New York Finalizes Regulations to Crack Down on Title Insurance Industry
The New York Department of Financial Services (DFS) has finalized two regulations to protect New Yorkers and crack down on unscrupulous practices in the title insurance industry.
These regulations, which are the culmination of efforts by DFS to reform the title insurance industry, began after a DFS investigation that revealed title insurance companies and agents have spent millions of dollars on inducements that the industry has charged back to consumers as marketing costs.
The DFS investigation found improper marketing expenses were being provided to attorneys and real estate agents and others who order title insurance on behalf of their clients. As a result, DFS commenced significant efforts to reform the industry, which include licensing of title insurance agents and reductions in rates for refinancing transactions.
“These regulations end the widespread practice of using meals and entertainment as inducement for the title insurance business,” said Superintendent Maria Vullo in a DFS press release. “New Yorkers can now rest assured that they will know exactly what they are paying for during the closing process and that they will pay only their fair closing costs.”
The first regulation clarifies rules about marketing expenses, including meals and entertainment and ancillary fees that title agents or title insurers may charge the insured at closing. The second regulation requires title insurance companies or agents that generate a portion of their business from affiliates to function separately and independently from any affiliate and be open for business from other sources.
The final regulations supersede emergency regulations DFS issued earlier to address questionable title industry practices. The new rules adopted by DFS take into consideration comments submitted during the comment period for the proposed regulations published in May 2017, as well as from earlier comment periods.