New York State Proposes New Rules On Title Insurance Companies
June 05, 2015
New York has joined the “new era” of compliance. Governor Cuomo has made significant announcements which effect title insurance agencies.
With the help of the New York Superintendent of Financial Services, Governor Andrew Cuomo introduced a set of regulations that affect the title insurance industry. These include several new restrictions on entertainment expenses and meals. Superintendent Lawsky and Governor Cuomo said that misuse of funds and unwarranted kickbacks some parties receive in the industry are raising the cost of title insurance for New Yorkers.
In a recent press release, the team stated that these new regulations would cut back on needless expenditures by banning the use of gifts and meals purchased for other parties in exchange for title insurance business. They reviewed the results of an investigation by NYSDFS regarding unnecessary expenditures of title companies. The results showed that inducement arrangements were very common and extremely pricey. With some types of insured transactions, they said this could increase premiums for consumers by as much as 60 percent. In addition to these regulations, ancillary title insurance charges would have caps assessed to them.
Cuomo said that New York residents should not have to be the ones paying higher costs when closing for a home or refinancing just because title insurance companies are misappropriating funds. He also said that the administration would not tolerate this type of abuse from the industry any further. The regulations will enforce proper use of funds to ensure New York consumers are not handed an unfair bill for wasteful spending that they had nothing to do with.
The superintendent and governor will also require title insurance companies to file papers every few years to show that their expenditures are in compliance with the new insurance laws. All expenditures will be analyzed to ensure they are not discriminatory, excessive or inadequate. To make sure compliance is enforced, the New York State Land Title Association has been cooperative with the NYSDFS and its new regulations. Their goal is to provide protection for consumers against unfair practices and to ensure the benefits they receive are of greater transparency.
In 2014, the New York State Land Title Association offered feedback about title agents’ licensing procedures. They said the new regulations would also be analyzed for success and feedback would be provided to track progress. The new regulations support the purpose of the CFPB Real Estate Settlement Procedures Act of 1975, which mandated that all parties involved in real estate transactions be upfront about the nature of all costs.
Frivolous expenditures that could increase premiums by as much as 60 percent is serious enough that all New Yorkers and honest title companies should be in full support of the new regulations. It is important for consumers to remain protected from the wastefulness of unscrupulous businesses that are supposed to be on their side. This new era of compliance is a breath of fresh air for all New York consumers who want to buy or refinance a property. Please call us at Nationwide for more information!
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