Letter to Congress regarding H.R. 1799
Editor's note: Earlier this week, we caught wind of a piece of legislation that's designed to create a more even playing field between affiliated and independent title companies, the "Ensure Fair Practices of Title Insurance Act of 2015." The National Association of Independent Title Agents, asked its members to write to Congress. Federal Title's founder Todd Ewing penned this letter.
I am a real estate settlement attorney and small business owner with a staff of 17. Together we operate Federal Title & Escrow Company, the largest independent title company in Washington, D.C. I am writing to ask your support of HR 1799, the "Ensure Fair Practices of Title Insurance Act of 2015," which intends to improve competition in the settlement services industry and lower consumer cost.
Being an independent title company means we do not share profits with referral sources through Affiliated Business Arrangements or Marketing Service Agreements – two common pay-for-business practices in the settlement services industry, also known as "legal kickbacks." Because we do not "kickback" cash to referral sources, we are able to charge about 20 percent less than affiliated title companies. Over the years, our kickback-free approach has saved consumers nearly $9 million.
Upcoming changes in our industry, namely implementation of TILA-RESPA integrated disclosures (TRID), are putting pressure on independent title companies like ours. While we support these changes as being in the best interest of consumers, they have increased operating costs. The reality is small businesses such as our independent title company, who are being held to the same rigorous standard as large financial institutions, have struggled to remain profitable while meeting new regulations.
HR 1799 will provide some relief to independent title companies. It is designed "to amend the Real Estate Settlement Procedures Act of 1974 (RESPA) to prohibit certain financial benefits for referrals of business and to improve the judicial relief for certain violations." In other words, it is designed to make it harder for affiliated companies who buy business instead of earning it to get ahead.
HR 1799 is an important first step in the process of improving competition within the title industry and lowering consumer costs for title insurance, which is why I'm writing to ask your support. Independent title companies – small businesses – including ours need an even playing field not only to thrive but to survive.
Thank you for your time and consideration.