New York announced new regulations on title insurers on April 29 that officials say will prevent homebuyers from being charged for inappropriate fees.
The proposed rules come after a state investigation found that some title insurers were buying lavish meals and entertainment for attorneys and real estate professionals in exchange for business referrals. The costs were then added to the premiums paid by buyers.
“New Yorkers should not have to foot the bill for outrageous or improper expenses made by title companies just to refinance or close on their home,” Gov. Andrew Cuomo said in a statement announcing the new rules.
The draft regulations prohibit insurers from including the cost of meals and entertainment in their rate calculations.
The new rules also set caps on certain fees and require insurers to submit their rates to regulators at least every three years. The state estimated that the changes will cut title insurance closing costs by as much as 20 percent.
The proposed regulations haven’t yet taken effect, and the title insurance industry plans to “provide valuable input” before they are finalized, said Rafael Castellanos, president of the New York State Land Title Association.
The new regulations are part of a larger effort to increase scrutiny of the title industry. Last year, Cuomo and lawmakers gave the Department of Financial Services the authority to issue licenses to title insurance agents for the first time.
Topics New York Legislation Market
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