Florida laws effective today: Mortgage fraud and title insurance
 
TALLAHASSEE, Fla. – Oct. 1, 2007 – Two new laws approved during the regular session of the Florida Legislature take effect today. SB 1824 creates new mortgage rules and greater transparency in the lending process. HB 111 effectively deregulates closing services and requires out-of-state title insurance agents to follow the same legal rules as in-state agents.

Mortgage fraud

In 2005, Florida ranked No. 1 in mortgage fraud, over two times higher than the national average. To combat the problem, SB 1824 tightens lending rules and imposes stiff penalties for mortgage fraud violations. Among the provisions of the new law:

• Law enforcement is provided greater powers to combat mortgage fraud, which now expressly includes “any material misstatement, misrepresentation or omission” knowingly made in the mortgage lending process, with the intent to defraud.

• Borrowers must be told how much a lender pays a mortgage broker, and it must be in writing.

• Good Faith Estimates must disclose all possible fees from every party involved in the mortgage – including the lender, mortgage broker, title company and other third parties. The Good Faith Estimate must be signed and dated by the borrower.

• If loan terms change, the borrower must be notified no later than three business days before closing. The mortgage broker must be able to prove that the notice was provided and that the borrower accepted the new terms.

Title insurance agents

In the wake of a 2006 study that concluded Floridians pay more for title insurance than buyers in neighboring states, and pressure by the Office of Insurance Regulation to revise Florida’s rate-setting rules, the title insurance industry supported a measure that effectively deregulates closing services. HB 111 amends the definition of “primary title services” and “related title services,” and codifies a civil court case that permits a portion of a title insurance premium to be rebated.

Title agents are no longer allowed to charge a separate fee for a title examination and are no longer required to charge a minimum of their actual cost for the title search and closing.

The legislation also requires an out-of-state title agent to fulfill the same licensure and continuing education requirements as a Florida-based title agent.

© 2007 FLORIDA ASSOCIATION OF REALTORS®
 

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