N.Y.’s New Regulations Aim to Reduce Title Insurance Costs

By | April 29, 2015

New York Gov. Andrew Cuomo announced new regulations Wednesday that would crack down on what officials describe as kickbacks and other improper expenditures in the state’s title insurance industry.

These improper expenses have been significantly inflating title insurance premiums for New York consumers, the New York Department of Financial Services (NYDFS) said.

These new “anti-inducement” regulations — together with broader reform measures — are expected to reduce New York’s title insurance closing costs by up to 20 percent for new home purchases and up to 60 percent for refinancing transactions, according to the governor’s announcement.

NYDFS said there is a 45-day public comment period, which begins in early May. The department would then review the comments with the aim of finalizing the regulation soon thereafter.

“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,” Cuomo said. “Our administration will not stand for that kind of abuse in the title insurance industry, and these new regulations will help ensure that New Yorkers are protected from unfair charges and get the most bang for their buck.”

New York Financial Services Superintendent Benjamin M. Lawsky said, “Our investigation uncovered that title insurance companies paid for lavish meals and entertainment on the dime of consumers, which inflated premiums. These new reforms will help significantly reduce costs for homeowners by trimming the fat and making sure that New Yorkers get what they pay for in the title insurance industry.”

The regulation outlines categories of expenditures which — when provided as an inducement for title insurance business — are improper and violative of the New York Insurance Law. These expenditures include meals, entertainment, vacations and gifts that are provided to attorneys, real estate professionals, and others, who represent consumers and order title insurance on their behalf.

NYDFS said its investigation revealed that these types of expenditures are routinely made by title insurance corporations and agents in an effort to secure title insurance business.

Regulators said these improper expenditures have been included in the calculation of title insurance rates and have saddled New York consumers with excessive title insurance premiums for years. The new regulation mandates that these improper expenditures, which violate the anti-inducement provision of the Insurance Law, be eliminated from the rates, thereby resulting in lower title insurance premiums.

In addition, the regulation also imposes caps on ancillary charges, which are fees for additional searches and services that are provided in connection with the issuance of a title insurance policy, but not included in the title insurance premium.

NYDFS said some title insurers and title insurance agents mark up these searches three and four times their cost and otherwise charge consumers additional excessive fees. The regulation also precludes the payment of gratuities and pick-up fees to closers of real estate transactions, which add hundreds of dollar to consumers’ final closing bills, NYDFS said.

And in order to ensure continued compliance, the regulation mandates that at least once every three years a filing be made demonstrating that title insurance rates comply with the New York Insurance Law, and are not excessive, inadequate or discriminatory. The review of these filings is expected to help ensure that title insurance reforms result in lower premiums.

The proposed regulations are part of a series of actions that NYDFS is taking to lower premiums and improve accountability in the title insurance industry. New York State’s 2014-15 enacted budget provided NYDFS with the authority to issue licenses to title insurance agents for the first time, just as it licenses all other insurance agents and brokers. Licensing requires agents to meet qualification standards and undergo regular training.

NYDFS will also have the authority to monitor abuse by agents and to revoke licenses accordingly, as well as help root out conflicts of interest that drive up costs for homeowners.

The following is a copy of the proposed regulations, which are subject to public comment:

Topics Agencies Legislation New York Market

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Latest Comments

  • June 5, 2017 at 3:04 pm
    Helen says:
    Not to mention it now cost close to a $1000 to record a deed in Nassau County. The counties out of now where impose a tax map verification fee which is $300 and up on mortgag... read more
  • July 22, 2015 at 10:07 pm
    Don B. says:
    Hi Murray, The problem is, as with many other industries - a few bad apples spoil the whole bunch. What confuses me about this legislation is Title Insurance premiums are alre... read more
  • July 17, 2015 at 9:22 am
    murry says:
    i found this article because i think i'm getting very overcharged- paying over 1k more than the rate calculator for my area says, and also i can't even find the name of the ti... read more

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