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Title News - September/October, 2006

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September/October, 2006 - Volume 85 Number 5

Inside ALTA®
109th Congress Wraps Up the Year

by Edward C. Miller

It’s hard to believe that as early as September the 109th Congress is really done with all its major issues. Learn what the title industry can expect for the next session.

As Title News went to press, legislators wrapped up the 109th session of Congress to return home and campaign for reelection. Because it is a midterm election year, this session could best be described as accomplishing as little as possible to upset the electorate.
Tax cut extensions, pension reform, energy legislation, hurricane Katrina, immigration reform, and the conflicts in Afghanistan and Iraq were the focus for most of this Congress, along with passing annual appropriations bills.
Many items of interest to the title industry were considered this year, but few were enacted. Federal terrorism insurance legislation was extended. Federal flood insurance program reform bills were considered and reported in both the Senate and House, but failed to receive final action. Predatory lending, data security, Fannie Mae/Freddie Mac regulatory reform, and optional federal insurance charter bills all received varying degrees of attention, but none were enacted. The stage has been set for the next Congress though, with hearings already having been held on several of these issues.
So what can the title industry look forward to next year? With a close election predicted for November, forecasts are difficult. What legislation is considered will depend largely on which party wins control of the legislature. Here are some issues that are most likely to receive attention.

GAO Report
The Government Accountability Office study of the title insurance industry is scheduled to be released during the first quarter of 2007. ALTA® met with GAO staff more than three times to discuss the industry. The latest meeting was held at the ALTA® offices on August 3rd with several ALTA® member title agents participating. Questions focused on the rate split between agents and underwriters; the cost of title insurance and differences between “risk only” and “all inclusive states;” competition; automation in the industry; and allegations of kickbacks between settlement services providers. Additionally, the GAO has met with underwriters, state insurance commissioners, consumer groups, Realtors®, and mortgage bankers.

House Financial Services Committee
Continued examination of the title industry by this committee will largely depend on who becomes the next chairman. But it would be reasonable to expect a hearing to review the results of the GAO final report next spring. In addition, insurance regulation in general is likely to garner committee attention. If Democrats gain control of the House, it is likely to reinvigorate housing issues in general, including legislation to address predatory lending.

Senate Banking Committee
Chairman Richard Shelby (R-AL) has two years remaining on his chairmanship of the Banking Committee. His agenda is likely to be a continuation of this year’s agenda. That included two hearings on insurance regulation. These hearings focused on shortcomings of the state insurance regulatory system, and how a federal system might improve it. Shelby will push for an overhaul of Fannie Mae/Freddie Mac (GSE) regulation and the formation of a new regulator (if this hasn’t been done before printing of this publication). Partisan differences on several provisions of the bill stalled floor consideration. Final action on a new federal flood insurance program will be considered shortly after Congress convenes the 110th session. The banking industry continues to push for regulatory reform legislation that failed to cross the finish line in the 109th.

Optional Federal Insurance Charter
Senators John Sununu (R-NH) and Tim Johnson (D-SD) are expected to reintroduce their National Insurance Act (S. 2509). This bill would allow life and property/casualty insurers to opt out of the state regulatory structure for a federal regime. This federally chartered institution would be granted preemptive authority over state insurance regulations. Life insurance companies, banks, and large property/casualty companies continue to aggressively push for this legislation. ALTA® is opposed to the bill as introduced in the 109th Congress. ALTA®’s Government Affairs Committee is studying its language to prepare responses to specific problems and to draft amendments to ensure the bill will not adversely affect the industry should there be movement in the future. This issue will be discussed at the committee’s meeting during the ALTA® Annual Convention. Problems include the competitive disadvantage and consumer harm that federal preemption of state licensing and consumer protection regulations could cause. In addition, if the federal regulator granted authority to property/ casualty insurers to offer a mortgage impairment type insurance product, the title industry could suffer. The Senate Banking Committee is expected to continue its review of insurance regulation and to possibly consider federal charter legislation during the next session.

State Modernization and Regulatory Transparency Act (Smart Act)
Although not introduced in this session, this proposal seeks to establish more coordination and uniformity among state regulations and quicker product approval, or risk the imposition of federal standards. It would also limit states’ ability to regulate premium prices. The title industry was able to obtain an exemption for title insurance in previously introduced bills and has worked with drafters to include such an exemption in new versions. As with optional federal charter efforts, pressure will continue to pass some reform.

RESPA Reform
As Title News went to press, HUD had not released its new RESPA reform proposal. It is expected to be a narrower version of its prior proposal that would only amend the Good Faith Estimate and HUD-1 to better define terms and to unify their look and readability for consumers. If a proposal is released that meets industry objections, it can be expected that Congress will once again inject itself into the debate to make its views known. This industry and congressional opposition killed the last HUD-RESPA proposal, and that result could likely be repeated if the new proposal is unpalatable to industry.

Small Business Health Plan Legislation
(H.R. 525, S. 406, S. 1955) Legislation to allow trade and business associations to offer their members group health insurance plans failed to gain final action in the Senate. H.R. 525 passed the House in 2005. Senators Olympia Snowe (R-ME; S. 406) and Michael Enzi (R-WY; S. 1955) introduced bills in the Senate. Senator Enzi’s compromise proposal failed to gain the necessary 60 votes on the Senate floor to cut off debate and proceed to a vote. Some consideration was given to attaching this bill to legislation that would gain the support of Senate opponents, but these attempts were abandoned as of print date. Supporters of this legislation will push for introduction and passage of legislation next year.
With many issues in Washington pushed off until next year, the title industry could be quite busy next year. Your participation on ALTA® committees and your continued contributions to TIPAC are essential to our industry’s success in Washington. I urge you to become more active in both of these important areas next year. If you have any questions or comments, feel free to contact me or Charlene Nieman, our grassroots and PAC manager.

Edward C. Miller is ALTA®’s chief counsel and vice president of public policy. He can be reached at 800-787-2582 ext. 214 or

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