Time to dust off those VIP seats in the arena. Less than two days after enacting what title insurance players said were repressive rules against excessive marketing, state regulators agreed to delay implementation until Feb. 1.
The change in heart comes after heavy lobbying from the industry and some elected officials, who argued that the rules, which kicked in Dec. 18, would destabilize the industry and hurt smaller businesses.
“Given the important consumer protections and impact of the necessary reforms of the title insurance industry… DFS recognizes that a longer implementation period may be necessary to ensure full compliance,” the agency said in a statement posted on its website Tuesday.
The stay applies to a specific part of the new regulations that banned title companies from treating clients to meals, tickets, entertainment or gifts (including donations to charitable organizations).
The decision amounts to what at the very least is a stay of execution for title companies, and is a win for the New York State Land Title Association, the industry trade group, which opposed the regulations.
“As we have said, we understand and appreciate what DFS is trying to do but it appears that these regulations will only hurt New Yorkers, not help them,” said Bob Treuber, NYSLTA’s executive vice president.
DFS superintendent Maria Vullo said in a statement to The Real Deal that the agency agreed to delay a part of the regulation “a mere six weeks” after receiving letters from a number of legislators urging her to do so, and after learning that the New York State Assembly may convene a hearing on title insurance in mid-January.
“I look forward to testifying at any hearing the Legislature may hold,” Vullo said, “to discuss the important protections the regulations provide homebuyers and shining a light on the industry’s history of inappropriate, and in some cases, illegal conduct that has resulted in decades of inflated title insurance rates.”
Over the past week and a half, six elected officials — including State Sen. Marty Golden of Brooklyn — urged Vullo to postpone the regulations for six months. In Golden’s letter, dated Dec. 13, he warned that the regulation would have a “series of unintended consequences resulting in higher costs for consumers, while creating havoc in the real estate market.” Others who wrote in to Vullo included State Sen. James Seward of Oneonta, and Assembly members Kevin Cahill of the Hudson Valley, Edward Braunstein of Queens and Dan Quart of Manhattan.
On Wednesday, Golden called the delay a “godsend” that could lead to the rules being made more fair.
“We want to make sure the legislation that goes forward goes after the bad actors and lets the good actors do business,” he said.
Title insurance closers, who perform administrative tasks at closings, remain impacted by the new regulations. The delay announced by DFS does not impact the regulations that affect them – namely, the banning of all tips for the work they do.