Commissioner Adopts Changes to the Basic Manual of Rules, Rates and Forms 
Effective Date: April 1, 2004
Texas Department of Insurance Commissioner Jose Montemayor has by order officially adopted amendments that were considered during the rulemaking phase of the 2002 Texas Title Insurance Biennial Hearing. The following is a summary of what was adopted. To view the items in their entirety, please click here.

The following adopted agenda items relate to new endorsements and their corresponding procedural rules for the purpose of facilitating commercial transactions regarding insurance relating to access, contiguity, restrictions, encroachments, minerals, and provide coverage when additional insureds are added in an estate planning context or when new investors acquire an interest in an existing entity:

# 2002-8 - New Access Endorsement Form T-23
# 2002-9 - New Procedural Rule P-54 for the New Access Endorsement
# 2002-10 - New Restrictions, Encroachments, Minerals Endorsement-
Owner Policy Form T-19.1
# 2002-11 - Amends Procedural Rule P-50 for the new Restrictions, Encroachments,
Minerals Endorsement-Owner Policy
# 2002-12 - New Non-Imputation Endorsement Form T-24
# 2002-13 - New Procedural Rule P-55 for the new Non-Imputation Endorsement
# 2002-14 - New Contiguity Endorsement Form T-25
# 2002-15 - New Procedural Rule P-56 for the New Contiguity Endorsement
# 2002-16 - New Additional Insured Endorsement Form T-26
# 2002-17- New Procedural Rule P-57 for the new Additional Insured Endorsement

The following adopted agenda items clean up language in rules and forms, conform language to new statutory requirements, and update statutory references:

# 2002-1- Amends Texas Short Form Residential Mortgagee Policy of Title Insurance
Form T-2R and Addendum T-2R
# 2002-2- Amends Tax Deletion Endorsement Form T-30
# 2002-20- Amends Residential Real Property Affidavit Form T-47
# 2002-34- Amends Administrative Rules in Section VI
# 2002-35- Amends Immediately Available Funds Procedure Agreement T-37
# 2002-36- Repeals Procedural Rule P-33 which expired by its own terms

The following adopted agenda items reinstitute reporting requirements for directly issued policies, clarify procedures regarding overcharges and institute internal controls related to title agents’ reporting of defalcations, change and modernize continuing education requirements, and establish a new rule regarding rebates and discounts:

# 2002-24- Adopts Procedural Rule P-58 concerning reporting to department of all
directly issued policies of title insurance
# 2002-32- Amends Minimum Standards, Specific Instructions and Report Forms for
Audit of Trust Funds
# 2002-33- Amends Procedural Rule P-28 -Requirements for Continuing Education for
Title Agents and Escrow Officers.
# 2002-37- Adopts Procedural Rule P-53 regarding prohibitions of Rebates and
Discounts and restrictions on multi-state transactions which include Texas land.

The following agenda items were withdrawn:

# 2002-21 # 2002-28
# 2002-22 # 2002-29
# 2002-23 # 2002-30
# 2002-26 # 2002-31
# 2002-27

Questions regarding new Procedural Rule P-53?
By now it should be widely known in the industry that Texas Insurance Commissioner Montemayor has adopted a groundbreaking Procedural Rule implementing the Insurance Code relating to prohibitions on marketing activities considered to be rebates in the title insurance business. The new rule, Procedural Rule P-53, is effective on April 1, 2004. As with any significant new enactment, many questions have been raised about the application of the rule and the meaning of many of its provisions. TLTA General Counsel Tom Rutledge and TDI Deputy Commissioner Rob Carter have both written summaries that might be helpful. To view these documents, click here. Also, we encourage you to participate on the March 23rd Teleconference discussing all the newly adopted rules. Rob Carter and Tom Rutledge will be answering your questions on P-53. Click here to register for the Teleconference.

Commissioner approves Basic Manual changes regarding Home Equity 
Effective Date: April 1, 2004
Texas Department of Insurance Commissioner Jose Montemayor has by order officially approved adoption of amendments to forms and procedural rules intended to conform to recent changes in the Home Equity law.

By voter approval on September 13, 2003, Section 50, Article XVI of the Texas Constitution was amended to provide for home equity lines of credit, to require an additional notice to borrowers prior to the origination of such mortgages, and to permit lenders to take certain actions to cure origination defects with such mortgages, including offering borrowers the opportunity to refinance such mortgages under certain circumstances.

Stewart Title Guaranty Company petitioned the department for amendments to the applicable procedural rules and endorsements in the Basic Manual to facilitate the issuing of mortgagee title policies insuring home equity liens on homestead property. The modifications to the existing title insurance forms relating to home equity refer to the correct and applicable law, provide insurance for future advances under home equity lines of credit, and insure disclosure of fees by title insurance companies or title insurance agents who close home equity loans. The amended endorsements and procedural rules will enable title insurance companies to write additional title insurance coverages regarding home equity lending in Texas. The amendments will also provide both lenders and borrowers more certainty regarding the meaning of the law and a clear means of resolving origination problems.

The amendments adopt by reference the amended endorsements, forms T-42, T-42.1, T-44, T-45, and T-46 and the amended procedural rules, P-46 and P-47 to the Basic Manual. Click here to view the approved Home Equity agenda items.

Place Your Order Now for Updates to the Basic Manual
All updates to the Texas Title Insurance Basic Manual resulting from the 2002 RULE Hearing and newly approved Home Equity items are in the process of being printed and will be mailed within the next 10 days. If you have the 2002 Basic Manual, please place your order for your updates as soon as possible. Click here to order your Basic Manual Update. Please note: A decision has not yet been announced regarding 2002 RATE Hearing Items. As a result, a second shipment of updates pertaining to the RATE portion of the 2002 Hearing will occur separately. To order your copy of the Basic Manual, click here.

Just as a reminder, the procedure for updating the Basic Manual was changed in July 2002 to the following: The Basic Manual, copyright 2002, was the last reprint of the entire Texas Title Insurance Basic Manual. All subsequent changes in rules and rates will be sold as updates to the Manual. All Texas Title Insurance Basic Manual owners will be notified of future updates. The cost of each update will be based on the extent of the changes to the manual.

Primary election summary – tough night for some incumbents
Although the presidential candidates were already decided, there were a number of exciting statewide and local races that proved to be victorious for some incumbents but problematic for others.

There were no big surprises in the Senate since two senators had recently resigned and special elections had already been held. Those newly elected Senators are Kel Seliger (R-Amarillo) and Kevin Eltife (R-Tyler). However, over in the House, five democratic incumbents were defeated and two others are headed for a run-off. Long time legislator and committee chairman Ron Wilson (D-Houston), Chairman Glenn Lewis (D-Ft. Worth), Chairman Jaime Capelo (D-Corpus Christi), Miguel Wise (D-Weslaco) and freshman legislator Timo Garza (D-Eagle Pass) were defeated while Roberto Gutierrez (D-McAllen) and freshman Gabi Canales (D-Alice) are headed to a run-off. In the U.S. House, redistricting did prove fatal for Congressman Chris Bell (D-Houston) who lost to Al Green, a retired judge. Congressman Lloyd Doggett (D-Austin) who was the most targeted Democrat by the Republicans, defeated his opponent while democratic Congressman Ciro Rodriguez (D-San Antonio) barely beat out (by 121 votes) former Secretary of State Henry Cuellar of Laredo. You can be sure a recount will be called on this race. We are excited that former House member Kenny Marchant (R-Coppell) who has been a friend to the industry, won his race and will face a democratic challenger in the general election. In order to keep you informed, Dateline Austin will report on the upcoming general elections. We are sure to see some new faces in the state legislature since several long-time members decided to retire. We hope you will contact us if you have relationships with these newly elected or soon to be elected officials in order to help us build our grassroots program. Click here for more details on joining TLTA’s BLOC (grassroots program).

Reminder - Guaranty Assessment Re-instated

The Texas Title Insurance Guaranty Association announced that effective January 1, 2004 title agents and direct operations are required to collect a Guaranty Fee of $1.00 per owner or mortgagee title policy reported on quarterly statistical reports.

The statutory authority for the Guaranty Fund can be found in Article 9.48 of The Insurance Code. Section 6. (c) specifically refers to how funds derived from guaranty fees can be used. In addition to covering claims, funds are used to pay for audit expenses, providing a benefit to consumers by insuring the enforcement of state regulations governing title insurance. Click here for due dates and a sample remittance form.

RESPA Reform Update
The real estate industry is holding its breath as we wait for the OMB to either send the rule back to HUD or adopt the proposal in its final form. Officially, they have until March 16th to act. TLTA has continued to work its grassroots network by asking members to contact their Congressmen and the White House. On March 1st, TLTA along with representatives from the Independent Bankers Association of Texas, the Texas Mortgage Brokers Association and RESPRO Texas met with the OMB and Texas Congressmen in Washington D.C. to express our joint opposition to this rule. The real estate industry group along with TLTA’s D.C lobbyist Jim Hyland and ALTA’s lobbyist Ann vom Eigen met with key staff for Senator Hutchison, Senator Cornyn, Majority Leader Tom Delay, GOP Whip Roy Blunt, Congresswoman Kay Granger and Senator Richard Shelby. They were able to meet face to face with Texas Congressmen Ralph Hall, Joe Barton, Pete Sessions and Jeb Hensarling.

All of the meetings were successful and we thank each and everyone who took time out of their schedule to travel to D.C. We also want to thank our membership for their continued help on this issue. All of the phone calls, faxes, and letters have been a huge help. In an effort to derail the proposed rule, Congressman Ruben Hinojosa (D-TX) and Congresswoman Judy Biggert (R-IL) took the lead by writing a “Dear Colleague” letter to HUD, urging them to reject adoption of the HUD proposed rule as a final rule and return it to HUD with instructions to issue a revised proposed rule and seek additional public comment. They were able to obtain over 220 signatures. Thanks to Congressman Hinojosa, Jim Hyland and our grassroots efforts, Texas had 20 out of 32 Congressmen cosign the letter! To see a copy of the letter and cosigners, click here. Be on the lookout for a Breaking News as soon as the OMB makes a decision.

Jackson faces tough questions during confirmation hearing
As Dateline Austin has reported, Deputy Secretary Alphonso Jackson was expected to take over as Secretary of HUD after Mel Martinez resigned to run for the Senate in his home state of Florida. During his initial confirmation hearing before the Senate Banking Committee, Senator Wayne Allard (R-CO) announced that he could not support his nomination at this time due to HUD’s persistence in moving forward with a proposed RESPA rule over the objections of industry, consumers groups, and Members of Congress. Senator Allard asked Mr. Jackson a series of questions to determine if HUD had received any comments in support of its proposed rule. Jackson answered, “Not in my memory.” Allard continued asking Jackson the question, “Do you believe HUD has knowledge that is superior to that of Congress?” Jackson was notably quiet. The hearing came to an abrupt end since a vote was scheduled on the floor. Although this will probably not affect the final outcome, the real estate industry feels this sends a strong message to the White House.

ALTA Telephone Seminar on the RESPA Rule
Expecting that the Office of Management & Budget will return the proposed RESPA rule to HUD sometime in mid-March, ALTA plans to hold a teleconference to discuss what the new regulations mean. No one knows what the new rule will look like but it will probably change the way title professionals do business. In anticipation of the new rule, ALTA has organized a telephone seminar with four RESPA experts to interpret what the new rule means to the title industry. The ALTA telephone seminar will be held on March 22 from 1-3pm CST. RESPA experts Sheldon Hochberg of Steptoe & Johnson, James Dufficy from First American Title Insurance Co., Richard Patterson from CATIC and ALTA's Executive Vice President, James Maher, will explain what the rule means to you and your business. There will be a Q&A session during the seminar to address your questions and concerns. Price: $225 ALTA members, $275 Non-members. To register, click here or visit the ALTA web site at (http://www.alta.org).

The revised RESPA rule could be the most important thing to affect the title industry in a decade or more. Title professionals will need to know what this new rule means to their business, what changes will they have to make, how it will affect their existing partnerships, who will be the new decision makers, will they gain or lose control in the closing process? If the OMB does not release a rule by March 22, the teleconference will be re-scheduled.

Here’s your chance to go to Washington
We need your help! The ALTA Federal Conference is right around the corner and we feel it is crucial that Texas be well represented. Attending ALTA’s Federal Conference is a great opportunity to show that we are serious in Texas about RESPA reform and other federal issues that affect us. If a final RESPA rule is adopted and you are concerned about complying with the new regulations, you will see that many of the sessions on the program are RESPA related. The Conference will be held April 19 – 21 in Washington D.C. The timing is good since the OMB is due to release the revised RESPA Rule in mid-March. As part of the program you are urged to meet with your senators and congressmen to discuss issues important to the industry. We will set up the Capitol Hill visits for Texas participants.

Attendance by Texas title industry members at the Federal Conference has been somewhat non-existent. We can’t stress to you how important it is to have members from Texas present so that our voices and concerns will be heard on a national level. Right now it is RESPA but who knows what the next issue will be. The title insurance industry continues to be a target on many agendas.

Please click on the following link: http://www.alta.org/educ/fedconf/index.htm and take a look at the Federal Conference program. We encourage all members of the title insurance industry in Texas to attend so if you or someone in your company might be interested, sign up now. TLTA’s President and Director of Government Affairs will be attending so please come and join us!

Email Mindy Carr at mindy@tlta.com if you are planning to attend or if you have any questions. As always, we appreciate your time and commitment to the industry!