New Title Law For Missouri

I am writing to discuss the changes that will be implemented on January 1, 2008, as a result of the new title insurance law in the State of Missouri. In an attempt to protect the interest of the consumer, the Missouri Legislature has revised Chapter 381 of the Missouri Revised Statutes dealing with the issuance of title insurance. These revisions will result in dramatic changes to what we are all accustomed to seeing on the settlement statement for real estate closings.

In the past, an all inclusive “Title Insurance Premium” fee for the owner’s policy and the lender’s policy have been included on the Settlement Statement. Included in these fees were the remittance, title search, document clearing and document preparation fees charged by the title insurance agent for issuing the policy. Under the new law, this is no longer allowable. Instead, what will now show as the title insurance premium fee will be the rate posted with the Department of Insurance for each underwriter in the state of Missouri. Essentially, this rate is the amount the settlement agent must remit to the underwriter in order to issue the policy on that underwriter. Additional fees for the title search, document clearing fee and document preparation will now have to be individually itemized on the Settlement Statement.

In addition, the new law mandates that a closing protection letter be issued for each closing. When conducting a refinance, there will be an additional fee for this service itemized on the borrower’s Settlement Statement. When conducting sale transactions, a closing protection letter must be issued for both the buyer and seller. The additional fee will be included on both the buyers and sellers side of the Settlement Statement. It is anticipated that the fee for the closing protection letter on each side of the transaction will be $25.00. There are within the law limited provisions for opting out of this fee, however the Missouri Department of Insurance has yet to approve and distribute the forms to do so.

Many lenders and brokers have in the past used blanket Closing Protection Letters to satisfy the requirements of their underwriters. However, as of January 1, 2008, this practice will not be allowable in the State of Missouri. So, please let us know as soon as possible the name and address of the lender associated with each transaction so that we can issue the required closing protection letter(s) in a timely manner.

I am aware that change does not come easily within the real estate community. However, we will be doing everything we can to make this transition as smooth as possible. I know that there will be concerns that the fees being charged for services provided will increase as a result of this itemization. However, that will not be the case. Our fees for providing the services we have provided in the past will not increase. They will however, out of necessity, be itemized on the Settlement Statement.

It is my feeling that these changes have been put in place in response to the numerous problems in the St. Louis market. In the past two years a large number of title insurance companies in that market have either gone bankrupt or been shut down by their underwriters. In an attempt to provide the consumer with full disclosure of the fees incurred, these changes were implemented. I believe that over the first few months of this year the new procedure will cause a great deal of confusion and require a lot of explanation. The main concern will be the perception that the fees charged will increase. I cannot speak for the other title insurance companies in the market, however the fees charged by Archer Title Company will remain the same. They will be itemized in a different manner but will total the same as in the past. If you have questions or concerns, please let me know.

Courtesy of Eric Blume President of Archer Title Company