Title insurance reform bill passes General Assembly, draws mixed reaction GENERAL ASSEMBLY'S FINAL NIGHT

April 11, 1995|By Mark Guidera | Mark Guidera,Sun Staff Writer

Legislation to tighten state control of Maryland's title insurance industry and bar from the business those who have mishandled clients' money is headed to the governor after clearing the General Assembly.

The new legislation would require all lawyers selling title insurance to obtain state licenses and officers and directors of all title insurance companies to provide more information about their backgrounds to the state.

Under the legislation, the state could deny a license to anyone it deems not trustworthy to handle title insurance funds. It also could revoke the license of any company employing an unlicensed agent or broker.

The Senate's unanimous passage of the bill late Friday drew a mixed reaction.

"This will go a long way toward keeping the bad apples out of the business," said Jean E. Bienemann, an associate state insurance commissioner who oversees the title insurance industry in Maryland.

But James Cosgrove, co-chairman of the legislative committee for the Maryland Title Insurance Association, said he was discouraged by 11th-hour changes to the bill, such as exempting owners of title companies from having to obtain licenses.

Nevertheless, he said, he hopes the bill spurs state regulators toward stronger enforcement. "To me, the issue was never one of licensing, but one of enforcement," he said.

Ms. Bienemann and the bill's sponsor, Del. Michael E. Busch, said the move to reform the title insurance industry -- which sells policies to protect property transactions from fraud and liens -- resulted from an article Dec. 21 in The Sun.

The article documented that Maryland title insurance agents who ... TC have admitted or been convicted of stealing clients' money from escrow accounts have returned with ease to work in the same industry.

Attorney General J. Joseph Curran Jr. backed the legislation, saying it would help the state "keep bad actors out, which the public demands and deserves."

Mr. Busch, an Anne Arundel County Democrat, could not be reached yesterday for comment.

The new legislation:

* Requires applicants for licenses for title insurance companies to submit names and addresses of all company owners, agents and brokers. Now, just one name -- the corporate license holder -- must be submitted.

* Requires the state to investigate backgrounds of partners in title insurance companies controlled by partnerships and of majority owners and directors of corporations. Such checks haven't been required.

* Requires all officers, directors, agents and brokers -- but not owners -- of title insurance companies to obtain state licenses. Currently, only those actually selling title insurance must have licenses.

* Requires title insurers to conduct annual on-site reviews of the escrow accounts and other financial aspects of its Maryland agents and brokers. A written report of those reviews may be requested by state regulators.

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