76 West Main Street - Suite 100Freehold, New Jersey 07728www.njailta.org (732) 333-0149
October 22, 2012
VIA REGULAR MAIL
Kenneth E. KobylowskiActing Commissioner State of New JerseyDepartment of Banking and Insurance20 West StreetPO Box 325Trenton, New Jersey 08625-0325Re: CFPB Bulletin 2012-03Service Provider Bulletin & Third Party VettingDear Acting Commissioner KobylowskiI am writing you on behalf of the National Association of Independent Land Title Agents (NAILTA – www.nailta.org) and independent title insurance agents that we represent in the State of New Jersey to bring your attention to a matter about which we have recently become aware. A number of our agentshave told us that they are receiving notices from their warehouse lenders requiring them to pay a third party as a condition of doing business. We believe that this “requirement” not only violates federal lawfound at RESPA Section 8 and its prohibition against kickbacks in the settlement process but alsocontemplates a new, quasi-form of insurance in which the lender would receive indemnity in the event of a closing agent defalcation or other loss. Because the third party vendors are not licensed insurance producers, we believe this action violates New Jersey law under the Insurance Code and requires your immediate action.To better explain this recent phenomenon, please note the following. The third party firm is offering to“vet” the title insurance agents on behalf of the lenders who have agreed to participate in this program.The third party company, known as Secure Settlements, Inc. (SSI) out of New Jersey, is apparentlyseeking to charge the title agent an annual flat fee per escrow officer, as well as non-escrow officers whomay play some role in closing the transaction or handling the closing file. Title agents, attorneys, closers,title searchers, abstractors, surveyors, real estate agents, mortgage brokers, and loan officers will all haveto fall under the SSI vetting program, despite the fact that SSI is not a licensed provider of such services.SSI has recruited hundreds of warehouse lenders to participate in their vetting scheme. Those participating lenders have sent out the enclosed correspondence to title agents across New Jerseyrequiring them to take action that is not otherwise required by law and that is already performed by theagent’s title insurance underwriters. The fees for vetting are now being passed along to the consumers inthe form of higher settlement costs with no attendant benefit to the consumer or the insured’s.