- June 26, 2013
- All Indiana Issuing Offices
- UNDERWRITING - Closing Protection Letters-Requirements/Rates/Forms/Procedures
The Indiana Legislature recently enacted SEA 370* mandating the issuance of a closing protection letter (CPL) to certain parties in residential real estate transactions for a fee. This bulletin sets forth the requirements, guidelines and procedures to follow concerning issuance of CPLs under the new law.
REQUIREMENTS UNDER THE NEW LAW
For closings on or after July 1, 2013, title companies and insurance producers are required by law to issue a closing protection letter to a lender, borrower, buyer and seller in all residential real estate transactions in which: 1) a title policy is issued by the title company or insurance producer; and 2) the title company or insurance producer is also acting as a settlement or closing agent. A CPL may be issued in a commercial transaction (defined as non 1-4 family transaction). A separate CPL must be issued to each party. The new law requires that a fee filed with and approved by the Indiana Department of Insurance shall be charged to the party benefitting from the CPL.
Commencing with transactions that close on July 1, 2013, there will be two forms of closing protection letters available as required for issuance in accordance with the new IN law. CPLs (Insured Closing Letters) may be issued ONLY by use of the Stewart ICL Website: https://www.stewarticl.com The CPL forms as provided are both designed to be issued for specific real estate transactions. If the above-described conditions are met, the CPL must be issued to the lender, borrower, buyer, and seller of the property and will require a separate letter be issued to each party receiving the benefit of the CPL. The two CPL forms made available July 1, 2013, are as follows:
- IN (LENDER/BUYER/BORROWER) CPL Form - This form shall be generated for issuance to a Lender, Buyer, Lessee, and/or Borrower as required.
- IN2 (SELLER) CPL Form – This form shall be generated for issuance to a Seller only as required.
A CPL may only be issued to a party to a real estate transaction in which a title insurance policy is to be issued by or on behalf of Stewart Title Guaranty.
NEW CPL PREMIUM CHARGE
The IDOI has determined that the CPL fee is premium. A fee shall be charged to each party receiving the benefit of the CPL. The fees to be charged shall be $25 for a lender, buyer, borrower and seller. The new law does not allow a split of the premium between a title company agent and underwriter. As a result, the entire amount of the CPL fee shall be remitted to Stewart Title Guaranty. In the event of a second mortgage or HELOC by a lender other than the primary lender, an additional fee of $25 per letter is to be charged. A CPL may be issued in a commercial transaction (defined as non 1-4 family transaction) under the same terms, conditions and charges set forth above, if provided. The new law provides that only the fees filed with and approved by the IDOI on or before July 1, 2013 may be used. Therefore, the exact fees as set forth herein, no more or less, must be charged.
In a refinance transaction, the CPL charges would be $50 total ($25 for Lender and $25 for borrower);
In a purchase transaction, with financing the CPL charges would be $75 total ($25 for Lender, $25 for borrower/buyer and $25 for Seller);
In a purchase transaction without financing, the CPL charges would be $50 total ($25 for Seller and $25 for buyer)
Issuing Agents may remit the entire CPL fee at the same time as policy premium. Please report premium and fees on a monthly basis. CPL fees may be remitted with policy premium as one check along with an itemized breakdown of the premium and CPL fees and/or copies of all policies and CPLs. This will assist our policy department with prompt processing of all premiums. Please contact your Stewart Agency Services Representative if you have any questions on how to remit fees to the Company.
EXCEPTIONS AND EXEMPTIONS
There are no fee exemptions or exceptions for letters issued on or after July 1, 2013. However, there is no fee for letters where a transaction does not close or where a letter is issued by mistake.
MODIFICATIONS TO CPL FORMS
Please contact the Agency Contracts/ICL Administration Department on all requests made to (1) modify the CPL and (2) reflect a different amount for a transaction that exceeds $5 million. Please note that all requests made for CPLs on transactions over $5 million must be accompanied by a completed “overlimits approval” form approved and executed by the local underwriter.
- Closing Protection Letters may not be (1) modified, (2) prepared by an Issuing Agent on its Letterhead or in any other format, or (3) typed, computer generated, or signed by an Issuing Agent.
- The Stewart ICL Website has the most recent Closing Protection Letter forms approved by STG and maintains a record of the Closing Protection Letters issued.
- The Stewart ICL Website generates the Closing Protection Letter only for current authorized Issuing Agents (or Approved Attorneys, where allowed and customary). The CPL is generated in HTML format which is to be printed and then sent to the requesting lender.
- A CPL is not to be sent electronically in a Word format or other format which can be changed without our knowledge or consent.
CPL CHARGES, THE GFE AND THE HUD SETTLEMENT STATEMENT
The new CPL fee may affect Good Faith Estimate calculations. We recommend that you contact your lender clients and begin making adjustments if needed. As to the placement of the CPL fees on the HUD-1, it is our opinion that the CPL fee(s) should be collected and disclosed on a blank line in the 1100 series on the HUD-1 labeled “CPL fees to Stewart Title Guaranty”. The fee for the Seller’s CPL should be disclosed in the seller’s column. The fee for the borrower/buyer CPL and the Lender CPL should be disclosed outside the column. The charge for the borrower/buyer CPL and the Lender CPL should be included in the total charges for “title services” in Line 1101.
If you are currently utilizing StewartDocs or AIM, please contact a Stewart technology representative to update your system with the new CPL fee at Customer Care Center, 888-526-3282.
Please do not hesitate to call on us if you encounter a problem requiring a solution or if you have a question. We are always happy to assist.
*New Indiana Code Section 27-7-3-22 et seq.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- IN2013004 Legislative Updates - New Legislation - Mandatory Issuance of Closing Protection Letters in Residential Transactions
- IN2013005 RATES AND/OR FORMS UPDATE - New Schedule of Charges for Use
- Underwriting Manual:
- Exceptions Manual: