Over the past year, the title & escrow industry has navigated a sea of challenges—from proposed policies that undermine the vital work of title professionals to the escalating risks of wire fraud and the uncharted territory of artificial intelligence (AI) technology.
At Qualia’s 2024 Future of Real Estate Summit (FORES24), ALTA CEO Diane Tomb discussed ALTA’s efforts to address the industry’s most pressing concerns. Tomb outlined ALTA’s approach to reinforce the title & escrow industry’s vital role in the real estate ecosystem and how ALTA is helping the industry navigate growing threats and fast-evolving technologies.
Safeguarding the title & escrow industry and protecting homebuyers
As the housing affordability crisis continues to grip American homebuyers, some entities have set their sights on an unexpected target: title insurance. In a bid to cut costs, President Biden announced during his March 2024 State of the Union Address a plan to waive the requirement for lender’s title insurance on certain refinances. Similarly, Fannie Mae and Freddie Mac now accept written attorney opinion letters (AOLs) in lieu of a title insurance policy under limited circumstances.
ALTA believes these programs are misguided and leave consumers vulnerable. In an effort to combat this misconception, Tomb noted that the title & escrow industry must double down on efforts to showcase its value. ALTA is spearheading several initiatives to raise the industry’s visibility and position:
- Facilitating advocacy groups: ALTA facilitates action committees and hosts events like the ALTA Advocacy Summit to help title & escrow professionals engage with local and federal lawmakers and share their insights and expertise.
- Working directly with policymakers: ALTA is on the frontlines, collaborating with federal entities like the FHFA, GSEs (such as Fannie Mae and Freddie Mac), and various task forces to help them understand the critical importance of title insurance for homebuyers and the broader economy. Tomb notes that while ALTA serves the title & escrow industry, it’s more effective and authentic when lawmakers hear directly from title & escrow professionals. “You have relationships and connections in your local communities… you are the integrity of the process,” she said.
- Publishing studies: Over the past year, ALTA has worked with independent analysis firms to generate data showcasing the title & escrow industry’s impact. This year, ALTA published the Economic Impact Study, which revealed that the title & escrow industry directly generated $30 billion of GDP in the United States economy and 155,000 jobs in 2022. ALTA also published its Claims Report, quantifying the protections title insurance companies provide consumers. For example, the study found that fraud and forgery claims represent 21% of total dollars spent by title insurers on claims and expense losses — more than twice the national average salary in the U.S.
Combatting the persistent threat of wire fraud
Wire fraud remains one of the title & escrow industry’s biggest threats. Despite efforts to mitigate the issue, reported losses from real estate wire fraud continue to climb year over year. While Tomb noted that the recovery rate has improved by 30% from 2023, the looming threat of wire fraud persists, exacerbated by advancements in AI technology that enable more sophisticated attacks.
“We’ve done a lot of mitigation to slow [wire fraud] down significantly,” Tomb said. However, she emphasized the need for continued vigilance and proactive measures. To help title & escrow companies take greater control over this growing issue, ALTA has implemented several initiatives, including but not limited to:
- Developing and sharing its Rapid Response Plan: ALTA, in collaboration with its members, put together a Rapid Response Plan. This comprehensive plan outlines steps to be taken in the event of a wire fraud incident, enabling swift action and increasing the chances of fund recovery.
- Ongoing collaboration with security experts: ALTA regularly convenes meetings with Chief Information Security Officers (CISOs) and other security leaders from member companies. These sessions facilitate the sharing of attack instances, prevention strategies, and best practices for enhancing cybersecurity measures.
Leading by example to embrace AI
The adoption of AI in the title & escrow industry has skyrocketed over the past year, fueled by groundbreaking advancements in large language models (LLMs). According to Qualia’s State of AI survey, a staggering 90% of title & escrow professionals already leverage AI in their personal and work-related tasks, signaling a rapid bottoms-up adoption.
Amidst this transformative shift, many title & escrow companies are grappling with how to integrate the technology in a way that limits risks and amplifies the benefits for their business operations, employees, and the end consumer. ALTA is leading by example, starting with the rollout of its own AI policy. This policy provides a framework for internal teams to experiment with AI while ensuring appropriate guardrails. By embracing AI within its own operations, ALTA aims to gain firsthand experience that can inform its guidance to member companies.
ALTA also prioritizes AI education to equip its employees with the knowledge and skills necessary to navigate the AI landscape. Regular “table talk” exercises and monthly educational programs help employees become more familiar with AI technology and explore the latest ways to use it in their respective roles. For example, ALTA’s advocacy teams are experimenting with AI to summarize lengthy legislation and ALTA education teams are using it to translate materials into different languages to enhance accessibility.
Together as one
Tomb believes that the entire real estate industry benefits when title & escrow professionals unite and take the lead in shaping relevant industry conversations. After all, title & escrow professionals possess a unique vantage point and nuanced understanding of transactions that enables them to pinpoint viable solutions that will enable a more efficient and streamlined transaction.
“We see our industry as innovators,” she asserted. By amplifying title & escrow professionals’ voices and fostering collaboration and open dialogue, ALTA believes the industry can remain resilient and adaptive to the ever-evolving real estate landscape.
To hear more from Diane Tomb, watch her full fireside chat from FORES24.
