CFPB- ALTA Real Estate Settlement – Escrow Accounting Compliance
If you are an attorney who is involved in the real estate settlement industry it may be in your best interest to mark October 3, 2015, on your calendar. On this day the Consumer Financial Protection Bureau will begin to require new closing disclosure forms as they begin to enforce new compliance requirements associated with those closing disclosure forms.
For those involved in the real estate settlement industry, you know that this is a game changer for the industry and it is absolutely imperative that your practice is in complete compliance with these new regulations.
What Does ALTA Say About The Upcoming Transformation Of The Real Estate Settlement Industry?
ALTA, The American Land Title Association, has proposed a set of basic guidelines for real estate settlement industry. ALTA is the national trade association and voice of the abstract* and title insurance industry. ALTA members search, review and insure land titles to protect home buyers and mortgage lenders who invest in real estate.
Part of the changes being implemented by the CFPB are associated with the merger of the Real Estate Procedures Act (RESPA) and the Truth in Lending Act (TILA). In doing this the CFPB has created a significant compliance hurdle associated with attorneys having adequate escrow account controls in place when dealing with real estate settlements.
It is clear that these new real estate settlement regulations will focus largely on an attorney’s ability to maintain accurate records of the multiple trust accounts that need to be in play when handling real estate settlements for a wide range of clients. Below are some of the highlights of ALTA’s Best Practice Guidelines associated with the CFPB’s new real estate settlement regulations:
- Escrow funds and operating accounts must be separately maintained
- Escrow Trust Accounts must be prepared with trial balances
- Escrow accounts must be reconciled
- Attorneys must keep in mind three-way reconciliation procedures
- Attorneys are encouraged to use Positive Pay to prevent check fraud
Navigating The Financial Aspect of Your Legal Practice
These new regulations are just the latest in a long line that call for attorneys to put their accountant hats on. Unfortunately, attorneys just aren’t accountants, it is a different skill set. Legal accounting matters can even create an area of confusion for general purpose business accountants too. With penalties for inaccuracies that could occur in dealing with escrow funds and trust accounts resulting in disbarment, it is important that your firm have somewhere to turn when it comes to the financial matters faced when dealing with real estate settlements.
CosmoLex Legal Practice Management Software Will Keep You Compliant
Expertise in dealing with the proper management of trust accounts can be found inside CosmoLex’s Law Practice Management Software. The software comes with built-in Attorney Trust Accounting Software with the following features:
- Individual client trust ledgers
- Add or disburse client funds
- One-click withdrawn of trust funds for invoice payments
- Print disbursement checks
- Overdraft protection
- Bank reconciliations
- State-compliant reports, including three-way reconciliations.
You won’t need a legal accounting expert to pull together the appropriate reports to remain compliant, the software can do it for you, and your firm will always be audit ready.
These new regulations associated with real estate settlements are real, and they will be a thorn in your firm’s side if you don’t take action to remain compliant before October 3rd. CosmoLex has had and will continue to have the accounting tools to keep your firm compliant, so don’t wait until it becomes a problem. Take control of your escrow and trust fund accounting, before your lack of control disbars your firm.