In The News

In the News  

Presented by Frank Pellegrini, CEO, Prairie Title     

August 15, 2018         

Bill to Amend Title Act Introduced in Springfield

A bill introduced by Illinois Rep. Jeanne Ives in late July  would amend the Illinois Title Insurance Act to allow the Secretary of Financial and Professional Regulation to refuse, suspend or revoke the authority of attorneys to act as title agents in the same transaction wherein they represent a party to the transaction. It is quite unusual for a new bill to be introduced during a veto session of the legislature. We all need to keep a close eye on how this develops. You may consider contacting your representatives in the General Assembly to voice your position.

Have you Visited our New Web Site? PrairieTitle.com has been revised and revamped, and we’re really excited about the new look and feel.  There’s great information for you and for home buyers and sellers. Take a look, and pass the Internet address on to your customers. There they will find answers to most of their closing and title insurance questions and a new rate estimator calculator that is under the Attorney and Consumer buttons.

Also in Springfield: The Illinois Department of Professional and Financial Regulation was set to implement its new rule regarding the Disclosure of Finan­cial Interest form in July  when the courts swooped in after a lawsuit was filed by Attor­neys’ Title and joined by ILTA. The Court will consider the case on the merits at a preliminary injunction hearing that is scheduled to begin on Septem­ber 26, ILTA noted.

Title Act task force: The Illinois Land Title Association recently formed a task force which aims to recommend changes to the Title Insurance Act, and I have been asked to play a part in the discussions. I will let you know when updates become available.

In Washington: ALTA recently issued a press release thanking the Treasury for making recommendations for improvements to the home closing process. Treasury consulted with ALTA leadership while preparing the report, which identifies hurdles in the market and offers recommendations to improve the electronic closing and recording process.

On a personal note: ALTA CEO Michelle Korsmo recently announced that she is leaving the organization after 10 highly successful years leading the title industry’s trade group. Under Michelle’s  leadership, ALTA has doubled its membership and revenue. Also, in the past few years, the association has instituted an industry-wide licensing program as well as a best-practices standard. Michelle will be missed.

In The News

In the News  

Presented by Frank Pellegrini, CEO, Prairie Title     

June 1, 2018    

New Disclosure Rule Delayed to July 1, at Least

The Illinois Department of Professional and Financial Regulation has announced implementation of a new rule on the Disclosure of Financial Interest form. Initially the change was to become effective in May. Following input from the industry, IDFPR has postponed implementation until at least July 1. For more information, click here to view the online form, and here for instructions on filling out the form.

Springfield update: Amazingly, the state legislature adjourned yesterday after passing a full budget on time, and Gov. Rauner has said he will approve it. Two bills of  interest to the real estate community were passed, one that legislates predictive recording fees for Cook County and another limiting the selection of title insurance and settlement services and the splitting of title policies in any residential transaction ("bifurcation"). The governor is expected to sign both.

In Washington: After many fits and starts, updates to Dodd-Frank are now law, to the applause of many in our industry. Unfortunately, there’s been no movement forward on the House-passed bipartisan ALTA-supported legislation that corrects the inaccurate disclosure of title insurance premiums on the TILA-RESPA Integrated Disclosures. As we grind toward the November election, odds will fade that the Senate will take up and pass this bill, but there’s still hope.

Tech talk. The MReport recently published an article on homebuyers and technology, based on a survey by owners.com. The upshot? “Homebuyers are increasingly looking at their real estate agent for expertise and tech-based tools to keep them organized during their home search.” Read the full article here. I also recommend a recent article about how blockchain and cryptocurrency are changing commercial real estate published by REJournals.com. 

April existing home sales tumble. There’s no way to sugarcoat this: “The affordability issue is kneecapping strong demand,” declared Housing Wire in a recent story. The article quoted NAR Chief Economist Lawrence Yun, “The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home.” Ugh.

Is Gen X making its mark on CRE? While homeownership among younger adults is not nearly as robust as we’d like in a vibrant economy, NAIOP recently published an interesting article noting that Gen Xers (born between 1965 and 1981) are helping boost commercial real estate develop-ment as companies strive to meet their preferences in housing, office space and entertainment options. I’m always looking for a silver lining.

IDFPR Disclosure Rule

 

April 6, 2018

         

New Guidance from IDFPR! 

Disclosure Rule Updated,  Effective May 15, 2018

In a surprise move, the Illinois Department of Professional and Financial Regulation on April 4 implemented a new rule on the Disclosure of Financial Interest form effective May 15, 2018. The crux of IDFPR’s new guidance is:

“The Department of Financial and Professional Regulation, Division of Financial Institutions announces that the Disclosure of Financial Interest form, also known as the DS-1 form, has been revised. This revised disclosure form is effective at 12:01 a.m., April 4, 2018 [now May 15, 2018], and the current form will no longer be used.

“The Title Insurance Act (Act) authorizes the Department to prepare the disclosure form so that a producer of title business (usually the attorneys, real estate brokers or lenders in transactions) discloses their financial interest to any home seller and buyer involved in the closing process. This includes the title insurer, independent escrowee or title agent/agency involved in the closing.” 

 

Note: As of this writing, the Illinois Land Title Association has requested that IDFPR delay implementation of mandatory use of the new form for 90 days. IDFPR has announced a new effective date of May 15, 2018.

Click here to go to the online form, and here for instructions on filling out the form.

What you need to know:

·         Compliance with this guidance is mandatory and effective immediately.

·         You must present the revised disclosure form to your client at the beginning of each transaction process, i.e. before the title commitment is issued.

·         For each transaction, the title insurer (underwriter), “Must review and approve the disclosure, including accurately verifying the percentage the agent will receive for statutorily authorized services that the agent will perform, including an estimate of the fee.”

How can Prairie Title help?

We are here to help you through the new process. Do not hesitate to reach out to your representative with any questions you have and for the assistance you need.

New Regulatory Initiative in Illinois

Illinois Moving Forward on Regulatory Guidance for Title Insurance Fees

In a most welcome development, last week I attended a meeting at the Thompson Center in downtown Chicago called by the Illinois Department of Financial and Professional Regulation. The topic was IDFPR’s proposed regulatory guidance with respect to premium-sharing practices and update fees. The official document can be found here.

In my opinion, the proposed guidance and regulatory action is long overdue and is a good start in addressing certain questionable practices which have been occurring with greater frequency in recent years.

Several important items emerged from the meeting that I wanted to share with you:

·         IDFPR feels that premium splits should reflect market concerns. However, no clear definition was offered. I questioned whether premium splits should be considered compensation for work actually performed or reflect division of liability. The Title Act and RESPA require agents to perform “core services,” understood to be: 1) examine title; i.e. determine insurability, 2) clear exceptions, and 3) underwrite title risks.

·         Contracts between underwriters and their agents may be reviewed by IDFPR to determine if the premium splits reflect the prevailing market. Further, there may be a need to audit actual transactions to confirm the contract terms are carried out according to the agreed split.

·         IDFPR indicates that certain fees for settlement services should not be paid to nor shared with attorney agents. These include later date fees, chain of title fees, commitment update fees, policy update fees, etc. Paying these fees or sharing them may constitute illegal inducements. Further, unless services are actually performed, sharing or paying these fees to attorney agents may violate RESPA.

·         It was generally agreed that consumers do not understand the mechanics behind the division of title fees. There is a possibility that the disclosure forms may be revised to create greater transparency.

·         The question was raised of whether an attorney at the closing who believes certain fees or arrangements are inappropriate has an ethical obligation to report that conduct. The IDFPR officials indicated that they could not opine on the Rules of Professional Conduct, but they welcome reports of bad behavior, and gave assurance that anonymity would be would be protected as much as possible.

·         On the issue of required reciprocal referrals by several real estate brokerages which operate affiliated title companies, IDFPR is interested in these matters and indicated they may address them at some time, but they wanted to limit the discussion to the issues raised in the proposed guidance.

During the meeting, I made the point that title insurance and the advocacy provided by attorneys for the respective parties are important consumer protections and any guidance issued should take this into account. We should not create disincentives in the market where consumers may opt out of title insurance or forego the advice of legal counsel. Let’s be careful not to throw the baby out with the bath water as has occurred in other parts of the country.

Overall the discussion was candid and open. IDFPR Secretary Bryan A. Schneider referenced shedding light on the issues; this is a positive outcome. If nothing else, the meeting raises awareness and gives us the opportunity to more openly talk about inappropriate behavior in the market.

I applaud the Department for initiating the discussion and raising awareness. Perhaps more clarity will come as more light is cast on proper market conduct.

As always, I welcome your comments and questions, and I assure you that if Prairie Title provides you with support services, nothing will change for you. Our invoicing, billing, and remittance practices are already (and always have been) in line with the proper conduct suggested by the IDFPR guidance document.

I would love to have your thoughts and comments. Please share them below. Let's start a conversation.