Bulletin: TX2010004

The Commissioner's Order on the 2008 Rules hearing takes effect February 1, 2010. While many of the rules changes are administrative and make technical corrections to forms, some of the changes are more substantive. This bulletin will address each of the agenda items approved and, where there are things you must do to comply, provide our opinion on those matters. The Commissioner’s Order of the 2008 Rate hearing takes effect on January 1, 2011. As of the date of this revised bulletin all industry parties have requested a rehearing to correct certain decisions made by the commissioner.  Unless such order is granted and even if the parties appeal to district court, the matters will go into effect unless stayed. 

2008-1 Amends T-47 (Survey Affidavit) to define 'Title Company."
What you need to do: Nothing except change your form to use the proper language.

2008-2 Amends P-36 to update names of Owner's and Loan policies.
What you need to do: Nothing except change your form to use the proper language.

2008-3 Amends P-21 to update names of Owner's and Loan policies on Schedule D of Commitment.
What you need to do: Nothing except change your form to use the proper language. 

2008-4 Amends P-9b (8) to update name of Future Advance/Revolving Credit Endorsement.
What you need to do: Nothing except change your form to use the proper language.

2008-5 Amends P-9b (6) to conform name of Variable Rate Mortgage from adjustable rate.
What you need to do: Nothing except change your form to use the proper language.

2008-6 Creates new Texas Limited Coverage Residential Chain of Title Policy, for Lenders wanting a 24 month title search.
What you need to do: This product addresses demands by some lenders that title companies provide a complete list of all transactions involving vesting for a period of time, usually the previous 6 months. Nothing in TDI regulations allows or prohibits this practice; however, unless the information is provided in a promulgated insuring form, the liability of the company providing the information is likely to be considered abstracting and carry abstractor's liability.

2008-7 Creates new Procedural Rule for issuance of the Texas Limited Coverage Chain of Title Policy:

• cannot be issued until a rate is set by TDI;
• for residential real property only;
• names last grantee in deed, and shows other deeds and leases in chain of title for up to past 60 months;
• issued only to institutional lenders, not to individuals;
• no split of premium will be permitted, title agent doing search retains all premium.
  What you need to do: Comply with the rule and the rate rule (2008-55 below).

2008-55 sets the premium for this policy at $15.00

2008-8 Amends T-27 Assignment of Rents/Leases Endorsement to correct typos.
What you need to do: Nothing except change your form to use the proper language.

2008-9 Amends name of Form T-IR to Owner's Policy; Form T-2R to Loan Policy; and Form T-13 to Loan Title Policy Binder.
What you need to do: Nothing except change your form to use the proper language.

2008-10 Amends P-7 to update name of policies.
What you need to do: Nothing except change your form to use the proper language.

2008-11 Amends T-2 to correct typo.
What you need to do: Nothing except change your form to use the proper language.

2008-12 Amends Schedule A of Loan Policy T-2 to require a specific exception must now be made on Schedule B, to delete a paragraph from either a T-17 or T-19:

• exception will now need to be made on Commitment if you know at the commitment stage that you will be making the exception on the policy.
  What you need to do: This change eliminates the procedure where the deletion of certain paragraphs from T-17 and T-19 endorsements are made on Schedule A and moves these deletions to Schedule B. You will need to change your form to use the proper language and remember to make the changes to T-17 and T-19 by exception on Schedule B. Agents and offices will have to add the exceptions on Schedule B.

2008-13 Amends Deletion of Arbitration Provision in Commitment Form T-7 to increase amount from $1 million to $2 million.
What you need to do: Nothing except change your form to use the proper language.

2008-14 Amends P-17 to allow pass-through of actual charges for electronic recording to consumers.
What you need to do: This change recognizes the change in the law necessary to have TDI allow charges made by third party providers to electronically record documents. You may pass through the exact charge made. You may not pass through estimated charges. RESPA allows average charging but you may not allow reasonable estimates otherwise. (See also various bulletins on the 2010 RESPA changes concerning estimated charges, referenced below).

2008-15 Amends Minimum Standards to provide:

• charges for tax searches may be paid by consumer (current practice allowed);
• allows actual charge for absentee notary sign-up fee, provided consumer makes written request for such service, and fee is disclosed;
• requires copy of written demand for release to be kept in file when loan paid off at closing.

What you need to do: Make sure that your files reflect proper charges and that your accountant doing your escrow audit is aware of this rule change.

2008-16 Amends Schedule A of Commitment Form T-7 to update names of policies.
What you need to do: Nothing except change your form to use the proper language.

2008-19 Amends T-1 Owner's Policy to delete the right of reimbursement from the insured when handling a claim under a reservation of rights.
What you need to do: Nothing except change your form to use the proper language. This issue is a claims handling issue and will be taken care of by our claims department.

2008-20 Amends T-2 Loan Policy to delete the right of reimbursement from the insured when handling a claim under a reservation of rights.
What you need to do: Nothing except change your form to use the proper language. This issue is a claims handling issue and will be taken care of by our claims department.

2008-21 Creates new form T-24.1 Non-Imputation Endorsement (Mezzanine Financing) to allow non-imputation coverage provided in the Owner's Policy to be assigned by the Insured to a Mezzanine Lender:

• Both the Insured and the Mezzanine lender must sign the Endorsement.
• Cannot be issued until a rate is set by TDI.
  What you need to do: Mezzanine Financing occurs when the lender in a commercial transaction takes an equity position in a project in return for making loan concessions. You will need to follow basic non-imputation procedures to assure that new investors in or owners of the titleholder to not have knowledge of matters that were known or created by prior owners if they are not excepted in Schedule B of the Owner Policy.

2008-60: Sets the rate for the T-24.1 at 5% of the premium which an Owner’s Policy of the same amount as the loan policy would bear with a minimum premium of $25.00.

2008-22 Creates new Procedural Rule prohibiting issuance of an Insured Closing Letter where the loan is to be closed by an attorney not licensed as an escrow officer:

• Applies to P-22 Approved Attorneys.
• Does not apply to Fee attorneys who are licensed as escrow officers.
  What you need to do: Be sure that only escrow officers licensed by TDI handle money or documents and do not issue Insured Closing Letters to others. You may cause a Stewart Title Guaranty Company ICL to be issued only in appropriate situations.

2008-23 Creates new Procedural Rule to clarify cancellation fees charged to consumer when deal does not close are prohibited:

• P-24 Agreements may provide for a flat fee for furnishing title evidence and examination instead of a percentage of premium.
  What you need to do: You may enter into agreements with other title companies to provide title evidence for a fee rather than a percentage of premium. You may not charge a consumer (individual, entity or lender) a fee when a file fails to close.

2008-24 Amends T-50 Insured Closing Service Letter to provide more ALTA coverages.
What you need to do: Nothing except change your form to use the proper language.

2008-25 Amends T-48 Co-Insurance Endorsement to conform to ALTA form.
What you need to do: Nothing except change your form to use the proper language.

2008-26 Eliminates the T-15 Last Dollar Endorsement.
What you need to do: Nothing except change your form to use the proper language. The changes in the T-2 Loan Policy eliminated the last dollar provision from the policy which made the endorsement redundant and unnecessary.

2008-27 Amends P-9 to eliminate procedure for issuing Last Dollar Endorsement.
What you need to do: Nothing. The changes in the T-2 Loan Policy eliminated the last dollar provision from the policy which made the endorsement redundant and unnecessary.

2008-28 Amends P-55 to provide for issuance of Non-Imputation Endorsement (Mezzanine Financing) (T-24.1).

• What you need to do: see Agenda item 2008-21 above

2008-30 Amends Administrative Rule L-1 to provide for cancellation of agents license for cause as defined in agency agreement, without 30 day notice.

• Plan for winding down operations must be submitted to TDI if only one underwriter.
  What you need to do: This agenda item actually involves 2 separate issues. 1. From time to time pursuant to agency agreements, underwriters will be required to cancel an agent for cause. Under the prior TDI rule, this cancellation was not effective until the agent was given 30 days written notice. This item allows the underwriter to cancel an agent for cause without the 30 day advance notice. 2. TDI requires that agents should have in place a plan for ceasing business. Implementation of this requirement may be postponed for 90 days. See discussion under Agenda item 2008-44 for more information.

2008-31 Amends T-35 Future Advance/Revolving Credit Endorsement to conform language to ALTA form.
What you need to do: Nothing except change your form to use the proper language.

2008-32 Amends T-5 Leasehold Loan Policy Endorsement to conform language to ALTA form.
What you need to do: Nothing except change your form to use the proper language.

2098-33 Amends T-4 Leasehold Owner's Policy Endorsement to conform language to ALTA form.
What you need to do: Nothing except change your form to use the proper language.

2008-37 Amends P-54 Access Endorsement rule to remove redundant language.
What you need to do: Nothing except change your form to use the proper language.

2008-38 Amends P-56 to provide that new Contiguity Endorsement Form T-25.1 may be issued on irregularly shaped parcels, or for four or more parcels.

• Use existing R-32, and may be issued on February 1, 2010.
  What you need to do: Change your form to use the proper language. For underwriting instructions see 2008-39 below.

2008-39 Creates new Form T-25.1 Contiguity Endorsement

• non-residential use only,
• insures against strips and gores;
• use where more than four adjacent parcels, or
• use where parcels are irregularly shaped.
  What you need to do: comply with the regulation set out in this paragraph.

2008-40 Amends P-20 to provide standard exception for taxes, and to insure that taxes are paid for the current year by use of escrow and indemnity agreement:
See our Bulletin 2010009 for further discussion of this agenda item.

2008-41 Amends L-1 Administrative Rule to update current statute references.
What you need to do: Nothing. The TDI rate manual will be published with the correct references.

2008-42 Amends G-2 Audit Rule to update current statute references.
What you need to do: Nothing. The TDI rate manual will be published with the correct references.

2008-43 Amends T-G1 Policy Guaranty Fee Remittance Form to update language, and remove reference to $1.00 fee. 
What you need to do: Change your form to use the proper language. The reference to the $1 fee has been eliminated because of the passage of HB 4338 allowing the Guaranty Board to set a guaranty fee of any amount as necessary.

2008-44 Amends D-1 Administrative Rule to clarify requirements for ceasing operation by agents or direct operations:

• underwriter responsible for completion of final audit;
• agent to prepare plan for winding down operations.
  What you need to do: As regards the underwriter being responsible for final audits, nothing. As to the agent's plan for winding down operations, the plan must provide for the immediate and orderly transfer of all computers, software, books, records and business records of the agency as well as the legal means to do so.

2008-46 Amends P-25 to provide requirement to maintain auditable records to demonstrate compliance with rule relating to Reasonable Time for furnishing Title Evidence.
What you need to do: You will need to keep copies of emails, faxes, letters and other written materials that show dates so that you can prove your compliance with the rule. You may want to consider an order tracking system like Stewart's SureClose to assist with this required record keeping.

2008-47 Amends T-G3 Statement of Assessment Form to update statutory references.
What you need to do: Nothing. The TDI rate manual will be published with the correct references.

2008-48 Amends T-G2 Guaranty Recoupment Charge Remittance Form to update language.
What you need to do: Nothing, use the appropriate form.

2008-49 Amends T-31.1 Supplemental Coverage Manufactured Housing Unit Endorsement to clarify policy references.
What you need to do: Change your form to use the proper language.

2008-50 Amends T-5 Leasehold Mortgagee Policy Endorsement to clarify policy reference.
What you need to do: Change your form to use the proper language.

2008-51 Amends T-4 Leasehold Owner Policy Endorsement to clarify policy reference.
What you need to do: Change your form to use the proper language.
2008-52 Amends G.1 Policy Guaranty Fee Administrative Rule to update statutory reference.
What you need to do: Change your form to use the proper language.

2008-53 Amends L-2 Administrative Rule to require title agent to notify TDI upon change of name of the escrow officer.

• Notification must have original license and rider for bond attached.
  What you need to do: Provide TDI with the required notice.

2008-54 Amends the Title Insurance Statistical Plan to provide rate code for the T-48 Co -Insurance Endorsement; and adds reporting codes for personal property title insurance forms, and new Mineral Coverage Endorsements.
What you need to do: use the proper Rate code on each of the forms set out.

• Description of Endorsement Rate Rule Reference Code
Restrictions, Encroachments, Minerals Endorsement - Owner's Policy (T-19.1) for a single issue policy on land which is residential property and no amendment of exception to area and boundaries is made R-29C (new) 897
Restrictions, Encroachments, Minerals Endorsement - Owner's Policy (T-19.1) for single issue policy on land which is residential and an amendment of exception to area and boundaries is made R-29C (new) 898
Restrictions, Encroachments, Minerals Endorsement - Owner's Policy (T-19.1) for a single issue policy on land which is not residential property and no amendment of exception to area and boundaries is made R-29D (was R-29C) 889

• Restrictions, Encroachments, Minerals Endorsement - Owner's Policy (T-19.1) for a single issue policy on land which is not residential property and an amendment of exception to area and boundaries is made R-29D (was R-29C) 895
• Minerals and Surface Damage Endorsement (T-19.2) for Owner's Policy on land which is for one-to-four family residential use of less than one acre or office, industrial, retail, mixed use retail/residential or multifamily purposes R-29. 1801
• Minerals and Surface Damage Endorsement (T-19.2) for Loan Policy on land which is for one-to-four family residential use of less than one acre or office, industrial, retail, mixed use retail/residential or multifamily purposes R-29.1802
• Minerals and Surface Damage Endorsement (T-19.3) for Owner's Policy on land which is not for one-to-four family residential use of less than one acre or office, industrial, retail, mixed use retail/residential or multifamily purposes R-29.1803
• Minerals and Surface Damage Endorsement (T-19.3) for Loan Policy on land which is not for one-to-four family residential use of less than one acre or office, industrial, retail, mixed use retail/residential or multifamily purposes R-29.1804

Agenda Item 2008-rewrites and subdivides the existing rule R-5 for clarity and consistency.  No substantive change is made.

Agenda item 2008-65 adds a new paragraph B to existing rule P-66 moving the language of Bulletin 120 into the rule.  The addition to P-66(A) states that "when multiple tracts of land are conveyed pursuant to separate contracts to a single purchaser and a single owner’s policy is issued covering all the land conveyed, the conveyances shall be treated as separate transactions and the premiums shall be charged accordingly."  The new R-3(B)(1) states that "the premium for the single Owner’s Policy shall be the aggregate of the Basic Rate as applied to each sales price"—in other words, the sum of separately-calculated Owner Policy premiums.  No additional chains of title are allowed.
Agenda item 2008-66:  The Commissioner has imposed a 2% credit against the basic premium rate when the issuing office uses the general mineral exception (allowed under P-5.1) or excludes minerals in Schedule A (also allowed under P-5.1.  If the issuing office includes a reference to a document limiting or reserving the mineral estate, the credit is not required. The credit, when required, is given even when the insured has required a T-19.2 or T-19.3.

            What you should do: Where reasonably possible, issuing offices should search the title for a period to discover a document that reserves 100% of the minerals. It does not matter whether you begin with sovereignty and search forward or begin at current date and search backward.  Once found, title to the interest reserved does not have to be chained forwards or backwards from the document discovered. 
For policies in excess of $400,000, a full mineral search should be undertaken because the 2% credit imposed by this agenda item is no longer offset by the premium for the T-19.2 or T-19.3.  If no T-19.2 or T-19.3 is requested, you should still perform a full mineral search since there is no offsetting premium.
If you have questions relating to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

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