Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 9.
TITLE INSURANCE
The Texas Department of Insurance proposes amendments to §9.1
and §9.401 which concern the adoption by reference of certain amendments
to the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance
in the State of Texas (Basic Manual) and to the Texas Title Insurance Statistical
Plan (Statistical Plan). The proposed amendments to §9.1 and §9.401
revise the date of the amended Basic Manual and the Statistical Plan. The
amendments to the Basic Manual and Statistical Plan, which the proposed amended
sections will adopt by reference were considered at the rulemaking phase of
the 2004 Texas Title Insurance Biennial Hearing. Adopting new rules and forms
and modifying or replacing currently existing rules and forms in the Basic
Manual and Statistical Plan facilitate the administration and regulation of
title insurance in this state. The proposed amendments to the Basic Manual
and Statistical Plan will clarify and standardize the rules and forms regulating
the writing and the business of title insurance in the State of Texas. The
proposed amendments to the Basic Manual and Statistical Plan are identified
by item number and are a republication of items published for consideration
at the 2004 Texas Title Insurance Biennial Hearing, Rulemaking Phase, Docket
Number 2600, (rulemaking hearing), held on December 15, 2004, together with
proposed amendments and typographical and formatting changes to the items.
Republication is necessary to incorporate these items into the Basic Manual
and Statistical Plan, to give notice of the changes to the various proposed
items, and to give notice of the decision not to adopt Items 2004-13, 2004-16,
2004-17, 2004-19, 2004-27, 2004-28, and 2004-32, which decision is set forth
in a separate Commissioner³s Order. The republication is also necessary to
conclude Docket Number 2599 which involved a petition and request to withdraw,
amend, and/or modify Procedural Rule P-53, the anti-rebating rule adopted
by the Commissioner effective April 1, 2004. By agreement of the petitioner
and all participants in the 2004 Texas Title Insurance Biennial Hearing, the
petition was consolidated into the 2004 biennial rulemaking hearing.
The items which are the subject of this proposal are as follows:
The proposals generally relate to: clean up and clarification of insuring
forms and procedural rules, new or amended forms and procedural rules to conform
to American Land Title Associate forms, updates and modernization of certain
administrative rules, definitions, and reporting forms in the Basic Manual,
and revisions to the rebating and discounts procedural rule, P-53, resulting
from legislation by the 79th Legislature. House Bill (HB) 2565 amended §2502.055
of the Texas Title Insurance Act to define four specific activities that are
not rebating activities and to provide a definition of "market rate." Other
activities not defined or identified by HB 2565 may be violations of the Texas
Title Insurance Act and continue to be prohibited. The proposed revisions
to P-53 continue to prohibit promotional and educational activities that are
conditioned on the referral of title insurance business. The department has
made corrective and clarifying changes to certain of these items, has added
the words "if any" to the references to "premium" in the procedural rules,
and has assigned form and rule numbers to each item. A brief description of
each item follows its listing:
Item 2004-1 - Submission to amend the Limited Pre-Foreclosure Policy Form
T-40 to change the number of the form.
Item 2004-2 - Submission to amend the Limited Pre-Foreclosure Policy Down
Date Endorsement Form T-41 to change the number of the form and make other
conforming amendments.
Item 2004-3 - Submission to amend Procedural Rule P-43 to make conforming
changes based on amendments to the Limited Pre-Foreclosure Policy and Limited
Pre-Foreclosure Policy Down Date Endorsement.
Item 2004-4 - Submission to amend the Verification of Services Rendered
Form T-00 by updating and clarifying the form to comply with new and existing
reporting requirements.
Item 2004-5 - Submission to amend the Endorsement Instructions in Section
II of the Basic Manual of Rules, Rates and Forms for the Writing of Title
Insurance in the State of Texas and Procedural Rule P-8 to allow for issuance
or affirmation of coverage under Forms T-19 or T-19.1 upon completion of contemplated
improvements.
Item 2004-6 - Submission to adopt a new Procedural Rule P-59 regarding
recodification of the Texas Insurance Code and the reconciliation of references.
Item 2004-7 - Submission to amend the First Loss Endorsement Form T-14
to conform to a new American Land Title Association form and to eliminate
the 10% threshold loss requirement.
Item 2004-8 - Submission to adopt a new Assignment of Rents/Leases Endorsement
(Form T-27) to insure that the assignment of rents or leases was properly
executed and that no existing prior assignment, unless excepted, appears in
the public records.
Item 2004-9 - Submission to adopt a new Procedural Rule (P-60) for the
proposed new Assignment of Rents/Leases Endorsement.
Item 2004-10 - Submission to repeal the Adjustable Mortgage Loan Endorsement
Form T-33 and adopt a new Variable Rate Mortgage Endorsement Form T-33 and
adopt a new Variable Rate Mortgage - Negative Amortization Endorsement Form
T-33.1 to conform to American Land Title Association forms.
Item 2004-11 - Submission to amend Procedural Rule P-9 to conform to the
issuance of the proposed new Variable Rate Mortgage - Negative Amortization
Endorsement.
Item 2004-12 - Submission to amend the Texas Short Form Residential Mortgagee
Policy - One-to-Four Family Form T-2R to conform to the issuance of the proposed
new variable rate mortgage endorsements and other endorsements.
Item 2004-14 - Submission to adopt a new Condominium Endorsement (Form
T-28) in accord with an American Land Title Association endorsement.
Item 2004-15 - Submission to amend Procedural Rule P-9 to add a new subparagraph
b (15) to conform to the issuance of the proposed new Condominium Endorsement
form.
Item 2004-18 - Submission to withdraw certain Bulletins in the Basic Manual
of Rules, Rates and Forms for the Writing of Title Insurance in the State
of Texas.
Item 2004-20 - Submission to amend Procedural Rule P-16, Mortgagee Title
Policy Binder on Interim Construction Loan (Interim Binder) to re-define situations
in which an Interim Construction Binder may be issued.
Item 2004-21 - Submission to adopt a new Texas Master Indemnity Agreement
(Form T-29) that will provide a standard master indemnity to address the most
often encountered potential defects, such as unreleased liens, thus relieving
an underwriter from executing separate indemnity letters on a transaction
by transaction basis. Separate indemnity letters will still be required as
to potential defects that are not covered by the terms of the standard promulgated
master indemnity agreement.
Item 2004-22 - Submission to amend Procedural Rule P-11 to conform to the
proposed new Texas Master Indemnity Agreement form.
Item 2004-23 - Submission to amend the Texas Title Insurance Statistical
Plan. This agenda item has been combined with agenda item 2004-43 in this
proposal.
Item 2004-24 - Submission to amend Administrative Rule L-1, Title Insurance
Agent, in the Basic Manual of Rules, Rates and Forms for the Writing of Title
Insurance in the State of Texas.
Item 2004-25 - Submission to amend Administrative Rule L-2, Title Insurance
Escrow Officer, in the Basic Manual of Rules, Rates and Forms for the Writing
of Title Insurance in the State of Texas.
Item 2004-26 - Submission to amend Procedural Rule P-58, Report on Directly
Issued Policy to clarify that the reporting of gross premium is for policy
and all endorsements.
Item 2004-29 - Submission regarding the exceptions from coverage in the
forms of title insurance policies as they relate to "filled-in lands." The
department will not go forward with this submission at this time but will
continue to work with interested parties in revising this submission for further
proposal at a later date.
The department has combined Item 2004-30 - Submission to withdraw Procedural
Rule P-53 of the Basic Manual of Rules, Rates and Forms for the Writing of
Title Insurance in the State of Texas, amended by its submitter to request
a modification of the current P-53, and Item 2004-31 - Submission to amend
Procedural Rule P-53 of the Basic Manual of Rules, Rates and Forms for the
Writing of Title Insurance in the State of Texas regarding prohibitions of
rebates and discounts and specifying parameters of allowed activities.
The department proposes to amend and revise P-53 to conform to the amendment
by HB 2565, 79th Legislature, Regular Session, to Insurance Code §2502.055
regarding certain promotional and educational activities that are statutorily
permitted and to make additional clarifying and formatting changes. The department
has also added a termination date to P-53. The newly amended statute is self-executing
and enforceable as written. The department notes that promotional activities
engaged in by a person on the condition of referral of title insurance business
remains a violation of the statute, and the department will also scrutinize
promotional activities that are clearly excessive or beyond what is considered
reasonable in accord with the new wording of the statute. The department will
continue to gather information and collect data on promotional expenditures,
including types and amounts, in furtherance of its statutory requirement to
make recommendations to the legislature to improve the efficiency and effective
regulation of title insurance business in Texas. Additionally, the department
may make further exploration of rebating issues in other forums to better
address continuing issues related to improper rebating and improper promotional
activities.
Item 2004-33 - Submission to amend Procedural Rule P-1. Definitions, aa.
Directly Issued Policy and cc. Commitment for Title Insurance.
Item 2004-34 - Submission to amend Minimum Standards, Specific Instructions
and Report Forms for Audit of Trust Funds Required of Texas Title Insurance
Agents, Direct Operations, Title Attorneys and Attorneys Licensed as Escrow
Officers.
Item 2004-35 - Submission to repeal the existing and adopt a new Policy
Guaranty Remittance Form (T-G1) in Section V of the Basic Manual of Rules,
Rates and Forms for the Writing of Title Insurance in the State of Texas.
Item 2004-36 - Submission to amend Procedural Rule P-28, Requirements for
Continuing Education for Title Agents and Escrow Officers.
Item 2004-37 - Submission to adopt a new procedural rule regarding persons
or entities using the word "Title" in the name of their businesses. The department
has withdrawn this item in light of existing statutory prohibitions against
false information and advertising.
Item 2004-38 - Submission to amend Section VI, Administrative Rules of
the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance
in the State of Texas.
Item 2004-39 - Submission to adopt a new procedural rule regarding the
timely issuance of title policies.
Item 2004-40 - Submission to adopt a new procedural rule regarding the
licensing and location of title agents and direct operations. The department
has added additional clarifying language resulting from input at the rulemaking
hearing.
Item 2004-41 - Submission to amend Mortgage Title Policy Binder on Interim
Construction Loan Form T-13 to clarify number references in response to inquiries
concerning what number to include on the binder.
Item 2004-42 - Submission to amend Procedural Rule P-21, Additional Requirements
for Contents of Commitment for Title Insurance to conform this procedural
rule with the Commitment for Title Insurance.
Item 2004-43 - Submission to amend the Texas Title Insurance Statistical
Plan to update references with conforming changes from the 2004 rulemaking
hearing.
The department has filed a copy of each of the proposed items with the
Secretary of State³s Texas Register section. Persons desiring copies of the
proposed items can obtain them from the Office of the Chief Clerk, Texas Department
of Insurance, 333 Guadalupe Street, Austin, Texas, 78714-9104. To request
copies, please contact Sylvia Gutierrez at (512) 463-6327.
Robert R. Carter, Jr., deputy commissioner for the title division, has
determined that, for each year of the first five years the amendments are
in effect, there will be no fiscal impact on state or local government as
a result of enforcing or administering the amendments. Mr. Carter has also
determined that there will be no measurable effect on local employment or
the local economy.
Mr. Carter has also determined that for each year of the first five years
the amendments are in effect there are a number of public benefits anticipated
as a result of the amendments to the Basic Manual and Statistical Plan. Providing
more uniform endorsements for mortgagee policies will allow for more efficient
closing of transactions. The updating and revising of the administrative rules,
definitions, reporting forms, and Statistical Plan, allow for consistent administration,
facilitate the efficiencies of the department, and the closing of title transactions.
The proposals adapt the Basic Manual to changing business practices. Revising
Procedural Rule P-53 regarding rebating and discounts will conform the rule
with the anti-rebating statute, as amended by the 79th Legislature, Regular
Session, in the Texas Title Insurance Act (Insurance Code §§2502.051
- 2502.056) and will allow self-executing statutory direction to the public
and the title industry as well as fostering the department’s data collection
initiatives to make further legislative recommendations on what are promotional
expenditures. The new and updated promulgated forms will impose no additional
regulatory costs on companies participating in the title insurance market,
and the costs of reproducing such forms, estimated to be no more than $.15
per form for the cost of a photocopy, should be fully compensated by the existing
premium schedule. As to all the proposals, the department anticipates no differential
impact between small, large, and micro-businesses. The cost per hour of labor
should not vary between small, large, and micro-businesses. Further, it is
neither legal nor feasible to exempt small or micro-businesses or to waive
compliance considering the purpose of the efficient regulation of title insurance
for which the amendments are to be adopted and which forms are promulgated
by the department for use in the title insurance business.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on September 12, 2005, to Gene C. Jarmon, General Counsel
and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box
149104, Austin, Texas 78714-9104. An additional copy of the comments must
be submitted simultaneously to Robert R. Carter, Jr., Deputy Commissioner,
Title Division, Mail Code 106-2T, Texas Department of Insurance, P.O. Box
149104, Austin, Texas 78714-9104. Request for a public hearing should be submitted
separately to the Chief Clerk's office. It should be noted that any comments
received during the previous rulemaking hearing will be considered part of
the record regarding these proposed amendments.
Subchapter A. BASIC MANUAL OF RULES, RATES AND FORMS FOR THE WRITING OF TITLE INSURANCE IN THE STATE OF TEXAS