New York Gov. Andrew Cuomo's proposal to license title agents has survived the negotiating process and is in the final budget for the new fiscal year.
This is something the New York Land Title Association has been advocating for the past 10 years. New York will become the 48th state to license title agents.
The Department of Financial Services, which regulates banks, mortgage banks and insurance companies in the state, 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," a press release from Cuomo's budget office says.
Agents will have to meet qualification standards and undergo regular training to be licensed.
The trade group estimates that 450,000 title insurance policies were issued in New York in 2012. The typical cost of a title insurance policy for a property selling for $200,000 is in a range from $1,029 in New York City and its suburbs, down to $952 in upstate New York.
While the New York association and its national partner the American Land Title Association supported the proposal from the start, many individual title agents reportedly expressed opposition.
Besides the licensing of title agents, the Cuomo administration again stated its plans for reducing the cost of title insurance.
"Together with other measures including regulations DFS will soon issue on title insurance, these reforms are expected to result in a 20% reduction in title insurance premiums and closing costs for new home purchases and a more than 60% reduction in costs on refinancing transactions," the press release announcing the budget says.
A new entrant to the title insurance underwriting business in New York, OneTitle National Guaranty Co., does not use title agents as a source of business; it works with borrowers, attorneys, developers and lenders. It says it filed a lower rate and fee structure with the regulator than other underwriters, which charge similar rates to one another.
"We are thrilled that Gov. Cuomo and New York State are taking steps to reform the title insurance industry. New Yorkers deserve better than the sky-high prices, mediocre service and the constant risk of fraud they have faced for decades," a statement attributed to OneTitle co-founders Daniel Price and Seth Brown says.
There were $991 million of title insurance premiums generated in New York last year, according to the American Land Title Association. However, about 87% of title business nationwide comes from the four major underwriters, with the rest divided among the regional underwriters.
A reason the New York trade group supports licensing is because of past bad practices involving title agents, including the stealing of funds, says Rafael Castellanos, the owner of Expert Title, an agency in New York.
Calls to the New York Bankers Association and the Empire State Mortgage Bankers Association were not immediately returned.