Bulletin: NY000276 (Limited Release)

As most of you know the title insurance industry is under increased scrutiny across the country. Attorneys General, the National Association of Insurance Commissioners (NAIC), HUD, and the plaintiff's class action bar have been looking at the way the industry conducts its business as never before. In New York, we have had a class action lawsuit on rate overcharges, and there are now two ongoing investigations, one by Attorney General Elliot Spitzer and a Market Conduct investigation by the New York State Insurance Department.

With this as a backdrop, we send this bulletin to insure you continue to monitor and conduct your business in conformity with applicable standards.

A review of our records indicates that you have Underwriting Agreements with Stewart that involve a Joint Venture or Affiliated Business Arrangement.

Our home office in Houston has issued several Bulletins that set forth and underscore the RESPA guidelines for the creation and maintenance of acceptable Joint Ventures/AfBAs.

We attach hereto Bulletins 43, 15, 33 and 58 together with the HUD AfBA Guidelines and an AfBA Profile that Stewart itself uses. Please review the enclosed to insure your continued compliance with these guidelines.

As part of our regular audits we will review your agency in light of these guidelines. Please complete the form for each of your Joint Ventures/AfBA's and have it available for our auditors.

In addition, NYS Insurance Law Section 6409(d) as it relates to Joint Ventures has been the subject of many inquiries to the New York State Insurance Department. The NYSID, through the office of its General Counsel, has issued several opinion letters on the subject. As you know, Section 6409(d) is a prohibition against rebates, payment, or the giving of, "any other consideration or valuable thing, as an inducement for, or as compensation for, any title insurance business."

Enclosed are opinions on the subject issued May 11, 2001, January 14, 2002, March 21, 2002, May 2, 2002, November 14, 2002, September 5, 2003, October 24, 2004, December 27, 2004, January 20, 2005, May 4, 2005, July 1, 2005, and November 10, 2005. Please review these to assure your continued compliance.

RESPA Section 8 and NYS Insurance Law 6409(d) need to both be considered when setting up/maintaining a Joint Venture/AfBA. Be advised that in the opinion dated July 1, 2005, the Insurance Department stated the RESPA does not preempt Insurance Law 6409(d).

Since violations of these guidelines have been the subject of RESPA enforcement actions, state regulatory actions, and even private rights of action under state consumer protection laws, continued compliance and awareness is essential. The cases brought have shown that ultimate responsibility for ensuring compliance rest with the Joint Ventures themselves.

We hope these materials will assist you in maintaining/establishing Joint Ventures/AfBAs consistent with these current guidelines and regulatory opinions. Should you have any questions please feel free to contact New York State Agency Manager Kevin Reilly or General Counsel John Killea at 212-922-0050.