Title Insurance Issues (C) Working Group
Title Insurance Issues (C) Working Group Page
Joint Executive (EX) / Plenary Committee Summary Report
Fall 2009 Meeting Summaries Index

The Title Insurance Issues (C) Working Group met Sept. 22, 2009. During this meeting, the Working Group:

• Heard a report from the Department of Housing and Urban Development’s Office of Real Estate
  Settlement Procedures Act (RESPA) and Interstate Land Sales regarding revised RESPA rules that were published November 2008 and become effective Jan. 1, 2010. The rules allow for more standardized price comparisons by consumers when purchasing a home and include a revised Good Faith Effort form. The standards include the combination of different costs into one category of settlement charges and information on the loan product. Over 200 frequently asked questions will be added to their Web site. If requested, RESPA will travel to any state to help explain the rule changes. RESPA planned to hold a regulator-to-regulator meeting at the conclusion of this meeting to review the rule changes in detail with states. RESPA also reported on recent enforcement efforts regarding fraud and title shams. RESPA conducts monthly collaborative enforcements with states in regulator-to-regulator conference calls. Approximately 20 states participate in these calls, and other states were encouraged to join these efforts, which include information sharing, referrals and joint investigations.

• Heard a report from the Wisconsin Office of the Commissioner of Insurance on their average premiums of title insurance survey initiative. This effort is to help and encourage consumers to make price comparisons when purchasing a home and selecting from the 21 title insurance companies in the state. The consumers in Wisconsin, as in many states, do not know they have a choice in selecting their carrier, and it is anticipated that this initiative, coupled with increased public service announcements, will provide additional information to consumers. The initiative will help collect premium information statewide and identify marketplace trends.

• Heard a report from the American Land and Title Association (ALTA) on Closing Protection Letters (CPL), which help protect a lender and others against risk of settlement agent misconduct. Specifically, the CPL covers the settlement agent’s failure to follow the lender’s written closing instructions or the settlements agent’s fraud, dishonesty or negligence in handling the lender’s funds or documents. CPLs vary by state, and ALTA has forms available for use wherever a state has no specific requirements. A CPL protects the lender, the lender’s assignee and the borrower. A CPL does not protect the seller, the seller’s lender or a borrower in a refinancing transaction. Some states require the CPL to be reviewed by an attorney before it is issued. A CPL may be considered insurance, depending on statutory definitions and if a charge is made for issuing the CPL.

• Heard a report from Avery Brown (NAIC) on H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act of 2009. The CFPA would be established to “seek to promote transparency, simplicity, fairness, accountability, and access in the market for consumer financial products and services” to ensure that consumers are able to make educated decisions regarding financial products and services. To implement these goals, the CFPA would have authority over a vast array of financial activities, including mortgage, title and credit insurance. Commissioner Ralph Tyler (MD) testified on behalf of the NAIC earlier this year, trying to have insurance exempted from the act. A revised version is expected in the next few months, and it is hoped that insurance will be exempted. There is also the possibility that a council would be established rather than an agency, as presently proposed.

• Heard that the Blanks (E) Working Group approved the three proposals to revise the Title Annual Statements.

• Heard that 22 states responded to the Working Group’s survey of state laws on collection of title agent data and other information. NAIC staff will send a reminder to the other states next week that the deadline to complete the survey is Sept. 30.

• Agreed to consider the work plan and prioritize the various components during the Winter National Meeting.