Print this page Important Dates (covered in this Dateline) April 1, 2008 Effective date for Guaranty Fee to increase April 8, 2008 Election Day for run-offs in Republican Primary April 22, 2008 TLTA P-24 and More teleconference-- Register Today! May 1, 2008 Effective date for the majority of rule and rate hearing items May 13, 2008 RESPA proposal comments due to HUD July 1, 2008 Effective date for new P-24 change October 1, 2008 Effective date of for new rule P-67; RE: RCL record keeping

 

 

REGULATORY NEWS

 

Commissioner Adopts Rule Changes with Multiple Effective Dates
As reported in TLTA Breaking News on March 13, Texas Department of Insurance (TDI) Commissioner Mike Geeslin has officially adopted changes to the current rules and forms. Overall, there were 39 rule and 7 rate hearing agenda items adopted. We encourage you to review each adopted agenda item due to the numerous changes that will take place over the next several months. We also encourage you to read the adopted Order issued by TDI, specifically pages 13 – 22 where the Commissioner comments on agenda items that received public comment. This will provide additional insight into his ruling.  

Make note of effective dates - The majority of adopted agenda items will be effective May 1, 2008. Agenda item 2006-65 relating to P-24 will be effective July 1, 2008. Agenda item 2006-38 relating to the database for insured closing letters to be maintained by underwriters will be effective October 1, 2008.

The following information is a brief summary of adopted agenda items; however we urge you to review each adopted agenda item for specific changes.

ADOPTS NEW FORMS AND RULES
2006-01 Adopts a new Co-Insurance Endorsement (T-48) to accommodate commercial lenders and owner who often request this endorsement in multi-state, multi-site and other large transactions.

2006-07 Adopts a new Procedural Rule (P-63) that incorporates the procedural portion of R-2(d) concerning policy issued to a qualified intermediary under IRS Code 1031 and also contains deletions and improved formatting.

2006-08 Adopts a new Procedural Rule (P-64) regarding the treatment of subordinate liens and leases in order to better alert title companies to comply with the instruction in P-11.b.(8).

2006-9 Adopts a new Procedural Rule (P-65) to conform with sections in the Insurance Code. The former Article 9.55 (now Section 2704.051 of Title 11) was enacted to ensure that a consumer would be offered the option to purchase an owner policy of title of insurance, concurrently with a mortgagee policy of title insurance required by a lender. Adding a Procedural Rule in regard to this requirement will ensure that consumers are made aware of the availability and cost of owner’s coverage and have an opportunity to purchase or reject same at the time they purchase a home.

2006-10 Adopts a new Procedural Rule (P-66) to include procedures currently in other rate (R-3, R-4, R-6) and procedural rules (P-45) into one rule relating to determining the correct amount of insurance in owner and mortgagee policies.

2006-38 Adopts a new Procedural Rule (P-67) to provide better auditing tools regarding ICL’s to ensure compliance with Chapter 2702 of the Insurance Code. The later effective date was requested in order to provide sufficient lead time for underwriters to retool their databases to capture all of the items listed in P-67 and to upgrade their data gathering capabilities to comply with the new rule.  THIS AGENDA ITEM 2006-38 IS EFFECTIVE October 1, 2008

2006-39 (See Agenda Item 2006-43) Adopts a new Procedural Rule (P-68) to clarify that Insurance Code 521.101-521.103 applies to the title insurance industry and to ensure title industry compliance with the statute. By Commissioner’s Order No. 06-1327, dated January 2, 2007, the Commissioner of Insurance adopted amendments to 28 Texas Administrative Code (TAC) §1.601, concerning the notice of toll-free telephone numbers and procedures for obtaining information and filing complaints that insurers are required to provide to consumers with each insurance policy, certificate, or evidence of coverage issued or renewed in the State of Texas. 28 TAC §1.601 implements Texas Insurance Code (TIC) §§ 521.101-521.103, which expressly applies to Title Insurance Companies under TIC § 521.101(a)(3). This change is necessary to ensure that Title industry practices comply with TIC §§ 521.101-521.103 and 28 TAC §1.601. 28 TAC §1.601 contains a single page form template that can be readily attached to each policy containing all of the elements required by the rule. Title Division Staff is satisfied that the form template promulgated by the Commissioner in 28 TAC §1.601 adequately ensures Title industry compliance with TIC §§ 521.101-521.103.

REPEAL AND ADOPT
2006-03 Repeals the current Verification of Services Rendered Form T-00 and adopts a NEW Form T-00 to organize the information each entity participating in the transaction must provide and to assist underwriters in reporting that information to the Department.

AMENDS PROCEDURAL RULES
2006-02 Amends P-6 to authorize a Co-insurer to issue a Co-insurer Endorsement (see 2006-01) to another Title Insurer’s Owner or Mortgagee Policy when the coinsurance transaction exceeds fifteen million dollars.

2006-12 Amends P-7 to incorporate the language from Bulletin 157 into the procedural rules and to resolve the question as to whether it is permissible to include the “successor in ownership” language as part of the Proposed Insured in a Commitment. This does not extend the scope of the Commitment, as it merely mirrors the definition of insured in the policy and it is responsive to the needs of the lending community who want to be assured that the title company will follow their instructions in regard to including this language on the policy when issued.

2006-14 Amends P-21 to make the terms used in the rule consistent with Insurance Code, §2651.203 and to update references to the Commissioner of Insurance. Paragraph 3 of the Procedural Rule sets forth the procedures for the use of Schedule D of the Commitment. Schedule D is authorized by Section 2651.203 of Title 11, Texas Insurance Code, and specifically uses the term “a portion of the premium”. This amendment will make the Procedural Rule consistent with the statute. The amendment also updates the Procedural Rule to make the correct reference to the Commissioner of Insurance rather than the State Board of Insurance.

2006-15 Amends P-28 to eliminate the need for a company owning multiple title insurance companies to make multiple course submissions and/or assignments between the related title insurance company providers. There are now several “holding companies” which own two or more title insurance companies authorized to do business in Texas. Frequently, these companies have a shared training department for the purposes of providing education to the agents representing their various title insurance companies. Under the current regulations, courses may only be provided by individual title insurance companies, requiring multiple course submissions and/or assignments between related title insurance company providers. The change will reduce the work of the department in handling requests for approval of CE courses without diminishing the quality of education provided to agents.

2006-16 Amends P-45 to make the rule consistent with the federal requirements regarding the Maximum Claim Amount for FHA-insured loans and to allow the insured amount to be determined by lenders through a lender estimation of the maximum amount that may be secured by lien. Under federal regulations FHA-insured loans must be insured up to the Maximum Claim Amount which may not equal or may exceed 150% of the total advances made in accord with the plan established by the original loan agreement.

2006-17 combined with 2006-42 Amends P-53 to remove the sunset provision to ensure that the rule will remain in effect.

2006-27 Amends P-1 to make conforming changes based on the proposed amended Owner and Mortgagee Policies renaming the two policies to coincide with terminology utilized in the corresponding ALTA policies. Also provides that the new terminology may be incorporated in newly printed or electronically generated forms and clarifies that forms and rules referring to defined terms or the Conditions of the Owner’s Policy (T-1) or the Loan Policy (T-2) shall be deemed to make such reference, even if the term is not capitalized or if the reference is made to the Conditions and Stipulations, instead of the Conditions.

2006-29 Amends P-32 to clarify time periods for retention of documents and to conform to provisions of UETA and E-SIGN and allows for electronically produced or scanned documents to be retained in place of hard copies. Escrow accounting information must be retained for three years, evidence of insurability must be retained for at least 15 years and title insurance policies must be retained indefinitely.

2006-30 Amends P-36 to conform with the amended Owner Policy and Mortgagee Policy and to make other changes including increasing the threshold for arbitral matters to two million dollars and deleting the choice of law provision.

2006-31 Amends P-37 to conform the reference to the Access Exception provisions to the Mortgagee Policy (T-2) and Owner Policy (T-1) as amended.

2006-40 Amends P-1, subparagraph f to conform the definition of closing the transaction to the statutory definition of closing the transaction in Insurance Code 2501.006.

2006-42 combined with 2006-17 Amends P-53 to remove the sunset provision to ensure that the rule will remain in effect.

EFFECTIVE July 1, 2008 2006-65 Amends P-24 to provide restrictions on a title insurance company, agent, or direct operation regarding prior written agreements that deviate from the premium split set forth in P-24.

AMENDS INSURING FORMS
2006-04 Amends T-31.1 the Supplemental Coverage Manufactured Housing Unit Endorsement Form to conform to the new American Land Title Association form by clarifying the insurance against personal property liens and by ensuring that a foreclosure of an insured mortgage may be conducted by one procedure.

2006-06 Amends T-47 Residential Real Property Affidavit to remove specific language in the affidavit that requires the name of the title company to be identified and to insert generic language to allow the affidavit to be prepared and executed early in the transaction process.

2006-05 Amends T-35 the Revolving Credit Endorsement (to be called the Future Advance/Revolving Credit Endorsement) conforming the Endorsement to the coverage provided in the ALTA Endorsement (ALTA 14).

2006-24 Amends the T-1 Owner Policy based on the new 2006 ALTA Owner’s Policy.

2006-26 Amends the T-2 Mortgagee Policy based on the new 2006 ALTA Loan Policy.

2006-32 Amends the T-18.1 Facultative Reinsurance Agreement Form based on changes contained in the new ALTA Reinsurance Agreement and to clarify a reinsurer’s payment obligations.

2006-33 Amends the T-19 Restrictions, Encroachments, Minerals Endorsement to conform to the new ALTA Endorsement 9.3-06 which may be issued with the proposed amended Mortgagee Policy (T.2).

2006-34 Amends the T-19.1 Restrictions, Encroachments, Minerals Endorsement – Owner Policy to conform to the new ALTA Endorsement 9.5-06 which may be issued with the proposed amended Owner Policy (T-1).

2006-35 Amends the T-21.1 Tertiary Facultative Reinsurance Agreement (Type I) Form to conform to the proposed amendments to the Facultative Reinsurance Agreement Form T-18.1.

2006-36 Amends the T-21.2 Tertiary Facultative Reinsurance Agreement (Type II) Form to conform to the proposed amendments to the Facultative Reinsurance Agreement Form T-18.1.

2006-43 (See Agenda Item 2006-39) Amends insuring forms T-7, T-1, T-1R, T-2, T-2R to remove outdated language regarding the consumer complaint notice. This change was necessary to repeal language concerning the required consumer notice provisions within the title forms and to ensure that Title industry practices comply with TIC §§ 521.101-521.103 and 28 TAC §1.601. The current practice of including the consumer notice at the end of each title policy does not comply with 28 TAC §1.601(a)(3), which provides that "...(t)he notice must appear on a full, separate page with no text other than that provided in this section..." Moreover, 28 TAC §1.601 contains a single page form template that can be readily attached to each policy containing all of the elements required by the rule. Title Division Staff is satisfied that the form template promulgated by the Commissioner in 28 TAC §1.601 adequately ensures Title industry compliance with TIC §§ 521.101-521.103.

AMENDS MINIMUM STANDARDS, SPECIFIC INSTRUCTIONS AND REPORT FORMS
2006-22 Amends the Minimum Standards, Specific Instructions and Report forms for Audit of Trust Funds Required of Texas Title Insurance Agents, Direct Operations, Title Attorneys, and Attorney’s Licensed as Escrow Officers pertaining to the Policy Guaranty Fee and Guaranty Assessment Recoupment Charge to provide that maintaining a policy guarantee fee escrow account and a guaranty assessment recoupment charge escrow account separate from the agent’s standard audited escrow account is optional.

2006-44 (Partial adoption see agenda item) Amends the Minimum Standards, Specific Instructions and Report Forms for Audit of Trust Funds Required of Texas Title Insurance Agents, Direct Operations, Title Attorneys and Attorneys Licensed as Escrow Officers by adding additional language to Minimum Escrow Account Procedures and Internal Controls, 18, to help identify fraudulent real estate transactions. Some lenders have released money based on settlement statements that are later substantially revised. In order to prevent title agents who commit fraud from taking advantage of the flexibility allowed by this standard, the Department requires a final revised settlement statement be delivered to the lender and borrower.

***Important note – Read the Commissioner’s order, pages 17-19, for explanation of the issue relating to “search services” as a pass-through fee chargeable to consumers. The Department did not adopt the proposed changes to Specific Areas and Procedures 5. However, they assert that tax search services have always been considered to be part of the overhead and that a fee for such services is not enumerated as a consumer pass-through fee in the language of the current Specific Areas and Procedures 5. In addition, the comment asserts that Specific Areas and Procedures 5 does not disallow the use of tax search services, but merely reflects that such fees have already been accounted for in the rate for title insurance.

AMENDS ADMINISTRATIVE RULES
2006-19 Amends Administrative Rule L-1 to provide that the Department must send notice of renewal to each agent at least 45 days prior to the expiration of the agent’s license and, if not renewed, within 45 days after the license expires.

2006-45 Amends Administrative Rule L-1 to clarify that a title insurance agent may not commence business in a county until authorized by the Department.

2006-46 Amends Administrative Rule L-2 to require attorneys who are licensed escrow officers to close  the transaction in the title agent’s name, to require attorneys who are licensed escrow officers to use the title agent’s escrow account, and to require escrow officers to keep a current address on file with the Department.

2006-47 Amends Administrative Rule L-2 to clarify that a non-attorney employee of an attorney must be licensed as escrow officer prior to performing the duties of an escrow officer.

2006-48 Amends Administrative Rules L-1 and L-2 to ensure that the Title Agent and Escrow Officer licensing procedures are consistent with the Texas Business Organizations Code, which went into effect on January 1, 2006, and to simplify the merger, exchange, and conversion process when an organizational restructuring results in a less than 50% change in ownership.

2006-49 Amends Administrative Rule G-1 to clarify that Policy Guaranty Fees must be postmarked on or before the due date to be considered timely.

AMENDS STATISTICAL PLAN
2006-50 Amends the Texas Title Insurance Statistical Plan.

Commissioner Adopts Changes to P-24 – Effective July 1, 2008
The Commissioner has adopted proposed changes to Procedural Rule P-24 (Agenda Item 2006-65) relating to Payment for Services Rendered by a Title Insurance Company, Title Insurance Agent, or Direct Operation to Another Title Insurance Company, Title Insurance Agent or Direct Operation. The changes include:

1. Premium splits on transactions involving an insured policy amount in excess of $125,000 shall not exceed fifty percent for furnishing title evidence, or furnishing title evidence and title examination and shall not exceed fifty percent for closing the transaction, or closing the transaction and title examination.

2. Restricts prior written agreement arrangements by requiring that prior written agreements must be entered into 90 days prior to closing and by stipulating that the parties to the agreement must be licensed in the same or in contiguous counties when an insured policy amount is $125,000 or less.

3. Requires that all payments must be remitted within 30 days after the date of recording of the conveying instrument and that the prior written agreement restrictions apply also to escrow officers.

4. On or after January 31, 2013 the insured policy amounts will increase to $150,000.

For more information about TLTA’s position on Agenda Item 2006-65 and to review its movement, refer to the October 4, 2007 Breaking News.  

Several Changes to Current Rate Rules Effective May 1, 2008
As we reported to the membership on February 27 in a Breaking News, all parties to the 2006 Biennial Rate Hearing, including the Texas Department of Insurance and OPIC, agreed to a Consent Order that provides there will be no change in title insurance rates; however several rate rule changes were adopted. Click here to read official order.

Parties to the rate hearing became concerned by the uncertainty in the real estate market over the last several months and agreed that no change to the rates should be made at this time. As part of the settlement, the Texas Department of Insurance has also agreed in the Consent Order to issue a Notice of Public Hearing for the 2008 Texas Title Insurance Biennial Hearing after July 1, 2008. 

Some items in the ratemaking phase of the Biennial Hearing were adopted as part of the Consent Order and some were withdrawn but may be resubmitted at a future hearing. All ratemaking adopted agenda items will be effective May 1, 2008. We have included a brief summary of changes below; however encourage you to review each agenda item as adopted. Click here for a list of all adopted items. 

1. 2006-55 Amends R-2 to address the situation in which a form of coverage may become effective before a ruling has been made regarding the proposed rate.
2. 2006- 56 Amends R-3 to create a new procedural rule (see agenda item 2006-10) and clarifies that the premium credit on surrendered policies is calculated using the currently promulgated Basic Rate.
3. 2006-57 Amends R-3 to create a new procedural rule (see agenda item 2006-10) and the reference to “an adjustable rate mortgage” has been amended to “a variable rate mortgage” in keeping with the form name change effective November, 2005.
4. 2006-58 Amends R-7 to clarify that each policy bears a separate premium and to assist the policy typist in associating a collected premium with a produced policy.
5. 2006-59 Amends R-15 by moving a portion of Rate Rule R-3 relating to the Increased Value Endorsement to Rate Rule R-15 with other owner endorsements. It is also recommended that endorsement rules make reference to the form number and, when applicable, the Endorsement Instruction, rather than by cross-reference to procedural rules.
6. 2006-60 Amends R-18 to re-name the rate rule to Refinance of a Construction Loan and allow the rule to meet current lending standards, where frequently two permanent loans are used to refinance a single construction loan. At present the rule does not provide for the instance in which two new loans are secured to pay off the construction loan, thereby making the renewing borrower pay a higher premium under Rate Rule 8. Consumers will benefit from this addition to the existing rule.

Guaranty Fee to Increase April 1, 2008
On January 28, 2008, the Board of Directors of the Texas Title Insurance Guaranty Association voted to increase the policy guaranty fee from $1.00 to $5.00 effective April 1, 2008. The Guaranty Fee will be $5.00 for each owner title policy and $5.00 for each mortgagee title policy collected during the applicable quarter. Please make the appropriate changes to your closing/collection procedures to change to the new fee as of April 1, 2008.

Click here to download a copy of the official notice and new form for your use in submitting the fee (or download an interactive form). The new fee will be due with this new form on or before August 1, 2008. Remember to use the old form for the first quarter of this year, which is due on or before May 1, 2008, and will cover January 1, 2008, through March 31, 2008. Click here for a helpful question and answer document.

Basic Manual Changes Coming Soon – Become a Subscriber and Save $$$$
The Commissioner has officially adopted numerous changes to rates, rules and forms therefore it is time to update your basic manual. Most of the rate and rule changes will be effective May 1, 2008. However, there will be subsequent updates relating to P-24 available July 1, 2008 and another update relating to ICL’s available October 1, 2008.  

The easiest and most cost-effective way to update your manual is to subscribe to our subscription service. Not only will you save money but you will automatically receive the last two updates without having to place an order. Click here to subscribe to this valuable service.

Updates to the Basic Manual regarding the rule and rate hearing will be similar to what you have received in the past. However, changes to the Basic Manual regarding the business of personal property title insurance will be included in a separate binder and referred to as Section 8; and will be available as a separate purchase.  We will also make it available online as soon as possible.

P-24 and More:  Sign Up Today for TLTA’s Teleconference on the New Rule and Rate Changes
So many changes, so little time—no problem! Get an overall update on all the new rules and forms over your lunch hour.  For a very low cost, TLTA is hosting a teleconference featuring industry experts to discuss all the new changes. The program will be offered on April 22 from 11:30 a.m. to 1:30 p.m. Click here to sign up today!

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LEGISLATIVE NEWS
 

Regional PREP Chapter Meets in Denton
The regional Property Records Education Partners (PREP) Chapter of the Property Records Industry Association held their quarterly meeting in Denton on March 13 to discuss issues related to real property records and the title insurance industry. Several TLTA members from the Dallas–Fort Worth area were present to hear from Senior Land Manager Bob Arnold discuss mineral rights.  Rep. Burt Solomons (R-Carrollton) also provided a legislative/election update. The group also discussed issues and concerns related to e-recording. The next meeting is scheduled for June.   

2008 Primary Election Update
The TLTAPAC contributed to 20 candidates who were all incumbents with legitimate opposition. At the end of the night, eight incumbents lost and one headed to a run-off. The TLTAPAC supported four of the losing incumbents including Rep. Nathan Macias (R-Bulverde) who lost by 29 votes and a recount of the ballots has been called. Additionally, TLTAPAC supported Rep. Buddy West (R-Odessa) who is in a run-off. Furthermore, there will be five other run-off elections held on April 8 which are all open-seat races. On the Senate side incumbent Senators Judith Zaffirini, Craig Estes, and Tommy Williams all won easily.  

If you are a registered voter in one of the run-off districts and did not vote in the Democratic Primary, you are eligible to vote in the April 8 Republican run-off election.  Those districts include:

• HD 52 (formerly Krusee) Republicans Bryan Daniel and Dee Hobbs

• HD 55 (formerly Delisi) Republicans Ralph Sheffield and Martha Tyroch

• HD 81 (held by West) Republicans Tyron Lewis and Buddy West

• HD 112 (formerly Hill) Republicans Angie Chen Button and Randy Dunning

• HD 144 (formerly Talton) Republicans Ken Legler and Fred Roberts

TLTA Legislative Committee at Work
On February 21, the TLTA Legislative Committee met under the direction of Chair Roland Love to begin drafting an agenda for the upcoming Legislative Session (view photos). Items discussed at the meeting include: privacy issues, mechanic lien contracts, mortgage fraud, mandatory sales price disclosure form and management certificates.

The committee also discussed several interim charges that effect the title insurance industry, specifically the Intergovernmental Relations Committee’s charge to review title insurance requirements relating to the purchase of a home under an installment contract or contract for a deed. We have been asked by Chairman Royce West (D-Dallas) to testify on this charge at his committee hearing schedule for March 26 in Dallas. We will report the outcome of this meeting in the April issue of Dateline Austin. 

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TLTAPAC UPDATE

Be a Part of History!
Support the TLTAPAC and also make history by joining the Centennial Club. To become a member, contribute $100 or more by June 30 and you will receive an exclusive ribbon at TLTA events and have your name inscribed on a special plaque that will hang in the TLTA office. Most importantly, you will be supporting your industry and its continuing success for years to come. Don’t miss out on this “once in a century” opportunity! See who is already making history and join fellow industry members by donating online today.

TLTAPAC Annual Golf Tournament
It is not too early to begin thinking about the annual TLTAPAC Golf Tournament on June 5, held in conjunction with the TLTA Annual Conference. This year’s tournament will be held at the magnificently scenic Westin La Cantera Resort. Participants will be playing the 6,926-yard, par-71 Palmer Course.

Please consider being a sponsor to make this tournament a huge success for the PAC! Show your company support in TLTA’s legislative efforts by donating corporate money to assist in TLTAPAC. We have several sponsorship opportunities still available. Find out how your company can support the PAC or contact Mary Beth Kiser.

 

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FEDERAL NEWS

HUD Proposes Major Changes to RESPA
The US Department of Housing and Urban Development (HUD) has published a revised RESPA reform proposal that would make significant changes to the closing process. The proposed rule, which was published in the Federal Register on Friday, March 14, 2008, is the product of a three-year revision by HUD to simplify the transaction process and encourage consumer choice. There is a 60-day comment period with comments due to HUD by May 13, 2008.  

Once TLTA has analyzed the 94-page proposal, we will then begin drafting comments to submit to HUD. However, an initial reading of the rule leads us to believe there will be major concerns for the settlement services industry. We urge you to take a close look at the proposed rule; specifically the new four-page Good Faith Estimate (GFE) and HUD-1, as well as the closing script, and provide us with your feedback at mindy@tlta.com. At a later date, we will provide you with talking points and ask you to submit comments to HUD.

It is important to remember that these are only proposed changes. After the comment deadline, HUD’s next steps can be any of the following including:

1. Adopt what was proposed;
2. Incorporate industry comments and republish a revised rule keeping the comment period open; or
3. Propose a final revised rule.  

Depending on HUD’s resolution, the Office of Management and Budget (OMB) retains oversight and will review the final proposed rule and either affirm or reject the proposal to HUD.

TLTA supports HUD's efforts to simplify the settlement process and make it more transparent; however we believe the revised rule falls short of this goal. We believe HUD will be urged to adopt and Congress will be pressured to support these changes to RESPA due to the downturn of the real estate market; therefore it is very important for TLTA and its members to remain engaged and mobilized.

While Congress is on break and members are back in their districts, we encourage you to meet with and educate them about this issue and how it will affect your business. The American Land Title Association (ALTA) has created simple talking points on the proposal that you can use when discussing this issue:

The proposed rule will make the process more complicated, less transparent and would not promote consumer choice -

1. Confusing and Unclear – Although the rule attempts to clarify the costs involved in the closing process, in reality it creates a complicated and confusing set of forms that may further baffle consumers.

(a) The proposed rule would turn the present one-page GFE into a four-page document that includes much more information than an estimate of settlement charges. The proposed GFE would provide loan term information and comparison data for other loans in a format which consumers are not likely to understand or use to shop.

(b) The proposed changes to the HUD-1 are meant to make it easier to compare costs with the GFE by parenthetically referring to GFE sections, but they could make it more confusing because they still don’t provide an “apples to apples” comparison of pricing.

2. The Rule Would Not Promote Shopping – The proposed rule may have the unintended effect of inhibiting consumer shopping.

(a) The proposed rule would allow originators to recommend settlement services providers, whose estimates would be subject to a 10% “tolerance.” There is nothing in this rule to ensure that recommended settlement service providers are the least expensive, most knowledgeable or qualified.

(b) The rule would inhibit a consumer’s willingness to shop if consumers felt that there would be no restriction on increased fees if they chose settlement service providers other than those recommended by the lender Consumers also would be discouraged from shopping and obtaining multiple GFEs because lenders are allowed to charge a fee for each GFE a consumer requests.

(c) The rule would incentivize the consolidation of settlement service providers and encourage lender-owned affiliated business arrangements, which may create less competition and shopping. 

3. Timing – HUD’s proposed changes are ill advised in light of the down business market.

(a) Given the present credit crunch, settlement service providers are reducing their staff. This is not the time to propose sweeping changes to the real estate industry that will burden settlement service providers with the time and expense to retool and retrain staff. 

4. Closing Script – The rule would require the settlement agent or closer to draft, read aloud, and provide a closing script in writing to consumers, which would explain the loan terms and compare fees on the HUD-1 to those estimated on the GFE. While fine in concept, the rule fails to foresee and address several practical considerations.

(a) It is unclear what action a consumer should take if questions are raised that cannot be answered by the closer who is not in the position to provide answers.

(b) Today, closers often don’t receive closing information from the lender until just prior to the closing. The rule would not change that practice.

(c) Rather than require a closing script, require earlier submission of closing information to the closer, to enable our members to provide closing documents to the consumer in advance.

(d) The proposed closing script explanation could subject the closer to state charges of the unlicensed practice of law.

TLTA Visits with Members of Congress
TLTA Members recently traveled to Washington, DC to attend the ALTA Annual Federal Conference (view photos). Members included TLTA Federal Issues Committee Chair Dawn Moore with First American Title, Todd Gregory with Countrywide Bank, FSB and TLTA Director of Government Affairs Mindy Carr.

Attending the conference was timely considering the buzz surrounding the release of the new RESPA reform rule. TLTA’s Washington, DC lobbyist Jim Hyland scheduled several appointments with members from the Texas Congressional delegation to discuss the new proposed rule as well as other issues affecting the title insurance industry.

TLTA had breakfast with Congressmen Pete Sessions (R-Dallas) and Randy Neugebauer (R-Lubbock) to discuss the latest RESPA proposal. We also met with the top aides to Senators Kay Bailey Hutchison and John Cornyn as well as Congressmen Kevin Brady (R-The Woodlands), John Carter (R-Round Rock), Mike Conaway (R-Midland), Henry Cuellar (D-Laredo), Kay Granger (R-Fort Worth), Al Green (D-Houston), Ruben Hinojosa (D-Mercedes) and Kenny Marchant (R-Carrollton).

We received very positive feedback from the Texas delegation and they expressed desire to help assist in our efforts. We also provided them with information about the FHA Reform bill which would help open funding to first time homebuyers and others.

Overall, the ALTA Federal Conference was very informative. Panel topics included state regulatory systems, uniform closing instructions, housing finance reform and RESPA. The final session of the Federal Conference featured Hon. Brian D. Montgomery from HUD, who discussed the FHA effort and initiatives to help homeowners avoid foreclosure and keep their homes by working with FHA loan counselors.

Financial Services Committee to Hold April 9 Hearing on Economic, Mortgage and Housing Rescue Bill
Hearing will include federal regulators, economists, academics and community leaders
Press release published by the House Financial Services Committee on March 14, 2008.
Washington, DC—House Financial Services Committee Chairman Barney Frank announced today the committee will hold a hearing on the economic, mortgage and housing rescue plan he announced last week.  The April 9 hearing will include federal regulators, academics, economists and representatives of the cities and communities that are being negatively impacted by high numbers of foreclosures.  Witnesses will be asked to discuss the proposal and to provide suggestions to the committee.  Mr. Frank has pointed out publicly that we are in uncharted territory in the challenges to our economy, and he has been seeking input from a wide range of experts on this subject.  This hearing is a part of that process.

The legislative proposal, which Mr. Frank outlined in a March 14 press conference with Senator Dodd, seeks to stem the significant rise in mortgage foreclosures by allowing the Federal Housing Administration (FHA) to insure refinanced mortgages that have been significantly written down by mortgage holders and lenders.  In addition, the bill will allow for the bulk refinance and guarantee troubled loans and provide loans and grants to communities to purchase and return to occupancy vacant foreclosed homes.  A detailed summary and the legislative text can be found on the Financial Services Committee Web site. The bill contains three main parts:

• Permits FHA to provide [up to $300 billion] in new guarantees that would help to refinance at-risk borrowers into viable mortgages.  In exchange for the agreeing to a substantial write-down of principal, the existing lender or mortgage holder would receive a short payment from the proceeds of a new FHA guaranteed loan if the restructured loan would result in terms that the borrower can reasonably be expected to pay.  The existing lender or mortgage holder no further credit exposure to the borrower.  This could potentially refinance between 1 and 2 million loans (and help these families stay in their homes), protect neighborhoods and help stabilize the housing market. 
• Permits the loan program to be used to refinance and guarantee mortgages through a facility that would provide for auction or other mechanism to refinance loans on a bulk basis.  
• Provides $10 billion in loans and grants for the purchase and rehabilitation of vacant, foreclosed homes with the goal of occupying them as soon as possible.

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INDUSTRY NEWS

Department of Banking Launches New Tool to Combat Identity Theft
Press release published by the Texas Department of Banking on March 18, 2008.
On March 1, 2008, the Texas Department of Banking launched the Closed Account Notification System, known as CANS, a secure electronic notification system which enables banks and credit unions to immediately notify all major check verification companies when certain accounts have been closed due to fraudulent activity by identity thieves. This system is the first of its kind in the nation.

Prior to implementing CANS, a victim of identity theft would close the compromised bank account and assume that would be sufficient to stop unauthorized use of his or her identity. However, the bank did not have any way of getting the information that the account was closed to those who most needed it – check verification companies who utilize a database to advise merchants which checks are valid. Identity thieves could pass fraudulent checks on a victim's account for weeks to merchants who were not yet aware of the closed account.

Identity theft exacts its greatest cost on the victim through the accumulation of negative information in the customer’s consumer credit report files. Every fraudulent check that is accepted adds to the burden of the victim as he or she tries to restore his or her good name. It is of the highest importance to catch identity thieves early, for the sake of the victim, and to deter future crimes.

Rep. Giddings (Dallas) authored House Bill 2002, establishing an electronic notification system to combat the fast-growing crime of identity theft. When a bank customer closes an account due to identity theft, he or she now has more protection than ever from future identity theft.

"Notification happens by the second business day," says Giddings, "so that thieves are stopped in their tracks. No longer will identity thieves be able to profit from their crimes by passing bad checks for weeks. Millions of dollars will be saved, but most importantly, stopping identity theft early will help victims restore their credit and good name."

If you discover that an identity thief may have enough information to access your deposit account, file a police report and contact your financial institution immediately to close your account and request notification through CANS. For more information about this new consumer protection service, please contact the Texas Department of Banking.

Since 1905, the Texas Department of Banking has sought to ensure that Texas has a safe and sound financial services system. Among other responsibilities, the Department of Banking is the charterer and primary regulatory supervisor for Texas’ over 400 state-chartered banks, trust companies, and foreign bank operations.


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