The Ramblings of a Title Man

How ready is your emergency preparedness plan?

Back-to-back cyber incidents at the two largest title underwriters in the fourth quarter of 2023 identified the need for an emergency preparedness plan for all title agents across the United States. From these events, we learned that there is a great deal of connectivity within the title industry, and many were not prepared with contingency plans. While the cyber incidents took down agent portals to obtain closing protection letters and policies, those incidents also interrupted many other systems, including: national search provider platforms; title and escrow software; escrow accounts in banks; title plant systems; and even policy database repositories. If you were highly dependent on a single underwriter’s systems, you may have experienced interruption to your business.?

The U.S. government maintains a website to help individuals and businesses prepare for emergencies and disasters. That site is https://ready.gov and is full of resources to help businesses prepare for and make an emergency response and recovery plan. The site identifies four areas: Business Continuity Plan; Crisis Communications; Emergency Response; and IT Disaster Recovery. All aspects of preparing for an emergency are important, but the hindsight of what we know about the interconnectivity of systems at the major underwriters should inform us on how to adapt our business recovery plan to address these type of problems.?

Here is a test case that you can pose to your company’s management to see how your company would respond:

A cyber incident has occurred, and four main systems you use to produce work are not functioning. How would you conduct a closing that will occur in 2 days? Systems that are not functioning are: Title and escrow software, underwriter website to generate CPLs, title plant software and primary title search vendor.

Do you have a second underwriter? That is the easiest way to solve for generating CPLs. I have written recently on the safety and benefits of having two unrelated underwriters for your agency. An emergency response plan would certainly go a long way for agencies that had multiple underwriters.

Do you have replacement title and escrow software? This could be a “low-tech” solution to have the ability to create a title commitment with simple word processing software, or it could be a backup system that is only used in an emergency. An agent who was impacted by the cyber incident had just switched software about 6 months prior, and they still had the old title and escrow software operational. They were able to process deals in the old system during the incident.?

Do you have a backup title search provider? While it is acceptable to obtain your searches from your underwriter, what if that underwriter has a period of time they are not able to complete your orders? Do you already have established accounts with another search provider in case of emergency?

Do you have a backup to the title plants available from your underwriter? During the cyber incidents, several agents lost the ability to use title plants, even to do date-downs. The natural alternative would be to conduct a date-down in the local records office of your county. However, in some cases, gaining that access could take up to 3 weeks in some locations. To be ready for a potential emergency, an agency should have a way to access the county records, even if not used on a daily basis.?

Here is an answer to the hypothetical scenario, “We have a plan that would allow us to do that closing in two days.” First, we would have a second underwriter not in the same family as the primary underwriter, and we would have that underwriter active in order to immediately generate a CPL for a file. Second, we would have a back up to the title and escrow software. That could be a low-tech solution such as word processing software to generate a title commitment or a backup software only used in emergencies. One such software could be web-based and only cost a per-file fee when used. Third, we would have an established relationship with a second title search provider that is not associated with our primary underwriter. Finally, we would establish access to local real estate records to allow for date-downs and updated searches.?

This exercise does not identify how you would generate a disbursement file for your escrow account, which is also a major consideration. But it gives you a good thought exercise to determine if you have a sufficient plan in case of emergency. Unfortunately, cyber events are likely to happen more frequently as more and more companies are targeted. But with the right planning, your company can be prepared for such events and not miss a beat for your customers.