Posted by Renee Giannos on 11/9/07 7:29pm
Msg #220537
Two Part Title Insurance Q
I have researched these questions and spoken to many title insurance agents. I'm getting mixed answers so I'm throwing it out there for discussion. Pardon my ignorance but I'm just so confused.
First Q: I live in Illinois. Many title companies that I have tried to market tell me that they do not use outside notaries. I am told that their underwriters forbid them from using outside notaries. Ok fine. Then why do some other title companies (some of which use the same underwriters) close loans with NSAs who are independent contractors?
Second Q: Is there is difference between an TPL and an "Approved Settlement Provider?" The reason I ask is because that is what these companies are asking me to become in order to close their loans.
It seems to me that all these questions are exactly related to the recent discussions had with Linda Cipa (sp?) the proponent of TPL. What I don't understand is without it being mandated by the IDPFR, how can some title companies require it and others not? Even the IDPFR can't give me a straight answer.
I appreciate any feedback.
| Reply by Dave Heine on 11/9/07 8:01pm
Msg #220543
Ok, here is part of your answer. I am a licensed Title Agent in many states. Your state of Illinois has required our underwriters to provide us with the following information:
**Please note: if the agency is not conducting closings, an attachment to the DFI forms needs to indicate "Closings conducted by branch" or "Closings conducted by underwriter agents". Closings, including signings, cannot be handled by notaries or attorneys, unless the attorneys are title insurance agents of the same underwriter. At this time, no notary services are title insurance agents.**
Re: Title Insurance Policies and Procedures
Agents doing business in Illinois should keep the following points in mind:
1. Title Insurance Agents must not contract with third parties to perform closing services. This practice is known as a "witness-only" closing, and is not permitted in the state. Please note that there is no exception for realtors or attorneys if they are acting outside the boundaries of their respective licenses.
| Reply by Renee Giannos on 11/9/07 8:06pm
Msg #220546
How then do some title companies get around this and use signing agents?
| Reply by Becca_FL on 11/9/07 8:20pm
Msg #220549
Dave, What do you do when you are closing an IL loan
being a FL TC and the borrower requires a mail away? Do you schedule courtesy closings with an agent in IL that is using your underwriter?
Just curious.
| Reply by JK/TX on 11/9/07 8:54pm
Msg #220553
One Part Opinion....
.........Many title companies that I have tried to market tell me that they do not use outside notaries. I am told that their underwriters forbid them from using outside notaries. Ok fine. Then why do some other title companies (some of which use the same underwriters) close loans with NSAs who are independent contractors?
_______________________________________________________________________
IMO..but don't know your state...
Many title co's can issue title policies with different underwriters and then there are the one(s) that only use one underwriter. They may be stating their “underwriters forbid...., when it is actually their legal council/corporate office/ region/etc. that forbids....
Then there are title companies that offer different types of service. Some will search title, issue a commitment to the lender or escrow company and allow the lender/escrow company to handle all phases of the closing process. After the the closing process is completed (i.e. closed and funded) the lender will pay the title company with the funds collected at closing to issue the policy. A title company takes a huge risk going this route. When they do not have control of the closing process, well, they are out of control but insuring the loan.
In my area, probably 90%-98% of the r.e. transactions are closed at the title company. And if the docs are sent out for sig's, they are sent to another title company or probably sent with a notary that is well known to the escrow closer. The escrow officer/closer can be held “personally” responsible for a closing so they want to have a close watch on their files.
| Reply by Renee Giannos on 11/9/07 9:03pm
Msg #220555
and this buttresses the Cipa argument
so what your saying (if I am to understand this correctly) is that those title companies that work directly with IL SSs and NSAs are playing fast and loose with the undewriter's policies (not necessarily IL law). Is that right?
| Reply by JK/TX on 11/9/07 9:11pm
Msg #220556
Re: and this buttresses the Cipa argument
if that question is directed at my post,,,,, no, I'm not saying that. It's just a risk (not necessarily fast and loose) many title co's, underwriters and escrow officers are not willing to take.
I for one, could not personally afford to buy a lender's loan...... my mortgage is plenty, thank you, but no thank you! 
| Reply by Becca_FL on 11/9/07 9:35pm
Msg #220568
Re: and this buttresses the Cipa argument
Hell, I don't know. It's not my business to know IL law. Do your research, I'm sure you will find enough info to make an informed decision.
| Reply by Becca_FL on 11/9/07 9:42pm
Msg #220570
I NEVER SAID THAT!
Time for your / you're lessons!
| Reply by Becca_FL on 11/9/07 9:30pm
Msg #220565
Re: One Part Opinion....IMO, JK/TX
Do you even know what a courtesy closing is?
| Reply by Renee Giannos on 11/9/07 9:36pm
Msg #220569
Re: One Part Opinion....IMO, JK/TX
Who is that question directed to? If you're asking me, the answer is yes.
| Reply by JK/TX on 11/9/07 9:52pm
Msg #220572
Re: One Part Opinion....IMO, JK/TX
In years past, yes......it was at no charge. everyone loved those request (right!) ........... why did you ask me that? I did not mention a courtesy closing....
| Reply by Renee Giannos on 11/9/07 10:16pm
Msg #220576
Thank you Dave & JK/TX!! n/m
| Reply by Dave Heine on 11/10/07 6:07am
Msg #220613
IL Signings
Ok, you asked how we do closings in Illinois. We can goto our underwriters website and search for title companies/attornies in that area. We can call them and set up closings through them, just like when they have closings in our area we they can call us. Some title companies are picky and want other title companies to do the courtsey closing.
As far as is it an underwriter thing, no, I Illinois, Maryland, South Carolina, and Mass it is set by state laws or in regulations by the Department of Insurance that we can not use notary signing agents or signing services.
Understand that if we choose to skirt the law, and there are those that do that, since the underwriter and the law in particular has set the "practice", not following the guidelines sets me up for "malpractice" and if I have to buy back that loan or laons, I really do not think that A) my underwriter is going to be happy as it sets me up for a title claim, B) the state will more than likely take sanctions against my license (which is reported to all the other states I am licensed in and they will also take some kind of sanction) and last but not least would be C) my e&o carrier will not be happy as they will have to pay the claim, then come after me and also the company for the loss.
So all in all, it is not worth it to lose my licenses over to not follow the directions of my underwriters and the law.
In Illinois, you fall under the Division of Financial Services, and per state la you need to have an independent escrowee license.
This is from the DFS website:
The Act also requires the certification of Independent Escrowees. These independent escrowees receive deposits, in trust, of funds or documents for the purpose of effecting the sale, transfer, encumbrance or lease of property held until the title to the subject property is in prescribed condition.
The state looks at the fact that you receive the DOCUMENTS and therefore fall under the licensure act. This is from an ALTA publication in 2003 and is still relevant in Illinois:
However, the Department of Financial Institutions of the State of Illinois has asserted that signing/notary companies advertising and operating in Illinois must be certified as Independent Escrowees, although at recent date, there were no such Independent Escrowees licensed in Illinois . An Independent Escrowee is defined as a person, other than a title insurer or title insurance agent, which receives deposits in trust of funds or documents for effecting a transfer or encumbrance of real property “to be held by such escrowee until title to the real property that is the subject of the escrow is in prescribed condition.” Several cease and desist orders had been issued against signing companies based on the Department's interpretation of the applicability of the requirements for an Independent Escrowee.
| Reply by Renee Giannos on 11/10/07 2:20pm
Msg #220640
Re: IL Signings
Dave, I PMed you!
| Reply by Pat/IL on 11/10/07 5:53pm
Msg #220653
Re: IL Signings
This is interesting. I have just visited the IDFPR site, which defines the Independent Escrowee as "a person, other than a title insurer or title insurance agent, which receives deposits in trust of funds or documents for effecting a transfer or encumbrance of real property." It does not include the text that you provided within quotation marks, being, “to be held by such escrowee until title to the real property that is the subject of the escrow is in prescribed condition.” The part in the quotation marks would suggest that the NSA does not fit the definition of an independent escrowee.
A reading of the Illinois Tile Insurance Act (I have read it several times and it is tedious) does include the language. A notary signing agent obviously does not hold funds nor documents "until title to the real property that is the subject of the escrow is in prescribed condition." Friends, that is not a legal opinion, just a statement of the obvious. Unless the law has changed, I would question the basis of the IDFPR's interpretation of the law. While the IDFPR seems to have wide latitude in its interpretation and enforcement of the Illinois Title Insurance Act, it is not a legislative body and cannot (or can it?) omit consideration of any part of the law in its interpretation.
Then again, maybe the law has been revised and my google skills just are not up to par. I seem to recall an effort, maybe a couple of years ago, to require that signing agents obtain license or certification from the IDFPR. Chaos ensued, as the state of Illinois had no procedures, or applicable test, or anything, to allow the signing agents to comply. I have heard little to nothing since...until this thread.
That said, my company, an Illinois title agent, has been asked, on several occasions, to become an agent for a specific underwriter, as an accommodation to specific agents, in order to conduct witness signings for the various agents. I guess that has been the result of the directive from the IDFPR of which Dave speaks.
Thanks for indulging us Illinoisans!
| Reply by Dave Heine on 11/10/07 6:22pm
Msg #220657
here is the statute they are refering to
See paragraph 9
State of Illinois
91st General Assembly
Public Acts
[ Home ] [ ILCS ] [ Search ] [ Bottom ]
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Public Act 91-0159
SB795 Enrolled LRB9101198LDmbB
AN ACT to amend the Title Insurance Act by changing
Sections 3 and 17.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Title Insurance Act is amended by
changing Sections 3 and 17 as follows:
(215 ILCS 155/3) (from Ch. 73, par. 1403)
Sec. 3. As used in this Act, the words and phrases
following shall have the following meanings unless the
context requires otherwise:
(1) "Title insurance business" or "business of title
insurance" means:
(A) Issuing as insurer or offering to issue as
insurer title insurance; and
(B) Transacting or proposing to transact one or
more of the following activities when conducted or
performed in contemplation of or in conjunction with the
issuance of title insurance;
(i) soliciting or negotiating the issuance of
title insurance;
(ii) guaranteeing, warranting, or otherwise
insuring the correctness of title searches for all
instruments affecting titles to real property, any
interest in real property, cooperative units and
proprietary leases, and for all liens or charges
affecting the same;
(iii) handling of escrows, settlements, or
closings;
(iv) executing title insurance policies;
(v) effecting contracts of reinsurance;
(vi) abstracting, searching, or examining
titles; or
(vii) issuing closing protection letters;
(C) Guaranteeing, warranting, or insuring searches
or examinations of title to real property or any interest
in real property, with the exception of preparing an
attorney's opinion of title; or
(D) Guaranteeing or warranting the status of title
as to ownership of or liens on real property and personal
property by any person other than the principals to the
transaction; or
(E) Doing or proposing to do any business
substantially equivalent to any of the activities listed
in this subsection, provided that the preparation of an
attorney's opinion of title pursuant to paragraph (1)(C)
is not intended to be within the definition of "title
insurance business" or "business of title insurance".
(1) "Business of guaranteeing or insuring titles to real
estate" means the making as insurer or guarantor, or
proposing to make as insurer or guarantor, of any contract or
policy of title insurance; the transacting or proposing to
transact, any phase of title insurance, including, as an
insurer or guarantor, examination of title, solicitation,
negotiation preliminary to the execution of a contract of
title insurance, and execution of a contract of title
insurance, insuring and transacting matters subsequent to the
execution of the contract and arising out of it, other than
reinsurance; the performance of any service in conjunction
with the issuance of any contract or policy of title
insurance, including but not limited to the handling of any
escrow, settlement or closing, if conducted by a title
insurance company or title insurance agent; or the doing, or
proposing to do, any business in substance equivalent to any
of the foregoing in a manner designed to evade the provisions
of this Act.
(1.5) "Title insurance" means insuring, guaranteeing,
warranting, or indemnifying owners of real or personal
property or the holders of liens or encumbrances thereon or
others interested therein against loss or damage suffered by
reason of liens, encumbrances upon, defects in, or the
unmarketability of the title to the property; the invalidity
or unenforceability of any liens or encumbrances thereon; or
doing any business in substance equivalent to any of the
foregoing. "Warranting" for purpose of this provision shall
not include any warranty contained in instruments of
encumbrance or conveyance. An attorney's opinion of title
pursuant to paragraph (1)(C) is not intended to be within the
definition of "title insurance".
(2) "Title insurance company" means any domestic company
organized under the laws of this State for the purpose of
conducting the business of guaranteeing or insuring titles to
real estate and any title insurance company organized under
the laws of another State, the District of Columbia or
foreign government and authorized to transact the business of
guaranteeing or insuring titles to real estate in this State.
(3) "Title insurance agent" means a person, firm,
partnership, association, corporation or other legal entity
registered by a title insurance company and authorized by
such company to determine insurability of title in accordance
with generally acceptable underwriting rules and standards in
reliance on either the public records or a search package
prepared from a title plant, or both, and authorized in
addition to do any of the following: act as an escrow agent,
solicit title insurance, collect premiums, issue title
reports, binders or commitments to insure and policies in its
behalf, provided, however, the term "title insurance agent"
shall not include officers and salaried employees of any
title insurance company.
(4) "Producer of title business" is any person, firm,
partnership, association, corporation or other legal entity
engaged in this State in the trade, business, occupation or
profession of (i) buying or selling interests in real
property, (ii) making loans secured by interests in real
property, or (iii) acting as broker, agent, attorney, or
representative of natural persons or other legal entities
that buy or sell interests in real property or that lend
money with such interests as security.
(5) "Associate" is any firm, association, partnership,
corporation or other legal entity organized for profit in
which a producer of title business is a director, officer, or
partner thereof, or owner of a financial interest, as defined
herein, in such entity; any legal entity that controls, is
controlled by, or is under common control with a producer of
title business; and any natural person or legal entity with
whom a producer of title business has any agreement,
arrangement, or understanding or pursues any course of
conduct the purpose of which is to evade the provisions of
this Act.
(6) "Financial interest" is any ownership interest,
legal or beneficial, except ownership of publicly traded
stock.
(7) "Refer" means to place or cause to be placed, or to
exercise any power or influence over the placing of title
business, whether or not the consent or approval of any other
person is sought or obtained with respect to the referral.
(8) "Escrow Agent" means any title insurance company or
any title insurance agent acting on behalf of a title
insurance company which receives deposits, in trust, of funds
or documents, or both, for the purpose of effecting the sale,
transfer, encumbrance or lease of real property to be held by
such escrow agent until title to the real property that is
the subject of the escrow is in a prescribed condition.
(9) "Independent Escrowee" means any firm, person,
partnership, association, corporation or other legal entity,
other than a title insurance company or a title insurance
agent, which receives deposits, in trust, of funds or
documents, or both, for the purpose of effecting the sale,
transfer, encumbrance or lease of real property to be held by
such escrowee until title to the real property that is the
subject of the escrow is in a prescribed condition. Federal
and State chartered banks, savings and loan associations,
credit unions, mortgage bankers, banks or trust companies
authorized to do business under the Illinois Corporate
Fiduciary Act, licensees under the Consumer Installment Loan
Act, real estate brokers licensed pursuant to the Real Estate
License Act of 1983, as such Acts are now or hereafter
amended, and licensed attorneys when engaged in the
attorney-client relationship are exempt from the escrow
provisions of this Act.
(10) "Single risk" means the insured amount of any title
insurance policy, except that where 2 or more title insurance
policies are issued simultaneously covering different estates
in the same real property, "single risk" means the sum of the
insured amounts of all such title insurance policies. Any
title insurance policy insuring a mortgage interest, a claim
payment under which reduces the insured amount of a fee or
leasehold title insurance policy, shall be excluded in
computing the amount of a single risk to the extent that the
insured amount of the mortgage title insurance policy does
not exceed the insured amount of the fee or leasehold title
insurance policy.
(11) "Department" means the Department of Financial
Institutions.
(12) "Director" means the Director of Financial
Institutions.
(13) "Insured closing letter" or "closing protection
letter" means an indemnification or undertaking to a party to
a real estate transaction, from a principal such as a title
insurance company or similar entity, setting forth in writing
the extent of the principal's responsibility for intentional
misconduct or errors in closing the real estate transaction
on the part of a settlement agent, such as a title insurance
agent or other settlement service provider.
(Source: P.A. 86-239.)
(215 ILCS 155/17) (from Ch. 73, par. 1417)
Sec. 17. Independent escrowees.
(a) Every independent escrowee shall be subject to the
same certification and deposit requirements to which title
insurance companies are subject under Section 4 of this Act.
(b) No person, firm, corporation or other legal entity
shall hold itself out to be an independent escrowee unless it
has been issued a certificate of authority by the Director.
(c) Every applicant for a certificate of authority,
except a firm, partnership, association or corporation, must
be 18 years or more of age.
(d) Every certificate of authority shall remain in
effect one year unless revoked or suspended by the Director
or voluntarily surrendered by the holder.
(e) An independent escrowee may engage in the escrow,
settlement, or closing business, or any combination of such
business, and operate as an escrow, settlement, or closing
agent, provided that:
(1) Funds deposited in connection with any escrow,
settlement, or closing shall be deposited in a separate
fiduciary trust account or accounts in a bank or other
financial institution insured by an agency of the federal
government unless the instructions provide otherwise.
Such funds shall be the property of the person or persons
entitled thereto under the provisions of the escrow,
settlement, or closing and shall be segregated by escrow,
settlement or closing in the records of the independent
escrowee. Such funds shall not be subject to any debts
of the escrowee and shall be used only in accordance with
the terms of the individual escrow, settlement or closing
under which the funds were accepted.
(2) Interest received on funds deposited with the
independent escrowee in connection with any escrow,
settlement or closing shall be paid to the depositing
party unless the instructions provide otherwise.
(3) The independent escrowee shall maintain
separate records of all receipt and disbursement of
escrow, settlement or closing funds.
(4) The independent escrowee shall comply with any
rules or regulations promulgated by the Director
pertaining to escrow, settlement or closing transactions.
(f) The Director or his authorized representative shall
have the power and authority to visit and examine at any time
any independent escrowee certified under this Act and to
compel compliance with the provisions of this Act.
(g) A title insurance company or title insurance agent,
not qualified as an independent escrowee, may act in the
capacity of an escrow agent when it is supplying an abstract
of title, grantor-grantee search, tract search, lien search,
tax assessment search, or other limited purpose search to the
parties to the transaction even if it is not issuing a title
insurance commitment or title insurance policy. A title
insurance agent may act as an escrow agent only when
specifically authorized in writing on forms prescribed by the
Director by a title insurance company that has duly
registered the agent with the Director and only when notice
of the authorization is provided to and receipt thereof is
acknowledged by the Director. The authority granted to a
title insurance agent may be limited or revoked at any time
by the title insurance company.
(Source: P.A. 86-239.)
| Reply by Pat/IL on 11/11/07 11:05am
Msg #220689
Re: here is the statute they are refering to
Thanks for providing the statute. It does not change my opinion, as it still limits the defiinition of Independent Escrowee to those receiving funds or documents "to be held by such escrowee until title to the real property that is the subject of the escrow is in a prescribed condition." this, to me, would exclude the NSA from contemplation as an independent escrowee under the act.
I agree with licensing of NSAs if it is done in a meaningful way, with meaningful standards of education and training.
| Reply by DianeCipa on 11/10/07 9:14am
Msg #220621
The straight answer is that some title companies read and follow rules and some do not.
You know how in this forum you often discuss how some notaries can read and some cannot or won't? It's the same thing in my business. Go figure. Humans, can't live with em and can't live without em.
| Reply by Laura Vestanen on 11/10/07 3:42pm
Msg #220645
VERY helpful info. What to title this thread for #33325?
This is the most helpful thread I have read in a month.
I'm going to add a note to thread starting with #33325 telling notaries it is a "must read."
What should I title this thread? What words would instantly clue the notary in when reading the title?
Thanks
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