Bulletin: NY000034

Dear Associates:

The Insurance Department has issued Circular Letter No. 18 (1992) dated December 14, 1992, prohibiting title insurers from issuing closing protection letters in New York State. The department states "that title insurers lack authority to issue a CPL to a lender insofar as that lender's attorney is concerned, because its purported protection falls beyond the scope of the monoline title insurer's license and writing authority that is exclusively confined to Section 1113 (a)(18) of the Insurance Law." This restates the position of Stewart Title Insurance Company regarding Closing Protection Letters and lender's counsel. All title insurers are now specifically prohibited from issuing these letters for lenders counsel and further must rescind all existing letters as to future transactions. The letter does allow for a title insurer to "issue an appropriate agent authorization letter confined to the title insurer's liability as principal for the acts of its agent within the scope of that agent's authority on the title insurer's behalf."

Please be advised that we will strictly adhere to the conditions of the department's letter in processing any new requests for letters and will be rescinding any existing Closing Protection Letters pursuant to the Insurance Department's requirements.