A New York State Senate bill to reform regulations that oversee the title insurance industry passed with broad bipartisan support last week, but a sister bill did not make it out of committee in the New York State Assembly on Thursday, the end of this year’s legislative session.
The bill, sponsored by State Senator Marty Golden, a Republican from Brooklyn, prohibits the Department of Financial Services (DFS) from ”establishing fees for ancillary or discretionary non-insurance services provided by title insurance agents.”
The legislation came about as a response to enforcement actions introduced by DFS in 2017, as first reported in The Real Deal.
“In 2017, (DFS) promulgated Regulation 208, which imposed strict limits on the fees title agents can charge for their services, many of which go beyond issuing title insurance policies,” the bill reads. “This one-size-fits all approach promulgated by DFS fails to account for the time and attention title professionals spend performing these services, and results in services rendered without compensation.”
As part of Regulation 208, DFS established a limit to the ancillary fees and expenses that may be charged consumers for residential closings.
Also among the other rules set forth in Regulation 208 was the ban of title insurance companies providing clients with meals, entertainment, sporting event tickets, vacations and parties. DFS argued that these practices result in higher fees and closing costs for the industry.
“These regulations end the widespread practice of using meals and entertainment as inducement for title insurance business,” said DFS Superintendent Maria Vullo, when the regulation was introduced. “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 Senate passed a bill in January that rolled back those regulations, but that also failed to make it through the New York State Assembly.