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(4) Division of Consumer Protection of the Office of the Maryland AttorneyGeneral (“OAG”);(5) Maryland Real Estate Commission (“MREC”);(6) National Association of Insurance Commissioners (“NAIC”);(7) National Coalition of Insurance Legislators (“NCOIL”); and(8) National Conference of State Legislatures (“NCSL”).Face-to-face meetings were held with representatives from ALTA, MLTA and MREC.The president of the State’s only domestic underwriter, Security Title GuaranteeCorporation of Baltimore, participated in the meeting with MLTA. Consultation with theremaining State agencies and organizations was conducted through correspondence andtelephone conversations.C. Research on Activity in Other StatesIn addition to conducting its own independent research, the MIA gathered andreviewed information on current or proposed statutory or regulatory activity concerningreal estate settlement practices of other states, including but not limited to informationprovided by the NAIC, ALTA, NCOIL, and NCSL.The MIA also reviewed a report published in June, 2012 by Demotech, Inc., anindependent financial analysis firm, involving challenges to the title insurance industry. 5The report rated the 50 states’ and the District of Columbia’s conformance with theNAIC’s Title Insurance Agent Model Act (“NAIC Model Act”) on a scale of zero to six.Two states received a rating of six, meaning they had “substantially more regulation”than the NAIC Model Act. Five states received a rating of zero, denoting “limited or noregulation.” The remaining 40 states fell somewhere between these two extremes. Witha rating of four, denoting adoption of “the NAIC model Act or substantially equivalentregulation,” Maryland received a higher rating than 31 of the 51 jurisdictions. The5 Demotech, Inc., Escrow Theft: Today’s Challenge in Title Insurance, June 4, 2012http://www.demotech.com/pdfs/papers/20120604_defalcation_study.pdf.6
following table outlines the provisions of the NAIC model law and the comparableprovisions existing in Maryland law.Table 1NAIC Model Law ProvisionsProducer licensing requirements including provisions of goodcharacter, competency, and continuing education (for new andrenewal licenses)Require fidelity bond coverageComparableMaryland Law§ 10-112; 6§ 10-116;§ 10-121(i)§ 10-121(e)Authorize Commissioner to examine books and records of § 10-118(c-d)producersProhibit rebating and fee splitting §§ 27-212, 11-407;§ 14-127 7Record retention requirements § 10-128.1Penalties and liabilities for noncompliant activities § 10-126;§ 10-132Requirement of producer appointment with title insurer and § 10-121.1required provisions of contract with insurerSubject to required examination by appointed title insurer § 10-121(k)Conditions for providing escrow, closing, or settlement servicesand maintaining escrow and security deposit accountsPolicyholder treatment§ 10-121(b);§ 22-103§ 22-102(a)IV.CONSIDERATIONSA. Title Insurance Producer Defalcations Reported by UnderwritersAn underwriter is required to report to the MIA when, as a result of an annual onsitereview, 8 it has reasonable cause to suspect that a title insurance producer or agencymay be involved in fraudulent, dishonest or improper practices when acting on itsbehalf. 9Also, an underwriter is obligated to report to the MIA when it has terminated a6 Unless otherwise indicated, all statutory references are to the Insurance Article of the Annotated Code ofMaryland.7 Real Property Article, Annotated Code of Maryland.8 See Section IV.C. below for a discussion of the underwriter annual on-site review.9 See § 10-121(k)(3).7
Page 2 and 3: Report of the Study ofClosing or Se
Page 4 and 5: TABLE OF CONTENTSI. EXECUTIVE SUMMA
Page 6 and 7: Although in a minority of states an
Page 8 and 9: or misuse of closing or settlement
Page 12 and 13: title insurance producer or agency
Page 14 and 15: As part of its Insurer Survey, the
Page 16 and 17: or dishonest practices, the underwr
Page 18 and 19: eported having a least one escrow a
Page 20 and 21: ond also may be purchased by an und
Page 22 and 23: 4. Other Protection Available to Un
Page 24 and 25: 1. Preventive MeasuresProducer Lice
Page 26 and 27: lender’s funds or documents. The
Page 28 and 29: In the event of the insolvency of a
Page 30 and 31: insurance task force. The informati
Page 32 and 33: in excess of 20 cents in claims on
Page 34 and 35: create an environment vulnerable to
Page 36 and 37: Appendix 1MARTIN O'MALLEY, Governor
Page 44 and 45: AppendixAppendix22MARTIN O’MALLEY
Page 46 and 47: Appendix 2c. If you answered “No
Page 48 and 49: Appendix 2Certification of Informat
Page 50 and 51: Appendix 2QUESTION #3Schedule BStat
Page 52 and 53: Appendix 3
Page 54 and 55: Appendix 3SURVEYTitle Insurance - C
Page 56 and 57: Appendix 3a. Does your title insura
Page 58 and 59: Appendix 3QUESTION # 2Schedule ADor
Page 60:
Appendix 3QUESTION # 10Schedule CMi
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