DFS-29-14-00014-E Title Insurance Agents, Affiliated Relationships, and Title Insurance Business

3/11/15 N.Y. St. Reg. DFS-29-14-00014-E

NEW YORK STATE REGISTER

VOLUME XXXVII, ISSUE 10

March 11, 2015

RULE MAKING ACTIVITIES

DEPARTMENT OF FINANCIAL SERVICES

EMERGENCY RULE MAKING

 

I.D No. DFS-29-14-00014-E

Filing No. 122

Filing Date. Feb. 20, 2015

Effective Date. Feb. 20, 2015

Title Insurance Agents, Affiliated Relationships, and Title Insurance Business

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of Parts 20 (Regulations 9, 18, and 29), 29 (Regulation 87), 30 (Regulation 194) and 34 (Regulation 125); and addition of Part 35 (Regulation 206) to Title 11 NYCRR.

Statutory authority:

Financial Services Law, sections 202 and 302; and Insurance Law, sections 107(a)(54), 301, 2101(k), 2109, 2112, 2113, 2119, 2120, 2122, 2128, 2129, 2132, 2139, 2314 and 6409

Finding of necessity for emergency rule:

Preservation of general welfare.

Specific reasons underlying the finding of necessity:

Long-sought and critically needed legislation to license title insurance agents was enacted as part of Chapter 57 of the New York Laws of 2014, which was signed into law by the governor on March 31, 2014. Chapter 57 took effect on September 27, 2014.

A number of existing regulations that apply to insurance producers generally are amended to make them applicable to title insurance agents. Specifically, Part 20 addresses temporary licenses (Insurance Regulation 9), addresses appointment of insurance agents (Insurance Regulation 18), and regulates premium accounts and fiduciary responsibilities of insurance agents and insurance brokers (Insurance Regulation 29), and are amended to include references to title insurance agents. Part 29 (Insurance Regulation 87) addresses special prohibitions regarding sharing compensation with other licensees with respect to certain governmental entities and is amended to address a limited exception for title insurance business insuring State of New York Mortgage Agency and certain other circumstances. Part 30 (Insurance Regulation 194) addresses insurance producer compensation transparency and is amended to reflect specific requirements in new Insurance Law section 2113 for title insurance agents. Part 34 (Insurance Regulation 125) governs insurance agents and brokers that maintain multiple offices and is amended to clarify the applicability of the regulation to title insurance agents. In addition, a new Part 35 (Insurance Regulation 206) is added that address unique circumstances regarding title insurance agents.

It is critical for the protection of the public that appropriate rules and regulations are in place on and after the effective date of Chapter 57 to apply to newly-licensed title insurance agents and the title insurance business generated. Although the Department has diligently developed regulations to implement Chapter 57, due to the short time frame, it is necessary to promulgate the rules on an emergency basis for the furtherance of the general welfare.

Subject:

Title insurance agents, affiliated relationships, and title insurance business.

Purpose:

To implement requirements of Chapter 57 of Laws of 2014 re: title insurance agents and placement of title insurance business.

Substance of emergency rule:

The following sections are amended:

Section 20.1, which specifies forms for temporary licenses, is amended to make technical changes and to add references to title insurance agents.

Section 20.2, which specifies forms of notice for termination of agents, is amended to make technical changes and to add references to title insurance agents.

Section 20.3, which governs fiduciary responsibility of insurance agents and brokers, including maintenance of premium accounts, is amended to make technical changes and to add references to title insurance agents.

Section 20.4, which governs insurance agent and broker recordkeeping requirements for fiduciary accounts, is amended to make technical changes and to add references to title insurance agents.

Section 29.5, which implements Insurance Law section 2128, governing placement of insurance business by licensees with governmental entities, is amended to make technical changes and to conform to amendments to section 2128, with respect to title insurance agents.

Section 29.6 is amended to remove language regarding return of disclosure statements.

Section 30.3, which governs notices by insurance producers regarding the amount and extent of their compensation, is amended by adding a new subdivision that modifies the requirements of the section with respect to title insurance agents, in order to conform to new Insurance Law section 2113(b).

Section 34.2, which governs satellite offices for insurance producers, is amended by adding a new subdivision that exempts from certain provisions of that section a title insurance agent that is a licensed attorney transacting title insurance business from the agent’s law office.

A new Part 35 is added governing the activities of title insurance agents and the placement of title insurance business. The new sections are:

Section 35.1 contains definitions for new Part 35.

Section 35.2 specifies forms for title insurance agent licensing applications.

Section 35.3 specifies change of contact information required to be filed with the Department.

Section 35.4 addresses affiliated business relationships.

Section 35.5 addresses referrals by affiliated persons and the required disclosures in such circumstances.

Section 35.6 addresses minimum disclosure requirements for title insurance corporations and title insurance agents with respect to fees charged by such corporation or agent, including discretionary or ancillary fees.

Section 35.7 provides certain other minimum disclosure requirements.

Section 35.8 governs the use of title closers by title insurance agents and title insurance corporations.

Section 35.9 establishes record retention requirements for title insurance agents.

This notice is intended

to serve only as a notice of emergency adoption. This agency intends to adopt the provisions of this emergency rule as a permanent rule, having previously submitted to the Department of State a notice of proposed rule making, I.D. No. DFS-29-14-00014-P, Issue of July 23, 2014. The emergency rule will expire April 20, 2015.

Text of rule and any required statements and analyses may be obtained from:

Paul Zuckerman, New York State Department of Financial Services, One State Street, New York, NY 10004, [phone], email: [e-mail]

Consolidated Regulatory Impact Statement

1. Statutory authority: The Superintendent’s authority to promulgate these amendments and the new Part derives from sections 202 and 302 of the Financial Services Law (“FSL”) and sections 107(a)(54), 301, 2101(k), 2109, 2112, 2113, 2119, 2120, 2122, 2128, 2129, 2132, 2139, 2314, and 6409 of the Insurance Law.

FSL section 202 establishes the office of the Superintendent and designates the Superintendent as the head of the Department of Financial Services (“Department”).

FSL section 302 and Insurance Law section 301 authorize the Superintendent to effectuate any power accorded to the Superintendent by the Insurance Law, the Banking Law, the Financial Services Law, or any other law of this state and to prescribe regulations interpreting the Insurance Law, among other things.

Insurance Law section 107(a)(54) defines title insurance agent.

Insurance Law section 2101(k) defines insurance producer to include title insurance agent.

Insurance Law section 2109 addresses temporary licenses for title insurance agents and other insurance producers.

Insurance Law section 2112 addresses appointments by insurers of insurance agents and title insurance agents.

Insurance Law section 2113 requires that title insurance agents and persons affiliated with such title insurance agents provide certain disclosures to applicants for insurance when referring such applicants to persons with which they are affiliated. Section 2113 also requires the Superintendent to promulgate regulations to enforce the affiliated person disclosure requirements and to consider any relevant disclosures required by the federal real estate settlement procedures act of 1974 (“RESPA”), as amended.

Insurance Law section 2119 permits title insurance agents to charge fees for certain ancillary services not encompassed within the rate of premium provided its pursuant to a written memorandum.

Insurance Law section 2120 addresses the fiduciary responsibility of title insurance agents and other producers.

Insurance Law section 2122 addresses advertising by title insurance agents and other insurance producers.

Insurance Law section 2128 prohibits fee sharing with respect to business placed with governmental entities.

Insurance Law section 2132 governs continuing education for title insurance agents and other insurance producers.

Insurance Law section 2139 is the licensing section for title insurance agents.

Insurance Law section 2314 prohibits title insurance corporations and title insurance agents from deviating from filed rates.

Insurance Law section 2324 prohibits rebating, improper inducements and other discriminatory behavior with respect to most kinds of insurance, including title insurance.

Insurance Law section 6409 contains specific prohibitions against rebating, improper inducements and other discriminatory behavior with respect to title insurance.

2. Legislative objectives: Long-sought and critically needed legislation to license title insurance agents was enacted as part of Chapter 57 of the New York Laws of 2014, which was signed into law by the governor on March 31, 2014 and took effect on September 27, 2014. By way of background, title insurance agents in New York: (a) handle millions of dollars of borrowers’ and sellers’ funds, (b) record documents, and (c) pay off mortgages. Yet for years, title insurance agents have conducted business in New York without licensing or other regulatory oversight, standards or guidelines. Because, as a matter of practice in New York, the title insurance agents control the bulk of the title insurance business, including bringing in customers, conducting the searches and other title work, the title insurance corporations often have little choice but to deal with title insurance agents who they may otherwise consider questionable or unscrupulous. Without licensing or regulatory oversight, an unscrupulous title insurance agent who was fired by one title insurer could simply take the business to another title insurer, who is usually more than willing to appoint that title insurance agent.

This lack of State regulation over title insurance agents made for an alarming weakness in New York law, and specifically New York law addressing title insurance rebating and inducement. For example, lack of regulatory oversight and licensing created a gaping loophole, which led to serious breaches of fiduciary duties and exploitation by unscrupulous actors to commit fraud in the mortgage origination and financing process. Over the years, this gap in New York law and lack of regulatory oversight allowed these actors to freely engage in theft, abuse, charging of excessive fees, and illegal rebates and inducements to the detriment of consumers, with little fear of prosecution. These abuses cost consumers of the State millions of dollars and at least one New York title insurer became insolvent because of the activities of its title insurance agents.

3. Needs and benefits: Now that New York law requires title insurance agents to be licensed, a number of existing regulations governing insurance producers need to be amended in order include title insurance agents or to address unique circumstances involving them, including affiliated persons’ arrangements and required consumer disclosures. Specifically, Insurance Regulation 9 addresses temporary licenses; Insurance Regulation 18 addresses appointment of insurance agents; and Insurance Regulation 29 regulates premium accounts and fiduciary responsibilities of insurance agents and insurance brokers; and each is amended to include references to title insurance agents. Insurance Regulation 87 addresses special prohibitions regarding sharing compensation with other licensees with respect to certain governmental entities and is amended to address a limited exception for title insurance business insuring State of New York Mortgage Agency and certain other circumstances. Insurance Regulation 194 addresses insurance producer compensation transparency and is amended to reflect specific requirements in new Insurance Law section 2113 for title insurance agents. Insurance Regulation 125 governs insurance agents and brokers that maintain multiple offices and is amended to clarify the applicability of the regulation to title insurance agents. Regulation 125 also is amended to address unique circumstances involving title insurance agents who are also licensed attorneys.

New Insurance Regulation 206 addresses a number of miscellaneous issues involving title insurance agents. Some of these changes simply add provisions that are similar to those that apply to other insurance producers; for example, it prescribes the form of applications and requires licensees to notify the Department of any change of business or residence address. Other provisions of Regulation 206 set forth the new disclosure requirements; require title insurance agents to comply with a rate service organization’s annual statistical data call; and address the obligation of title insurance agents and title insurance corporations with respect to title closers. Of particular significance are provisions of the regulations that codify Department opinions regarding affiliated business relations with respect to the applicability of Insurance Law section 6409, which prohibits rebates, inducements and certain other discriminatory behaviors.

4. Costs: Regulated parties impacted by these rules are title insurance agents, which heretofore were not licensed by the Department, and title insurance corporations. They may need to provide new disclosures in accordance with the regulation if they are not already making such disclosures but they already have an obligation to make changes to notices pursuant to the legislation. There are also new reporting requirements to the Department but these are the same that apply with respect to other licensees. In any event, the costs of these new disclosures and reporting requirements should not be significant. The proposed rules also subject title insurance agents to requirements regarding the maintenance of fiduciary accounts that already apply to other insurance producers. The cost impact on title insurance agents will likely vary from agent to agent but should not be significant.

Although the Department already was handling complaints and investigating matters regarding title insurance, because licensing title insurance agents is a new responsibility for the Department, anticipated costs to the Department are at this time uncertain. Existing personnel and line titles will handle any new licensing applications or enforcements issues initially.

These rules impose no compliance costs on any state or local governments.

5. Local government mandates: The new rules and amendments impose no new programs, services, duties or responsibilities on any county, city, town, village, school district, fire district or other special district.

6. Paperwork: The amendments and new rules now apply certain requirements that are applicable to other insurance producers to title insurance agents as well. For example, title insurance agents are made subject to the same reporting requirements as other insurance producers when changing addresses, maintaining records, and submitting applications, and title insurers are required to file certificates of appointment of their title insurance agents with the Department. In addition, to reflect the specific notice requirements of Insurance Law section 2113, the disclosure requirements to insureds under Insurance Regulation 194 are modified for title insurance agents to reflect the statutory requirements. The new law also contains certain new disclosure requirements and the new rules implement those changes, and require certain other disclosures to applicants for insurance, such as a notice advising insureds or applicants for insurance about the different kinds of title policies available to them.

7. Duplication: The amendments do not duplicate any existing laws or regulations.

8. Alternatives: Prior to proposing rules in the July 23, 2014 issue of the State Register, the Department circulated drafts of the proposed rules to a number of interested parties and, as a result, the Department made a number of changes to proposed new Regulation 206, particularly with respect to affiliated business relationships, and title insurance corporation or title insurance agent responsibility for title insurance closers. In response to comments received during the public comment period, the Department has made a number of changes that are incorporated in the emergency rules that clarify the proposal or eliminates unnecessary requirements.

The Department received a number of comments regarding the significant and multiple sources of business provisions of the regulation with respect to affiliated business relationships. Because of the critical need to have regulations in effect on and after the September 27, 2014 effective date of Chapter 57, the Department is promulgating the emergency regulations utilizing the provisions contained in the proposed rulemaking, while the Department continues to evaluate and review those comments and consider whether any changes should be made to those provisions.

9. Federal standards: RESPA, and regulations thereunder, contain certain requirements and disclosures that apply to residential real estate settlement transactions. These requirements are minimum requirements and do not preempt state laws that provide greater consumer protection. The amendments and new rules are not inconsistent with RESPA and, consistent with New York law, provide greater consumer protection to the public.

10. Compliance schedule: Chapter 57 of the New York Laws of 2014 took effect on September 27, 2014. In order to facilitate the orderly implementation of the new law, the Superintendent was authorized to promulgate regulations in advance of the effective date, but to make such regulations effective on that date.

Consolidated Regulatory Flexibility Analysis

1. Effect of the rule: These rules affect title insurance corporations authorized to do business in New York State, title insurance agents and persons affiliated with such corporations and agents.

No title insurance corporation subject to the amendment falls within the definition of “small business” as defined in State Administrative Procedure Act section 102(8), because no such insurance corporation is both independently owned and has less than one hundred employees.

It is estimated that there are about 1,800 title insurance agents doing business in New York currently. Since they are not currently licensed by the Department of Financial Services (“Department”), it is not known how many of them are small businesses, but it is believed that a significant number of them may be small businesses.

Persons affiliated with title insurance agents or title insurance corporations would not, by definition, be independently owned and would thus not be small businesses.

The rule does not impose any impacts, including any adverse impacts, or reporting, recordkeeping, or other compliance requirements on any local governments.

2. Compliance requirements: The proposed rules conform and implement requirements regarding title insurance agents and placement of title insurance business with Chapter 57 of the Laws of 2014, which made title insurance agents subject to licensing in New York for the first time. A number of the rules will make title insurance agents subject to the same requirements that apply to other insurance producers. There are also disclosure requirements unique to title insurance.

3. Professional services: This amendment does not require any person to use any professional services.

4. Compliance costs: Title insurance agents will need to provide new disclosures in accordance with the regulation if they are not already making such disclosures but they already have an obligation to make changes to notices pursuant to the legislation. There are also new reporting requirements to the Department but these are the same that apply with respect to other licensees. In any event, the costs of these new disclosures and reporting requirements should not be significant. The proposed rules now subject title insurance agents to requirements regarding the maintenance of fiduciary accounts that already apply to other insurance producers. The cost impact on title insurance agents will likely vary from agent to agent but should not be significant.

5. Economic and technological feasibility: Small businesses that may be affected by this amendment should not incur any economic or technological impact as a result of this amendment.

6. Minimizing adverse impact: This rule should have no adverse impact on small businesses.

7. Small business participation: Interested parties, including an organization representing title insurance agents, were given an opportunity to comment on draft proposed rules as well as the proposed rulemaking that was published in the State Register on July 23, 2014.

Consolidated Rural Area Flexibility Analysis

The Department of Financial Services (“Department”) finds that this rule does not impose any additional burden on persons located in rural areas, and will not have an adverse impact on rural areas. This rule applies uniformly to regulated parties that do business in both rural and non-rural areas of New York State.

Rural area participation: Interested parties, including those located in rural areas, were given an opportunity to review and comment on draft versions of these rules as well as the proposed rulemaking that was published in the State Register on July 23, 2014.

Consolidated Job Impact Statement

The Department of Financial Services finds that these rules should have no negative impact on jobs and employment opportunities. The rules conform to and implement the requirements of, with respect to title insurance agents and the placement of title insurance business, Chapter 57 of the Laws of 2014, which make title insurance agents subject to licensing in New York for the first time and, by establishing a regulated marketplace, may lead to increased employment opportunity.

Assessment of Public Comment

The consolidated amendments implement Part V of Chapter 57 of the Laws of 2014, which requires title insurance agents to become licensed in New York. The Department of Financial Services (“Department”) published the proposal for the amendments to the rules and the new rule on July 23, 2014. The Department promulgated a revised version, which reflected some of the comments that the Department had received, on an emergency basis effective September 27, 2014, and readopted the revised version on an emergency basis on December 23, 2014.

The Department received comments from many interested parties in response to its publication of the proposed rule in the New York State Register, including from: several New York State legislators; an association representing the title insurance industry (“title association”); an association representing New York banks; the real property law section of a state bar association (the “bar”); an association of real estate providers from all segments of the residential home buying and financing industry (“real estate association”); an association of realtors; title insurance corporations; title insurance agents; and a real estate broker.

Section 35.4 of Insurance Regulation 206 - Significant and Multiple Sources of Business

Comments: Section 35.4 of Insurance Regulation 206 generated the most comments. This section provides that a title insurance corporation may not accept title insurance business referred directly or indirectly from an affiliated person unless the title insurance corporation has significant and multiple sources of business, and a title insurance agent may not accept title insurance business referred directly or indirectly from an affiliated person unless the title insurance agent has significant and multiple sources of business.

Most of the commenters objected to the significant and multiple sources requirement. These commenters included both legislators; the associations representing realtors, real estate providers, and banks; the bar; an insurer; the real estate broker; and some of the title insurance agents. Their objections fell into the following general categories:

1. the Superintendent lacks the authority to mandate such a requirement;

2. the requirement is inconsistent with the legislative intent in enacting Part V of Chapter 57 and express limits on affiliated business were rejected during the legislative process;

3. the requirement is inconsistent with the federal Real Estate Settlement Procedures Act of 1974 (“RESPA”);

4. the requirement will not benefit consumers;

5. the requirement is inconsistent with sections 6701(d)(1) and (2) and 6701(e) of the federal Gramm-Leach-Bliley Act; and

6. the requirement is vague because there is no definition of the term “significant and multiple sources”.

Commenters stated that disclosure to the consumer of the affiliate relationship would be sufficient to protect the public. They also stated that the public would benefit by having additional choices of title insurance agents and that competition would be encouraged. One insurer observed that these businesses may provide ancillary services at a reduced rate.

Some insurers and title insurance agents, and the title association, stated that they support the significant and multiple sources requirement. They expressed concern that a concentration of influence in entities that control real estate development, lending, and insurance would dilute consumer protections. One commenter also noted that large real estate companies used their agents to promote their title insurance business and pressure local attorneys to use their services, and that such activity by an attorney may be a breach of an attorney’s fiduciary duty of undivided loyalty. One insurer expressed concern that affiliated agents may have a conflict of interest in representing both the insured and the title insurance corporation and that those interests are not always aligned.

The real estate association submitted suggested language that would substitute a “best efforts” requirement under which a title insurance corporation or title insurance agent would not be in violation of the section even though it did not have significant and multiple sources of business, provided that it made best efforts to obtain such business.

Response: The significant and multiple sources requirement in section 35.4 is a codification of long-held opinions of this Department interpreting Insurance Law section 6409(d), which is intended to prohibit certain parties involved in the real estate transaction from receiving compensation as an incentive for referring business or otherwise providing a rebate on the title insurance premium. A strict reading of the section could, in fact, preclude any kind of compensation being paid to those parties listed in the section. However, the Department recognizes that there may be legitimate circumstances where a title insurance agent may be affiliated with a law firm, lender, or other party addressed by Insurance Law section 6409(d) and that in these circumstances, such relationships should not be prohibited per se, but rather be permitted provided that the arrangement is not a sham intended to rebate commission or other compensation or intended to otherwise violate Insurance Law section 6409(d).

The Department does not believe the Department’s interpretation of Insurance Law section 6409(d) is inconsistent with Part V of Chapter 57. While the Legislature made some amendments to section 6409(d), including amending the penalty provisions, the Legislature did not amend the substance of that section. Although previous versions of the bill that eventually became Part V of Chapter 57 originally included a provision modeled after Insurance Law section 2103(i), that restriction applies only with respect to the amount of insurance business that a licensee may place insuring certain affiliated persons. Insurance Law section 6409(d), and by extension, the rule, applies to affiliated persons who are involved in the transaction even though they may not be insured under the policies.

However, the Department has considered the comments received, and is considering refining and revising the significant and multiple sources requirement. The Department intends to propose a revised rule shortly and affected parties and the public will have an opportunity to address any such changes during the public comment period. The Department believes that making any changes in the emergency regulation with respect to significant and multiple sources of business at this time would only create confusion and uncertainty in the marketplace until the Department adopts final rules.

Section 20.3 of Insurance Regulation 29 – Premium Accounts

Comment: The title insurance association and title agents raised a concern with the requirements in section 20.3 of Insurance Regulation 29 governing the types of funds that may be maintained in a “premium account”. The rule, which has been in place for many decades for insurance agents and brokers, discusses premium received from the insured and return premiums, but not other monies that may be received by the licensee in a fiduciary capacity.

Response: While it may appear that those other monies could not be deposited into the premium account, Insurance Law section 2120, which is the underlying statute that section 20.3 implements, talks broadly about all funds received or collected by the licensee in a fiduciary capacity. The Department is considering clarifying and modifying this section as part of a revised proposal. However, the Department believes that making any changes in the emergency regulation now only would create confusion and uncertainty in the marketplace until the Department adopts final rules.

Section 20.6 of Insurance Regulations 9, 18, and 29 – Service Fee Agreements

Comment: The title insurance association and title agents also raised a concern regarding service fee agreements under Insurance Law section 2119. They assert that section 20.6 of Insurance Regulation 29 appears to require a licensee to obtain a written agreement before providing the services that are covered under the agreement. Title insurance agents indicate that is not always practical to obtain the written agreement before providing the services because they typically have no contact with the consumer until the closing when the services already have been performed.

Response: The Department is considering clarifying and modifying this section as part of a revised proposal. However, the Department believes that making any changes in the emergency rule now only would create confusion and uncertainty in the marketplace until the Department adopts final rules.

Section 35.1 of Insurance Regulation 206 – Definition of “Person”

Comment: The title insurance association suggested that the definition of “person” in section 35.1 of Insurance Regulation 206 should include the trustee of a trust and the fiduciary of an estate.

Response: The Department believes that the definition of “person” is broad enough to include a trustee and a fiduciary. The definition references the definition of “person” in Insurance Law section 2101(q), which means an individual or a business entity. Insurance Law section 2101(p) defines “business entity” to include any kind of legal entity.

Comments on the proposal addressed in the emergency regulation

As noted above, in response to comments received during the public comment period, the emergency rules incorporated a number of changes that clarified the proposal or eliminated unnecessary requirements. The following are comments that have been addressed in the emergency and will be included in the revised proposal:

Section 35.5 of Insurance Regulation 206 – Referral by Affiliated Persons and Required Disclosures

Comment: One comment raised a concern that section 35.5(a)(3) permitted an exception from the requirement that any compensation to an affiliated person must be based upon that person’s financial or other beneficial interest in the title insurance agent when the affiliated person was licensed as a title insurance agent.

Response: While a title insurance agent generally may share commissions or other compensation regardless of the degree of work involved (except as prohibited under Insurance Law section 2128), nonetheless any such sharing is still subject to any other applicable law, including, in this case, Insurance Law section 6409(d). Accordingly, the Department removed the exception language in the emergency regulation and intends to make the same change in a revised proposal.

Section 35.7 of Insurance Regulation 206 – Other Disclosures to Applicants

Comment: Another comment that the Department addressed in promulgating the emergency regulation involved Section 35.7(b). The commenter indicated that the notice requirements regarding obtaining only a lender’s title insurance policy should not be necessary on a refinancing application or where the applicant is represented by an attorney and suggested that the Department remove the requirements.

Response: The Department made those changes and removed the requirements.

Section 35.8 of Insurance Regulation 206 – Use of Title Closer

Comment: The title insurance association pointed out that in Section 35.8(a) and (b) the wording “engages or uses” appears in one place, but only the word “used” appears in other places. The title insurance association commented that the wording “engages or uses” and “used” should all be replaced with the wording “selects and engages”.

Response: The Department revised subdivision (b) to include the wording “engages or uses” while retaining the word “used” in one place, as was appropriate. The Department believes that “selects and engages” is too narrow and that the broader term “engages or uses” better protects the consumer.