrow procedures to minimize the threat of fraud and theft — from coworkers catching minor irregularities to underwriters performing agencywide audits.Perform enhanced initial audits and investigations during licensing. Florida doesn’t possess many of the more stringent requirements for title insurance licensing that other states have. In fact, the state’s requirements are relatively lax. This leaves it up to Florida title companies to enact due diligence investigations that are more apt to turn up any past legal, regulatory or trustworthiness issues during a prospective agent’s licensing period. For inspiration, you may look toward the requirements enacted by other states with more strict licensing regulations such as requiring licensing with departments of insurance and financial institutions or requiring a separation of title insurance premiums from escrow settlement funds as separate fiduciary trust accounts.
Of course, as the NAIC points out, there are many other concerns that don’t quite rise to the level of fraud but are of concern nonetheless. These can include mixing personal funds with escrow funds, investing escrow funds in non-guaranteed accounts, failure to meet duties during closing and insufficient steps to prevent fraud from occurring. Performing routine audits of your title company to ensure compliance will help reduce the risk of incidences such as these, but constant vigilance, following guidelines and good hiring practices will provide a daily defense against title fraud and institutional corruption. Additionally, you should keep up with Florida’s prescribed differences from NAIC statutory accounting principles and not be afraid to reach out to your financial institutions for guidance on how they can help with wire or title fraud protection.