This week, I introduced a bill that I hope will increase regulation of Title Company and Closing Agents in Minnesota. The idea for this bill was prompted by a local news story about a title company employee who is charged with diverting about $1 million from escrow accounts over a period of six months. Once the news broke, many constituents began contacting me, wondering how $1 million could disappear virtually unnoticed.
As a lawmaker with a banking background, I dug deeper into the issue and as I found out, this crime isn’t as unbelievable as one would think. The Albert Lea case isn’t the only occurrence in the state, and Minnesota actually has quite a large problem that needs to be addressed.
I met with officials from the Minnesota Department of Commerce and Senate Commerce staff to talk about how this could happen. They told me the regulation of Title companies and closing agents is almost nonexistent in Minnesota law. The Department couldn’t provide details, but they said they are aware of numerous cases of escrow-linked crimes across Minnesota, and they expect many more are coming. The Department of Commerce currently is examining the 400 licensed closers and 500 licensed Title insurance agencies in Minnesota to determine how much, on average, each has in escrow accounts.
I have been working with the Department and other state officials to draft the bill I introduced this week in order to address this massive problem. Specifically, my bill would tighten the Title Insurance Agent language in statute, requiring documentation of financial conditions, annual reviews, and retention of records for contracts. It also holds title insurers liable for the malfeasance of their agents. The legislation also addresses who may act as a closing agent in the state by redefining the qualifications of an applicant and requiring the agent to meet and maintain certain financial and insurance obligations.
I believe that Realtors and banks should be supportive of this bill because it would provide more security in these types of transactions. When people purchase property, they deserve every assurance that their money and their information is protected at every step of the process. With so many different institutions involved in the purchase of property, it’s the state’s responsibility to make sure regulations are in place at each level. Apparently, we’ve lacked in that area in the past and it’s my intention to repair that oversight with this bill.
The legislation has bipartisan authors. I also am planning a meeting with the Minnesota Land Title Association to discuss the bill. I understand there may still be concerns with the legislation as written, but that’s why I’m willing to work with all parties to find compromise on workable legislation.
If you would like to follow this bill, Senate File 278, you may do so at www.senate.mn, and type SF 278 into the bill-tracking sidebar.
This legislation is a good example of how local input often can prompt legislation at the State Capitol. If you ever have a concern or idea, I encourage you to contact me. I’m not sure I would have known to investigate this issue without input from local residents, and I’m very appreciative of that feedback. You may reach me anytime at: firstname.lastname@example.org; 651-296-9248; Room 19 State Office Building, St. Paul, MN 55155.