Welcome to today s webinar! TDI Audit Review John Rothermel January 17, 2019

Transcription

1 Welcome to today s webinar! TDI Audit Review John Rothermel January 17, 2019

2 In order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum of 55 minutes obtain the password (provided at the end of the presentation) follow the instructions as given 2

3 ATTORNEY INFORMATION Because of opinions expressed by the Texas Department of Insurance (TDI) concerning rebates, legal credit is available only to: Attorneys who own title agencies that are Stewart Title Guaranty Agents Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity We welcome any other lawyers to listen, but cannot provide continuing education credit to you. 3

4 TDI Audits Review John Rothermel Senior Vice President Regional Underwriting Counsel Senior Underwriter SW Regional Underwriting Office Stewart Title Guaranty Company

5 5 Information taken from the Texas Department of Insurance (TDI) Summary of Operations Report for the 4 th Quarter of Financial Year 2018 (June to August) presented to Texas Title Insurance Guaranty Association Board of Directors 10/29/2018.

6 Compliance Audits and Escrow Audits Reports QTR FY 18 FY 17 FY 16 FY 15 FY 14 Field audits completed Field audit reports processed Section audit reports received Section audit reports reviewed

7 Analysis of Title Insurance Agencies Licensed as of 8/31/2018 Region NTX CTX WTX HOU STX # of Agencies Agencies audited within last 2 years Breakdown of Comprehensive Audit Status Agents last audit was 2-3 years ago Agents last audit was over 3 years ago # of (new) Agents Never Audited Totals: % of Total: 86.8% 8.2% 0.7% 4.3%

8 REVISED Goal: In order to comprehensively audit every agent at least once every 2 years, we need to conduct 300 comprehensive audits per year, which amounts to 75 audits per quarter. Last 12 months (9/1/17 8/31/2018) 265 audits (within 35 of goal) Last 3 months (6/1/18 8/31/18) 65 audits (within 10 of goal) 8

9 Experience Report Limited Reviews Out of 63 comprehensive audits completed during the quarter, 55 (85%) included a limited review of the agent s latest experience report. The following results were reported. Number of experience reports reviewed No material discrepancies noted Income and/or expenses reported in wrong categories 3. Total income and/or expense amounts reported didn t agree with agency s financial statements 9 QTR FY 18 FY 17 FY 16 FY 15 FY

10 Insolvency Financial statements indicated agent was insolvent or had cash flow problems

11 Abstract Plant Agency unable to retrieve instrument information. Unable to verify legal plant

12 Texas Insurance Code Conducted unauthorized business of insurance

13 Texas Insurance Code Issued polices for property in county where not licensed

14 Texas Insurance Code Failed to maintain separate escrow account (commingled escrow & operating funds)

15 Texas Insurance Code Annual escrow audit report prepared incorrectly or contained material inaccuracies or other problems

16 Texas Insurance Code Unlicensed person acting as an escrow officer

17 Texas Insurance Code Actual receipts and/or disbursements not in agreement with settlement statement or premium split not disclosed

18 Title Bulletins Title Bulletin NO. 160 All parties receiving portions of the real estate commission not disclosed on settlement statement

19 Procedural Rules P-21: Schedule D of commitment not in file or premium split not disclosed on commitment

20 Procedural Rules P-73: Failure to prepare/maintain Form T-64 (TD) when CD used

21 Rate Rules R-1: Unauthorized fee charged for closing (or tax search) in addition to premium

22 Rate Rules R-2: Premium collected in installments or premium not collected at all

23 Rate Rules R-8: Refinance credit not given or not calculated correctly

24 Minimum Escrow Accounting Procedures & Internal Controls #1 Monthly escrow trial balances not prepared or not prepared timely

25 Minimum Escrow Accounting Procedures & Internal Controls #3 Reconciliations not approved by management or reviewed by another employee

26 Minimum Escrow Accounting Procedures & Internal Controls #5 Only one signature on escrow checks when agency s size required two signatures

27 Minimum Escrow Accounting Procedures & Internal Controls #6 Record did not include copies of all checks, invoices, deposit slips and receipt items

28 Minimum Escrow Accounting Procedures & Internal Controls #9 Escrow bank accounts not styled as escrow or trust

29 Minimum Escrow Accounting Procedures & Internal Controls #10 No management approval for disbursement made on accounts open for more than six months or no review for disposition of funds

30 Minimum Escrow Accounting Procedures & Internal Controls #14 Guaranty file number not displayed on all escrow checks or deposit tickets

31 Minimum Escrow Accounting Procedures & Internal Controls #15 Disbursement sheets missing, incomplete or incorrect

32 Minimum Escrow Accounting Procedures & Internal Controls #16 Every disbursement not supported by invoice or sufficient other evidence

33 Minimum Escrow Accounting Procedures & Internal Controls #17 Escrow receivables not cleared timely

34 Minimum Escrow Accounting Procedures & Internal Controls #20 Images of checks did not meet requirements

35 Escrow Auditing Pattern of posting errors

36 Escrow Auditing Outstanding checks not cleared timely

37 Guaranty Files Legal documents not recorded timely with county clerk or evidence of timely recording not on file

38 Guaranty Files Funds not disbursed or escheated to state

39 Minimum Capitalization Rules S. 5: Quarterly tax report not submitted timely

40 Contact Info John Rothermel SW Regional Underwriter Senior Vice President Senior Underwriter Stewart Title Guaranty Company San Antonio, Texas

41 Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit you must: listen to the webinar for a minimum of 55 minutes obtain the password (provided at the end of the presentation) follow the instructions as given 41

42 To Receive CE Credit Each individual seeking credit hours must send their own certificate request to: Please include the following information: Provide only this Presentation Name in the Subject Line of your TDI Audit Review In the body of your Name of Participant (as it appears on your Escrow Officer License); Presentation PASSWORD given at the end of the webinar; License Number Only (located on left side of Escrow Officer Certificate of License for example: License Number: ) For Attorney CLE Credit also include: Texas State Bar Number Affiliation with Stewart Employed by Stewart Title Guaranty Company; an affiliate; or a Stewart agent For more details, see the CE and CLE FAQs at: 42

43 Recordings Under Texas TIPS tab Posted online 10 days after live presentation Other current courses available Certificates Processing can take up to 10 business days. Contact us if you haven t received your certificate after the allotted processing time. CEcertificate@stewart.com 43

44 Join us for the next Texas TIPS webinar! February 21, 2019 Basic Bankruptcy Victor Davis For Questions/Comments or 44