15859226, 69B-186.008 - Florida Administrative Rules, Law, Code, Register

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Florida Department of State and Division of Library and Information Services

Notice: 15859226

Notice of Development of Rulemaking

Department:

DEPARTMENT OF FINANCIAL SERVICES

Division:

Division of Insurance Agent and Agency Services

Chapter:

Title Insurance

Overview

RULE:

69B-186.008

Escrow Disbursements

PURPOSE:

On August 1, 2015, in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) will implement a new rule that integrates mortgage disclosures required by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA). The new “TILA-RESPA” rule includes a new “Closing Disclosure” form that replaces the currently used HUD-1 Settlement Statement.  Like the currently used HUD-1, the new Closing Disclosure form, with few exceptions, is required for use in consumer mortgage transactions.  National industry groups and state regulators have expressed concern that the new Settlement Disclosure form provides inadequate and potentially misleading information regarding the cost of title insurance.  
A noteworthy feature of the TILA-RESPA rule is the degree to which it alters the customary dynamic between lenders and settlement agents during the mortgage closing process. By custom, lender-creditors have typically relied on settlement /title agents to provide and assume responsibility for completing the HUD-1 Settlement Statement used at real estate closings. However, the new TILA-RESPA rule provides that the lender-creditor is wholly responsible for both the accuracy and the delivery of the Closing Disclosure form. To minimize their risk of non-compliance with provisions of the new TILA-RESPA rule, the lender-creditor community is bringing the preparation of the Closing Disclosure forms “in-house” and providing for their delivery to consumers. One consequence of the new TILA-RESPA rule's shifting of liability for the accuracy of the Closing Disclosure form to the lender-creditor is the unintended consequence of relieving the settlement agent from closing process liability, even though the settlement agent continues to handle the disbursement of escrow funds. In the absence of the proposed rulemaking, Florida regulators will be limited in their ability to prosecute settlement agents who mishandle or misappropriate escrow funds following implementation of the new TILA-RESPA rule. The proposed rule addresses this problem by reestablishing provisions holding settlement agents responsible and
accountable for their actions during the course of the closing process to assure that Florida consumers will retain protections currently afforded them under Florida law, following implementation of the new TILA-RESPA rule. 
The proposed 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) Require 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).

SUBJECT:

Requirements and Responsibilities of Title Agents

RULEMAKING AUTHORITY:

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

LAW:

626.8473, F.S.

PRINT PUBLISH DATE:

4/3/2015 Vol. 41/65

RELATED STATUTES
AND LAWS:

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

OVERSIGHT COMMITTEE:

Joint Administrative Procedures Committee
Florida Administrative Law Central Online Network (F.A.L.C.O.N.)

RELATED COURT CASES:

Division of Administrative Hearings

FEDERAL eRULEMAKING
WEB PORTAL:

Regulations.gov

HOW TO LINK TO
THIS NOTICE:

http://www.flrules.org/gateway/ruleno.asp?id=69B-186.008&PDate=4/3/2015&Section=1

REFERENCE MATERIALS:

No reference(s).

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