Gov. Andrew Cuomo announced on Wednesday proposed regulations to crack down on kickbacks and other improper expenditures that a recent investigation found are occurring in the title insurance industry.
In a news release Wednesday, Cuomo said new “anti-inducement” regulations, along with broader reform measures, are expected to reduce title insurance closing costs by up to 20 percent for new home purchases and up to 60 percent for refinancing transactions.
The move comes in response to a recent Department of Financial Services investigation that uncovered insurance companies were paying for excessive meal and entertainment expenses, which were significantly inflating title insurance premiums for consumers.
“New Yorkers should not have to foot the bill for outrageous or improper expenses made by title companies just to refinance or close on their home,” Cuomo said. “Our administration will not stand for that kind of abuse in the title insurance industry, and these new regulations will help ensure that New Yorkers are protected from unfair charges and get the most bang for their buck.”
The expenditures found in the investigation include meals, entertainment, vacations and gifts that were being provided to attorneys, real estate professionals and others who represent consumers and order title insurance on their behalf. Some, the report said, were in violation of the New York Insurance Law.
“Our investigation uncovered that title insurance companies paid for lavish meals and entertainment on the dime of consumers, which inflated premiums,” said Benjamin M. Lawsky, superintendent of financial services. “These new reforms will help significantly reduce costs for homeowners by trimming the fat and making sure that New Yorkers get what they pay for in the title insurance industry.”
The proposed regulations also impose caps on ancillary charges, or fees for additional searches and services not included in the title insurance premium. The proposed regulations are part of a series of actions the Department of Financial Services is taking to lower premiums and improve accountability in the title insurance industry.