16187086, 69B-186.008 - Florida Administrative Rules, Law, Code, Register

Home

Florida Department of State and Division of Library and Information Services

Notice: 16187086

Notice of Proposed Rule

Department:

DEPARTMENT OF FINANCIAL SERVICES

Division:

Division of Insurance Agent and Agency Services

Chapter:

Title Insurance

Overview

RULE:

69B-186.008

Escrow Disbursements

PURPOSE:

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“The Act”) of 2010 represented the congressional response to the nation’s financial crisis of 2008. The Act is a massive piece of legislation that affects nearly every sector of the financial industry. Its passage was, in large part, a reaction to the widely-held perception that the multiple agencies charged with regulating the financial sector had provided an inadequate and uncoordinated response to the financial crisis. This perception was most pronounced in the agencies’ response to the most visible features of the financial crisis, the collapse of the nation’s housing and mortgage markets. In an effort to address the financial regulators weak response to the financial crisis, the Act mandated the reorganization of the seven agencies charged with regulating the financial industry and also authorized the creation of new agencies. The Consumer Financial Protection Bureau (“CFPB”), an independent agency created under the Act, was charged with consolidating the regulation of consumer financial laws that were previously regulated across seven agencies. Among the more prominent tasks undertaken by the CFPB was the responsibility for implementing a new rule integrating the following two consumer protection statutes governing mortgage origination: the Truth in Lending Act (“TILA”), currently regulated by the Board of Governors of the Federal Reserve, and the Real Estate Settlement Procedures Act of 1974 (“RESPA”), currently regulated by the Department of Housing and Urban Development. The CFPB has announced a planned implementation date of August 1, 2015 for the new TILA-RESPA Integrated Disclosure rule (“TRID”). 
          Currently, and for over 30 years, settlement agents to real estate closing transactions have, in compliance with RESPA, been required to prepare and provide to consumers the HUD-1 Settlement Statement, while lenders are required to provide the revised Truth in Lending disclosure to consumers in compliance with TILA. The new TILA-RESPA Integrated Disclosure rule (“TRID”) includes a new “Closing Disclosure” form that will replace the currently used HUD-1 Settlement Statement. Like the currently used HUD-1 Settlement Statement, the Closing Disclosure, is, with few exceptions, required for use in consumer mortgage transactions.  National industry groups and state regulators alike have expressed concern that the new Closing Disclosure required by TRID provides inadequate and potentially misleading information to consumers regarding the cost of title insurance.  Representatives of both the lender and the title insurance industries have expressed concern over TRID's impending implementation and how it will change the customary dynamic that has existed between lenders and settlement agents. By custom, lender-creditors have typically relied on settlement agents to provide and assume responsibility for completing the HUD-1 Settlement Statement currently used in real estate closings. Under TRID, it is the lender-creditor who is wholly responsible for both the accuracy and the delivery of the Closing Disclosure form. To minimize TRID compliance risk, lenders have assumed responsibility for the preparation of the Closing Disclosure and its delivery to the consumer. One consequence of TRID's shifting of liability for the accuracy of the Closing Disclosure to the lender-creditor is the unintended relief from liability that it affords settlement agents. Such a consequence creates substantial financial risks to consumers engaged in real estate closing transactions, because, despite the shift in liability for preparation for the Closing Disclosure to the lender, it remains the settlement agent who continues to handle the disbursement of escrow funds. In the absence of the proposed rulemaking, following the implementation of TRID, Florida regulators will be limited in their ability to prosecute settlement agents who mishandle or misappropriate escrow funds. The proposed rule clarifies that the implementation of TRID will provide no relief from liability for settlement agents who have failed to act in a fiduciary capacity in conducting real estate closing transactions. The proposed rule assures that TRID’s implementation will in no way impede Florida regulators’ ability to hold settlement agents responsible and accountable for their actions  In doing so, the proposed rule assures that Florida consumers retain protections currently afforded them under Florida law.
The proposed new rule establishes the following: 
(1)  Provides consumers with an explanation regarding the true cost for the title insurance policy they are purchasing as well as showing the exact amount of premium paid, as apportioned between parties. 
(2) Authorizes the title insurance agency to hold and disburse the funds being held in the agency’s escrow account to fund the transaction. 
(3) Requires the settlement agent to certify that the escrowed funds are being disbursed consistent with the disclosure provided to all the parties and as the lender has instructed the funds to be paid. 
 (4) Incorporates by reference new Form DFS-H1-2146 (Florida Insurance Premium Disclosure & Settlement Agent Certification Form, Effective 08/2015).

SUMMARY:

The proposed new rule and rule chapter reaffirm that the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure rule (“TRID”) will in no way diminish protections currently afforded Florida consumers who engage in real estate transactions involving the issuance of title insurance. The proposed rule requires settlement agents conducting real estate closing transactions in Florida that involve the issuance of title insurance to certify in writing that they agree to disburse escrow funds in accordance with the terms of the transaction.

RULEMAKING AUTHORITY:

624.308(1), 626.8473(6), F.S.

LAW:

626.8473, F.S.

PRINT PUBLISH DATE:

7/6/2015 Vol. 41/129

COMMENTS:

From 7/6/2015 To 7/27/2015 (21 Days)
The public comment period for this notice has already expired.

REFERENCE MATERIALS:

No reference(s).

Under Florida law, E-mail addresses are public records. If you do not want your E-mail address released in response to a public records request, do not send electronic mail to this entity. Instead, contact this office by phone or in writing.