The budget message also calls for a reduction in fees for title policies, reportedly by 20% for new home purchases and 60% for refinancings. The problem is that people are not finding those details anywhere in the budget itself.
Fees are split between title agents and underwriters on an 80%-20% basis and a cut could pressure profit margins for both groups, a report from Fitch Ratings states.
New York is the fourth largest state by number of title insurance policies written, behind Texas, California and Florida, according to the American Land Title Association. In 3Q13, there were $258 million of premiums written, a 21% increase over the same period in 2012.
The proposal could lead to voluntary rate reductions, the ratings agency says. New York's insurance regulator, the Department of Financial Services, can only reject rates, not set them. If they do reject a rate filing, the previous rate that the agency has accepted remains in force.
The proposal will make New York a less attractive business environment for insurers but given the size of the market, the title industry is likely to adapt to any changes, Fitch says.
Whether or not this proposal will impact title insurance rates is speculation at this point because the budget document only includes a plan to require title insurance agents, closers and title solicitors to be licensed, says Michelle Korsmo, chief executive officer of the American Land Title Association.
The New York State Land Title Association, an affiliate of ALTA, has encouraged licensing of industry participants for years to elevate professionalism, she adds.
Last year, ALTA came out with a best practices statement for title agents.
According to the budget proposal, title agent licensing will only generate a very moderate amount of revenue for the state, about $80,000 annually.
Licensing, the budget says, can halt excess charges paid by consumers. It then claims licensing title agents will make homeownership more affordable in New York.
For licensing to go into effect, this part of the budget proposal must be approved by both houses of the state legislature.
While ALTA and NYSLTA support the move, anecdotal evidence suggests there are a significant number of agents who support the status quo.
There is a major need for licensing, one title agency owner declares. Every other professional at the closing table is licensed, except for the title agent, says Rafael Castellanos, the president of Expert Title Insurance Agency, New York. He is also the president-elect of NYSLTA.
Echoing the point made in the budget, agent licensing protects both the consumer and the industry from bad practices, he continues.
Cuomo's imprint on the housing industry is already huge. He is a former secretary of Housing and Urban Development during the Clinton administration. Later, as New York's attorney general, he negotiated the settlement which created the Home Valuation Code of Conduct (now part of the appraiser independence rules in the Dodd-Frank Act).