TLTA Represents Industry at Hearing to Determine Guaranty Recoupment Fee; Jan. 1 Effective Date Anticipated
By TLTA Staff
Sept. 13, 2017
TLTA represented the title industry last Wednesday at a TDI hearing to determine the Guaranty Assessment Recoupment (GARC) fee to be charged in connection with the failure of Southern Title Insurance Corporation. Deputy Commissioner Mark Einfalt presided over the short hearing.
TDI staff recommended fee be charged as a flat fee, like in 2014; and a round number for ease of calculation
Recoupment fee will function exactly like current guaranty fee
Unpredictability of Hurricane Harvey may affect market
Exact fee amount and rule order to be issued soon
Hearing Detailed Description
At the hearing, TDI staff testified about the method of collecting the GARC fee and the amount to be charged. They recommended that, for simplicity and ease of compliance, the fee should be charged as a flat fee, as it was in 2014. Additionally, they recommended that, based on projected policy volume for 2018 (with the caveat that Hurricane Harvey is a fairly unpredictable factor), a fee of somewhere between $4 and $5 be charged on each owners and loan policy and that a fee of $0 be established for all endorsements, binders and other insuring forms. In making these recommendations, TDI staff recognized the industry's request that the fee be a round number for ease of calculation and remittance.
The recoupment fee will function exactly like the current guaranty fee does with the flat fee being charged only on the owner and loan policies and then submitted quarterly by title agents to the Guaranty Association.
TLTA testified in support of the TDI staff recommendation, also citing the unpredictability of the effect of Hurricane Harvey on the market. TLTA thanked the TDI staff for seeking input and working closely with the industry to develop a practical way to administer this fee. No other public testimony was provided.
We anticipate that TDI will rule on the exact amount of the fee and an order will be issued very soon, with the effective date for compliance around Jan. 1, 2018. Title agents should begin preparations internally to be ready to collect this fee starting in January. We expect that underwriters will issue guidance on the specifics about collection and disclosure of this temporary fee, and TLTA will continue to update you throughout this process.
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