Title Insurance: Presentation for National Notary Day Alfred W. Redmer, Jr. Insurance Commissioner November 14, 2015

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1 Title Insurance: Presentation for National Notary Day 2015 Alfred W. Redmer, Jr. Insurance Commissioner November 14,

2 Overview Maryland Insurance Administration (MIA) Title insurance Title insurance producers Title insurance complaints Regulatory gaps CFPB, TIPs and TIPICs MIA Licensing - SBS Questions/contacts 2

3 MIA Independent State agency Regulates Maryland s $26 billion insurance industry by: Licensing insurers and producers Currently 1,500 insurers More than 110,000 insurance producers Examining financial affairs and business practices of insurers Investigating consumer complaints Regarding practices of an insurer, agency or producers Reviewing insurance policy forms and rates Informs the public about the business of insurance 3

4 Title Insurance A unique type of insurance Protects real estate purchasers and/or lenders from losses that arise after a real estate settlement from unknown liens, encumbrances or other defects upon the title that existed prior to settlement Provides coverage for legal defense and loss of the property up to the coverage amount (usually the purchase price) May only be offered by insurer authorized by the Commissioner to sell title insurance Policies sold and underwritten by title insurance producers 4

5 Title insurance producers Title insurance producer (TIP) A person that, for compensation, solicits, procures, or negotiates title insurance contracts Includes a person that provides escrow, closing or settlement services that may result in the issuance of a title insurance contract Title insurance producer independent contractor (TIPIC) Provides escrow, closing or a settlement service that may result in the issuance of a title insurance contract as an independent contractor for, or on behalf of, a licensed TIP 5

6 Title insurance producers continued Both TIPs and TIPICs must be licensed as TIPs Licensure requirements include: Must be 18 years of age or older Be of good character and trustworthy No violations of of the Insurance Article Complete pre-licensing education (30 hour course of study) Meet experience requirement Pass the examination 6

7 Title insurance producers continued In addition, a TIP must file with the Commissioner a: Blanket fidelity bond covering appropriate employees and title insurance producer independent contractors; and Blanket surety bond or letter of credit. Unless the Commissioner approves a lesser amount, each bond or letter of credit must be for $150,000. 7

8 Title insurance producers continued TIPs: Collect the premiums Issue the title insurance policies Conduct the settlements or closings Collect and disburse escrow funds for mortgage payoffs, taxes, closing costs, realtor commissions, etc. TIPICs: Conduct the settlement or closing Collect the premiums 8

9 Title insurance producers continued TIP is legal principal and liable for the TIPIC s actions TIP may use a TIPIC if the TIPIC: Has been appointed by the title insurer; and Is covered under the TIP s blanket fidelity bond and blanket surety bond/letter of credit This information can be verified through the TIP or title insurer. The TIP s and TIPIC s name, address and license number must be included on or recorded with the deed 9

10 Title insurance complaints Common complaints Failure to payoff a prior mortgage Failure to record the deed Failure to charge and collect the appropriate premiums Failure to issue title insurance policies Misappropriation of escrow funds Falsification or forgery of escrow documents 10

11 Title insurance complaints continued Regulatory action available to MIA: Administrative Action including a fine and/or restitution against a TIP or TIPIC for violation(s) of the Insurance Article Deny, suspend, revoke or refuse to renew the license of TIP or TIPIC for violation(s) of the Insurance Article Require title insurer to make a policyholder whole because of the actions of its agent 11

12 Regulatory gaps Changes made to state law in 2009 and 2010 as a result of regulatory gaps Access to escrow funds held by a title agency limited to licensed TIPs Bond/letter of credit amounts increased from $100,000 to $150,000 Effective December 1, 2014, regulations now exist establishing uniform procedures for insurers annual on-site review of TIPs which are reviewed by the MIA. 12

13 CFPB, TIPs and TIPICs TRID or the TILA-RESPA Integrated Disclosure Rule went into effect in October of 2015 which is a federal law affecting the mortgage industry. CFPB has presented five webinars on the TILA- RESPA Integrated Disclosures which answer a number of questions they have received. Those questions and answers are available at: 13

14 CFPB, TIPs and TIPICs These new laws appear to affect the title agencies you perform closings for more than they would affect you. However, you still need to be familiar with those laws and make sure you are not found in violation. It is not the role of the MIA to enforce federal law, but we do expect our licensees to abide by and obey those laws. 14

15 MIA Licensing - SBS Licensing of TIPs and TIPICs can be verified online through State Based Systems ( SBS ) and can be accessed from the MIA s website home page which is under the On-line Services Tab in the left margin. This database is updated daily and provides the licensing status of agencies and producers. 15

16 Questions? Contacts: Alfred W. Redmer, Jr. Insurance Commissioner Victoria August Associate Commissioner Compliance and Enforcement Unit Darlene A. Arnold, Chief Compliance and Enforcement - Title