Department Of Financial Services
OGC Opinion No. 01-10-02
The Office of General Counsel provided the following casual viewpoint on October 2, 2001, representing the position of the New york city State Insurance Department.
Re: Conflict Between N.Y. Insurance Law § 2502(a)( 2) (McKinney 2000) and the federal Real Estate Settlement Procedures Act of 1974 (RESPA)
Questions Presented:
May a mortgage loan provider or its lawyer need a customer to purchase title insurance from a specific title company, agent or agency, as a condition for securing a mortgage commitment?
If the federal Real Estate Settlement Procedures Act of 1974 ("RESPA"), as modified, 12 U.S.C. § § 2601-2617 (West 2001) allows the above activity, is state law preempted?
Conclusions:
No. N. Y. Ins. Law § 2502(a)( 2) (McKinney 2000) forbids banks, trust business, cost savings banks, cost savings and loan associations and nationwide banks from needing a debtor to obtain title insurance, from a particular title agent or insurance company as a condition to, to name a few things, protecting a mortgage dedication. While N. Y. Ins. Law § 2502(a)( 2) (McKinney 2000) does not specifically deal with other mortgage loan providers or their lawyers, N.Y. Banking Law § 595-a( 4) (2001) prohibits a mortgage banker or a mortgage broker from requiring a customer to acquire title insurance from a particular title business, firm or representative as a condition for protecting a mortgage commitment.
Real Estate Settlement Procedures Act of 1974, 12 U.S.C.A. § 2616 (West 2001) provides that a decision might not be made that a state law is inconsistent where such law provides more security to customers. N. Y. Ins. Law § 2502(a)( 2) (McKinney 2000), in addition to N. Y.
OGC Opinion No. 01-10-02
The Office of General Counsel provided the following casual viewpoint on October 2, 2001, representing the position of the New york city State Insurance Department.
Re: Conflict Between N.Y. Insurance Law § 2502(a)( 2) (McKinney 2000) and the federal Real Estate Settlement Procedures Act of 1974 (RESPA)
Questions Presented:
May a mortgage loan provider or its lawyer need a customer to purchase title insurance from a specific title company, agent or agency, as a condition for securing a mortgage commitment?
If the federal Real Estate Settlement Procedures Act of 1974 ("RESPA"), as modified, 12 U.S.C. § § 2601-2617 (West 2001) allows the above activity, is state law preempted?
Conclusions:
No. N. Y. Ins. Law § 2502(a)( 2) (McKinney 2000) forbids banks, trust business, cost savings banks, cost savings and loan associations and nationwide banks from needing a debtor to obtain title insurance, from a particular title agent or insurance company as a condition to, to name a few things, protecting a mortgage dedication. While N. Y. Ins. Law § 2502(a)( 2) (McKinney 2000) does not specifically deal with other mortgage loan providers or their lawyers, N.Y. Banking Law § 595-a( 4) (2001) prohibits a mortgage banker or a mortgage broker from requiring a customer to acquire title insurance from a particular title business, firm or representative as a condition for protecting a mortgage commitment.
Real Estate Settlement Procedures Act of 1974, 12 U.S.C.A. § 2616 (West 2001) provides that a decision might not be made that a state law is inconsistent where such law provides more security to customers. N. Y. Ins. Law § 2502(a)( 2) (McKinney 2000), in addition to N. Y.