Georgia Attorneys Title Guaranty Fund

Underwriting Bulletin No. 67

June 22, 2001

SUBJECT: First American Title Insurance Company Privacy
Policy Under the Financial Services Modernization Act
Effective July 1, 2001, the privacy provisions under the Gramm-Leach-Bliley Act (Financial Services Modernization Act), Title V, Subtitle A, 15 U.S.C. § 6801, et seq. ("GLB Act) and the related regulations promulgated by the Federal Trade Commission under the GLB Act, 16 C.F .R. 313 require that financial services companies provide disclosures to individual customers relating to the use of information obtained from those customers as part of the financial services process. This disclosure requirement is explained in the attached bulletin written by First American's President, Gary Kermott. (Please read Mr. Kermott's bulletin before proceeding with the remainder of this bulletin.)

In summary, both the activities of First American as an underwriter providing a title insurance policy and the activities of agencies and First American offices in the settlement services process create the requirement of a disclosure. In addition, it is First American's position that supplying property reports to individuals invokes the disclosure requirement as well. The disclosure relating to First American (as the underwriter) should be delivered by our Agent to the proposed insured(s) at or before closing in the form attached to this bulletin captioned "Privacy Policy". First American will be substituting privacy policy brochures for these one-page disclosure forms in the immediate future. These brochures will be available through your local agency managers.

The Agent should also deliver a separate disclosure to the buyer, seller and/or borrower relating to the settlement service, as First American and its Agents are not "affiliated entities" under the GLB Act definitions and one disclosure will not cover both entities. Delivery of the disclosure is all that is necessary, and there is no requirement that the recipient sign the disclosure or a receipt form. The disclosure may be given to the attorney for an individual with an instruction to deliver it to his or her client, as the GLB Act allows for methods of delivery in which a customer can reasonably be expected to receive the actual notice in writing.

It is important to note that the requirement of a privacy act disclosure only relates to individuals and to residential transactions. It is therefore not necessary to give these disclosures to lending institutions, although it would be necessary to give a disclosure to an individual who is making a loan on residential property. Furthermore, it is important that we provide the disclosure forms as early as practical to the buyer and seller in a purchase and sale transaction or the borrower in a refinance transaction, although delivery can be as late as during the closing of the transaction.

Two additional issues must be addressed. First, you will note that the attached Privacy Policy states that neither First American nor our Agents will distribute nonpublic personal information to non-affiliated entities, except as required by law or as necessary to provide the services requested of us. We appreciate the cooperation of our Agents in complying with this policy.

Second, you will be asked by others to execute compliance agreements regarding their privacy policies. These compliance agreements often contain indemnity language relating to loss occasioned by the failure to comply. First American offices and Agents are hereby notified that while we can execute an agreement to comply in substantially the same form as attached to this bulletin ( captioned "Confidentiality Agreement -Reminder Notice"), we cannot enter into an agreement that would obligate First American to indemnify for loss occasioned by the failure to comply with a third party's (usually the lender) privacy policy.

Finally, we have anticipated some common questions and have addressed them in the attached memo entitled "Operational Issues Regarding the Federal Privacy Law".

While the forms attached to this underwriting bulletin can be useful as a guide, it is First American's recommendation that agencies seek legal counsel to determine what steps are necessary to comply with the new federal guidelines. We understand that this new disclosure requirement as mandated by the GLB Act creates an additional step in the closing process and we ask that you understand that First American did not author these new requirements and that we are merely making you aware of the requirements created by the Federal Government.

If you have any questions or concerns, please contact the underwriting department at 404- 250-1604 or 1-800-328-2642.

First American Title Insurance Company Privacy Policy

Printable version: ub67.pdf

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