Posted by Genkichan on 9/29/06 8:50pm
Msg #149381

Fellow Marylanders, please respond...

Lender's First Choice has contacted most of us by now requesting we fill out information for United General, which asks us for our FIDELITY bond information. United General's interpretation of the new law is that we are to be covered by a fidelity bond, and if not, we cannot be appointed to close their loans. LFC is not willing to cover us under their own fidelity bond, as we are not their employees. As such, they expect us to obtain our own.

Now, many of us IC's do not have employees of our own, and are not required by the MIA to obtain a fidelity bond in order to get a TPL. (We have surety bonds instead). I recall filling out an affidavit for exemption from needing a fidelity bond because I have no employees of my own.

How are the rest of you handling this situation? Do you already have fidelity bonds? Are your other title companies listing you under their fidelity bonds? Do you see the need to go out and get a fidelity bond now? I would really appreciate hearing from the rest of you, since the thought of adding another several hundred dollar bill to my expense column is killing me! I copy here the text from the revisions to the law, as presented by LFC, which they are using to call upon us to provide them with fidelity bond information. It is my opinion that they are mis-interpreting 10-121, since we are not the agents, per se, we are the "Title insurance producer independent contractor."

Thank you for your input and opinions on this matter.

Vicki/MD

Bulletin Addendum attached to UGTIC Underwriting Bulletin 0714-2006

Selected Provisions of Maryland House Bill 1460 Involving Title Insurance Producer Independent Contractors.

Additions to existing statutes shown in bold type.


§ 10-101. Definitions

(j) "Title insurance producer independent contractor" means a person that:
(1) is licensed to act as a title insurance producer;
(2) provides escrow, closing, or settlement services that may result in the issuance of a title insurance contract as an independent contractor for, or on behalf of, a licensed and appointed title insurance producer; and
(3) is not an employee of, or associated with, the licensed and appointed title insurance producer.

§ 10-121. Title insurance agents

(d)(1) In addition to meeting any of the applicable requirements for a license to act as an insurance producer under this subtitle, a sole proprietor, a limited liability company, a partnership, or a corporate applicant for a license as a title insurance producer shall file with the Commissioner:
(i) a blanket fidelity bond covering appropriate employees and title insurance producer independent contractors; and
(ii) 1. a blanket surety bond; or
2. a letter of credit.

§ 10-121.1.
A title insurance producer may not use or accept the services of a title insurance producer independent contractor unless the title insurance producer independent contractor holds an appointment with the title insurer with which the contract of title insurance may be placed.

Reply by WDMD on 9/30/06 3:11am
Msg #149444

Seems to me if you send them the link to the fidelity bond waiver form and they read it, that should satisfy them that you are not required to have that bond. Like you say, fidelity bond will do you no good unless you have employees.

http://www.mdinsurance.state.md.us/documents/FidelityBondWaiver-SoleProprietor.pdf

Reply by Genkichan on 9/30/06 7:46am
Msg #149454

The law basically states that title agents need to have blanket fidelity bonds covering their TPL folks AND their TPL independent closers. LFC is also saying that *their* fidelity bond does not cover us, and is putting the pressure on US to go get our own fidelity bonds. It's called "pass the buck". They've even given information on a contact who can easily get us a fidelity bond to meet this need. I haven't called yet, but I suspect the cost won't be small for another $100,000 bond. Yet again another way of having the notary absorb their cost of business.

Have any other companies asked you to get your own fidelity bond yet? Are you complying? LFC is the ONLY one requesting this of me so far, and hopefully the last. I can't afford to pay for this, esp. as it isn't even required of me to be licensed in the first place.

Reply by Loretta Reed on 9/30/06 1:49pm
Msg #149540

I have spoken with 3 other closers in my area and we are not getting a fidelity bond. My attorney says that I do not need it. If they want to give me $295 to buy one, than I will go get it. They don't want to pay us more so I don't feel like buying anything to satisfy their idea of what I need to do this. I do not do enough work for the title companies that are requesting the fidelity bond to merit me buying it.

Reply by Genkichan on 9/30/06 3:29pm
Msg #149549

Thank you for your input...I do appreciate your perspective on this. I feel the same way...not enough business from LFC to justify me spending the money. I have a feeling that their MD closer list is about to become significantly shorter than usual. Maybe they will have to add us to their own fidelity bond after all, just to continue their MD business.

Reply by Kimberly Schneider/ Mobile Notary on 10/4/06 10:11am
Msg #150127

Hi,
I have a good friend Mike Tracy in Annapolis who works for and insurance co. And is also a lawyer. I called him and he said the entire industry (insurance bond etc) would not agree to this. So eventually you will see the law change back. Your right they are allways trying to pass the buck for the person who dose all the leg work and gets paid the least. Also I've done 4 reverse mortgages with a company in CA LDSS . My first was in August, and so on. I still have not been paid. They are very pleasent to deal with, I've called twice and was told the checks in the mail. Its Wednsday and I'm still waiting.

Kim