Missouri’s governor has signed legislation overhauling the state’s title insurance regulations that’s intended to provide better safeguards for funds held in escrow, and provide consumers with more information so that they can shop around.
Provisions of Senate Bill 66 pertaining to the title insurance industry include a requirement that title agencies provide “clear, conspicuous and distinct” disclosure of premiums and charges, including abstract or title search and settlement, escrow or closing fees.
The bill also requires that title agencies deposit escrow funds in separate trust accounts within one day of receipt, and makes it unlawful to commingle the accounts with other funds, disburse the funds held in the account without written agreement, or use the funds or indemnify against debts.
The bill was passed in the wake of the failures of eight title insurance agencies, the St. Louis Post-Dispatch reported.
In a press release announcing the signing of the bill Friday, Gov. Matt Blunt’s office acknowledged that “a handful of title insurance agencies used customers’ money inappropriately and ultimately were forced to close because of the abuse.”
Last year, Missouri regulators announced enforcement actions against 16 title insurance agencies accused of charging rates not approved by the state and misrepresenting to consumers the actual cost of a policy.
SB 66 increases civil penalties for agents who take advantage of consumers from $100 to a fine of up to $20,000 per violation, with a maximum penalty of up to $1 million for multiple violations. If the fraud causes a financial loss to the consumer, penalties of up to $1 million per violation with no limit for multiple violations may be levied.
The bill’s other provisions include:
- Title agencies are required to disclose the existence of affiliated business arrangements, and provide consumers with a written estimate of the charges generally made for the title services provided by the title insurer or agent.
- Title insurers are required to conduct onsite reviews at least once a year of title insurance agencies or agents they contract with, checking their underwriting, claims and escrow practices.
- Title insurance agencies and their agents must be licensed, with agents passing an examination and completing at least eight hours of continuing education coursework every two years.
The Missouri Department of Insurance Friday announced the appointment of a 12-member Title Insurance Advisory Committee to assist in implementing the new provisions and create regulations. Most of the group’s members are from title insurance agencies, although a home builder, Realtor, banker and consumer advocate are also represented.