Mortgage Loan Originator Licensing
July 9, 2008
To the President of the Institution Addressed:
Re: Statutory Prohibitions Against “Tying” Title Insurance to Mortgage Financing
We have become aware that, despite specific prohibitions in both the Banking and Insurance Laws, certain lenders continue to encourage mortgage applicants to use specific title insurance agents or agencies.
New York Banking Law Section 595-a precludes a mortgage banker or a mortgage broker from requiring a borrower to purchase title insurance from a specific title company, agency or agent as a condition for securing a mortgage commitment. Likewise, Section 2503(a)(2) of the Insurance Law imposes the same restrictions on banks, trust companies, savings banks, savings and loan associations and national banks.
Please be advised that we intend to expand our examination process to identify and follow up on any referrals to determine the proper enforcement action.
We urge you to fully comply with the aforementioned statutes.
Any questions regarding this letter should be addressed to Tom Barletta, Director of Legislation and Governmental Affairs at (518) 486-4300.
Very truly yours,
Richard H. Neiman
Superintendent of Banks