GlobeSt.com: Why should the real estate industry be concerned about these changes? What has been the impact on the lending industry? And what are the new best practices and expectations of the changes?

Matthews: As a result of these looming regulatory changes, banks have mobilized massive resources to improve risk management processes and oversight of third-party service providers. Notably, compliance is the fastest growing division of most banks today. Lenders have also drastically reduced the number of third-party like title agencies with whom they are willing to work to reduce their regulatory compliance risk. National lenders have sought to work with only the largest third-party organizations with well-developed compliance functions. The impact has been felt greatest on independent and small title agencies struggling to implement costly new requirements and build additional risk mitigation processes. Regardless of size, title agencies across the country have been working feverishly for the past year with their trade organization, the American Land Title Association, to adopt risk management processes intended to meet the requirements of new regulations. ALTA's Best Practices framework has established a baseline compliance model to help encourage banks and other lenders expand their use of third-party title agencies. The ALTA Best Practices focus on protecting borrower's non-public personal information, ensure IT and physical security, and safeguard escrow settlement funds. Borrowers should ask if their selected title company has adopted these practices to safeguard their privacy.

Adjusting to the new regulatory landscape is not a simple task. Title agencies are utilizing outside advisors to counsel and implement these changes. Companies like WGM have a heavy emphasis in the information security aspects of the risk management process. Grand Canyon Title Agency of Phoenix spent nearly a year revamping and documenting risk management processes to comply with the ALTA Best Practices in 2013. Grand Canyon continues to revise and update practices to meet lender requirements. Some title agencies and other third parties have yet to begin the process despite lender insistence. ALTA advises all members across the US to have completed a preliminary assessment of their organizations by September 2014.

GlobeSt.com: Are there further changes pending?

Matthews: New regulations and rules are still being developed by the regulatory bodies like the OCC and CFPB. After four years, experts estimate that just over half of the required regulations under Dodd-Frank have been put forth. Major milestones loom in August 2015 with new requirements for integrated mortgage disclosures. Organizations like ALTA have and continue to advocate additional transparency in the rule making process and for greater guidance in the implementation of the resulting regulations.

GlobeSt.com: What is the biggest take away from these fundamental changes in the industry?

Matthews: Many borrowers are likely unaware of the complexity of the mortgage lending process and the banks' use of third-parties to fulfill the lending process. Borrowers should demand to know that the privacy of their mortgage information and the security of their transaction is protected to the highest level. Borrowers should be prepared for additional changes as lenders and their third-party providers implement new regulatory requirements.