After two years of hanging in limbo, legislation requiring that Ohio home buyers be told about the protections afforded by homeowner’s title insurance is now part of a faster-moving bill, the Cincinnati Enquirer reported today.
State Rep. Michelle Schneider, R-Madeira, said Tuesday that the state Legislative Service Commission had, at her request, combined language from her title insurance bill to the bill that provides for swifter state enforcement of predatory lending practices, according to reports.
The Financial Institutions, Real Estate, and Securities Committee approved the predatory lending bill Wednesday, reports said, with the Senate later rejecting changes in the bill and sending it to a joint committee to work out the differences.
“My bill had only had one hearing, and it was going to take longer for it to become law,” Schneider told the Enquirer.
The title insurance industry came under an intense spotlight last year after Colorado’s Insurance Division in February 2005 investigated nine Colorado title insurers for alleged kickback schemes said to result in overcharges to consumers. The probe sparked dozens of investigations nationwide, in Florida, Washington, Hawaii, California, Oklahoma, Minnesota, Washington and other states.
On March 2, New York’s attorney general and insurance department announced that they are investigating national title insurance companies for suspected illegal kickbacks, the insurance department confirmed today.
Michael Oxley, R-Ohio, chair of the House Financial Services Committee, has asked that watchdog agency the Government Accountability Office investigate the title insurance industry.
Schneider introduced her title insurance bill in 2004 in the aftermath of a title insurance scandal, reports said. In that scandal, a now-defunct home builder in Edgewood, Ohio, the Erpenbeck Co., pocketed closing proceeds from more than 300 home sales instead of using the money to pay off construction loans, according to reports.
That left unpaid first mortgages on the homes, leaving their owners vulnerable to foreclosure by the banks that held those notes. The banks absorbed the losses, and the owners kept their homes, reports said.
Unlike Columbus, Ohio, where it is customary for home sellers to buy title insurance policies for buyers, and Cleveland, where buyer and seller split the cost, home sales in Cincinnati seldom include the purchase of homeowner’s title insurance, the Enquirer said. The title policies sold are lender’s title insurance, which covers only the home buyer’s mortgage lender in the event of fraud or claims on the property, according to reports.
“The whole intention of the bill is to start the conversation at the closing,” Schneider said, according to reports. “People need to know that if they want title insurance, they have to buy their own policy.”