Financial Services Dept. Delays Portion of New Title Insurance Regulation
The DFS posted on its website Tuesday night that it would delay enforcing a certain section of the regulation that deals with prohibition on inducements for future title insurance business and permitted expenses.
December 20, 2017 at 03:59 PM
4 minute read
Maria Vullo of the New York State Department of Financial Services. Photo credit: Rick Kopstein.
The New York State Department of Financial Services is delaying implementation of a portion of new title insurance regulations after lawmakers urged the regulator to slow down the rollout.
The DFS posted on its website Tuesday night that it would begin enforcing a certain section of the regulation that deals with prohibition on inducements for future title insurance business and permitted expenses on Feb. 1, 2018, rather than the scheduled date of Dec. 18, 2017.
On Friday, the New York Law Journal reported that a trio of bipartisan lawmakers in New York had asked the DFS for a six-month delay on the title insurance regulations that went into effect Monday. Assemblyman Kevin Cahill, D- Kingston, who is the head of the chambers' insurance committee, said in a letter to DFS Superintendent Maria Vullo that he had “serious concerns” about DFS's title insurance regulations, which were born of a 2015 investigation by the department.
Cahill said in the letter that regulations for how insurers and agents can market themselves, and the requirement for insurers to restate the last six years of their expenses and certify their compliance with the new regulations, or implement a 5 percent rate reduction for all title insurance policies “will significantly destabilize an industry that has stability, reliability and predictability at its very core.”
In an email Wednesday afternoon, Cahill said the delay from the department was a “reasonable step” and praised the action.
“An additional 45 days will allow title insurance companies and agents more time to receive guidance and clarity from the department. During this period the Legislature will continue to review concerns as well as ensure that the department has worked within its authority. Many responsible parties associated with title insurance raised serious issues with compliance and disruption of an important industry in New York. That is why I asked for the reprieve. I applaud Superintendent Vullo for acting decisively in the face of those concerns,” Cahill said.
The final regulations issued in October by the DFS clarify rules around marketing expenses, including meals, entertainment and ancillary fees, for which title agents or title insurers may charge a customer at closing. Another regulation finalized by the state agency requires title insurance companies and agents that generate a portion of their business from affiliations to function separately and independently from any other affiliates. Title insurance companies and agents must be able to accept business from other sources as well.
While the majority of the regulations went into effect Monday, the part of the regulation that prohibits title insurance companies or agents from providing meals, entertainment or gifts has been delayed until Feb. 1, 2018.
In a statement to the New York Law Journal, Vullo said she decided to delay Section 228.2 of the regulation for “a mere six weeks” after receiving letters from lawmakers who had asked for a much more substantial delay, and after being apprised that the Democratic-dominated Assembly may hold a hearing on the matter next month.
“All other provisions of Regulation 208, as well as the entirety of Regulation 206 continue to remain in effect. As DFS superintendent, I look forward to testifying at any hearing the Legislature may hold to discuss the important protections the regulations provide home[ ]buyers and shining a light on the industry's history of inappropriate, and in some cases, illegal conduct that has resulted in decades of inflated title insurance rates,” Vullo said in an email.
Bob Treuber, executive director of New York State Land Title Association Inc., which represents the industry, said the regulations will reverberate throughout the title insurance industry in New York.
“As many in the housing industry have been saying repeatedly, the new regulations will have major fallout for the title insurance industry, and therefore, consumers, other real estate professionals and the real estate industry as a whole. Those effects include people losing their jobs, local mom-and-pop companies (many that have been in business for decades) being forced to close, and, for consumers, a disruption in the housing as well as the [refinance] market. As we have said, we understand and appreciate what DFS is trying to do but it appears that these regulations will only hurt New Yorkers, not help them,” Treuber said in an email.
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