Title Matters

Rep. Ellison Introduces the Ensure Fair Prices in Title Insurance Act

Jan 17, 2017
Press Release

Last week Rep. Keith Ellison (D-MN) reintroduced the Ensure Fair Prices in Title Insurance Act (H.R. 517), which would ensure homebuyers are not overcharged when purchasing title insurance.

“Working Americans shouldn’t get cheated out of hard-earned dollars when they invest in a home for their family.” Rep. Ellison said. “When sellers or real estate agents refer buyers to a title insurance company, homebuyers assume they’re getting the best deal. But agents or sellers may have a financial stake in the title insurance company they recommend to buyers. The Ensure Fair Prices in Title Insurance Act protects working families from an opaque market with hidden commissions and reverse competition. The bill will make the housing marketplace fairer, help homebuyers save money, and strengthen our communities.”

“I will continue to oppose any efforts to weaken the Consumer Financial Protection Bureau’s work to end lucrative kickback arrangements that place homebuyers at a disadvantage when they make the biggest purchase of their lives,” said Rep. Ellison. “For example, when Treasury Secretary nominee Steve Mnuchin was at OneWest, it was sued in Toledo, Ohio for lucrative kickback arrangements with force-placed insurance carriers who, for being picked as the insurer on OneWest-related foreclosures, would pay OneWest for the referral.”

The Ensure Fair Prices in Title Insurance Act amends Section 2 of the Real Estate Settlement Procedures Act of 1974 addresses this conflicted referral advice in three ways:

  1. Prohibits any referral source such as a realtor, builder or mortgage broker from receiving a financial benefit for referring home-buying clients to a title insurance firm. These referral financial benefits could include an ownership interest, a bonus or payment, a lower desk rental rate, tickets to sports, theater or special events or any other benefit with a financial value.
  2. Requires firms breaking the law to provide restitution to clients and competitors.
  3. Extends the statute of limitations from one to three years if the law is broken. The current prohibition against illegal kickbacks has a one-year look back to assess the violation. One year is inadequate to truly assess penalties for long-standing violations.

Since the bill’s introduction in 2015, regulators have taken steps to stop illegal kickbacks and costly fees when homebuyers are making the largest purchase of their lives. The Consumer Financial Protection Bureau (CFPB) has taken action against fraudulent activity in home sales as has New York State. Also, the National Association of Insurance Commissioners reestablished its Title Insurance Task Force.

In addition, The Washington Post and The New York Times published opinion pieces on concerns with reverse competition. The New York Times published my letter to the editor which recommended my bill as a solution. Finally, the National Association of Realtors published the DANGER report (www.dangerreport.com) or the Definitive Analysis of Negative Game Changers Emerging in Real Estate which notes that the realty industry is harmed by some poorly trained and unethical realtors, non-compliance with anti-kickback laws and excessive consolidation.

The bill is supported by Americans for Financial Reform, Center for Responsible Lending, Consumer Advocates in American Real Estate, Consumer Federation of America, National Association of Independent Land Title Agents and Center for Responsible Lending.