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Rating Bureau Activity

Rating Bureau Activity:

The New Jersey Land Title Insurance Rating Bureau [“NJLTIRB”] has recently received approval of the Department of Banking & Insurance [“DOBI”] for certain changes to the Rate and Form Manuals. These changes became effective on Feb. 15, 2015. The following changes have been approved.

Form Manual Revisions; Existing Endorsement Forms Revised.

ALTA Short Form Expanded Coverage Residential Loan Policy (ALTA Rev’n 04-02-14) (NJ Var’n) (NJRB 2-14)

ALTA End’t No. 29-06 (Interest Rate Swap – Direct Obligation) (ALTA Rev’n 04-02-14) (NJRB 5- 129) ? ALTA End’t No. 29.1-06 (Interest Rate Swap— Additional Interest) (ALTA Rev’n 04-02-14) (NJRB 5-130)

ALTA End’t No. 29.2-06 (Interest Rate Swap - Direct Obligation – Defined Amount) (ALTA Rev’n 04-02-14) (NJRB 5-135) ? ALTA End’t No. 29.3-06 (Interest Rate Swap - Additional Interest – Defined Amount) (ALTA Rev’n 04-02-14) (NJRB 5-136)

Successors & Transferees Coverage End’t (Adoption 10-16-08) (NJRB 5-66)

Form Manual Revisions; New Endorsement Forms Adopted.

ALTA End’t No. 8.2-06 (Comm’l Environmental Protection Lien) (NJRB 5-165)

Survey End’t (Without Survey) for Residential Condos & C-ops (NJRB 5-164)

Rate Manual Revision; Existing Sections Revised.

ARTICLE and SECTION (pages i, ii, and various additional pages). This technical amendment explains the use of each of these terms throughout the Manual as follows: RATE & FORM MANUALS REVISED “The page numbers are tied to the Article numbers described herein, i.e. Definitions, being Article 1, are numbered 1-xx, Methods of Operation, being Article 2, are numbered 2-xx, etc. Each paragraph contained within an Article shall be defined as a Section, i.e. Article 1, Section 1.1, etc.”

§7.1. SERVICE CHARGES. The following sentence has been added: “The charges imposed under this Article shall be in addition to the charges imposed under Article 6 and any other applicable provision of this Manual.”

§10.15. LENDER’S SURVEY END’T (WITHOUT SURVEY). The text of this section has been revised to delete surplus wording.

Rate Manual Revision; New Section Added.

§10.97. Survey End’t (Without Survey) for Residential Condominiums and Co-operatives (NJRB 5-164) addresses the use of this new endorsement. The charge for same is $25.00, and the endorsement may be issued in connection with loan or owner’s policies insuring residential condominium or co-operative units.

§10.98. ALTA End’t No. 8.2-06 (Comm’l Environmental Protection Lien) (NJRB 5-165) ad- dresses the use of this newly-approved endorsement. The charge for same is $100.00, and the endorsement may be issued in connection with loan policies insuring non-residential properties. It is generally similar in concept to existing ALTA End’t No. 8.1. But 8.2 differs from 8.1 in that it does not require the insertion of a reference to a state environmental statute.

As noted above, the changes to the Rate and Form Manuals are effective on Feb. 15, 2015, and are applicable to applications for title insurance received on or after that date.

 NJLTIRB has received DOBI’s approval for certain changes to the portions of the Rate Manual which relate to settlement charges, effective April 1, 2015. They are discussed below.

Rate Manual Revisions; Existing Sections Revised.

§ 1.9 (definition of "Settlement Charge”) is revised to reflect a revision in the explanation of the term settlement, which now includes “closing- or settlement-related functions performed both before and after the occurrence of the closing or settlement itself”. However, no settlement charge may be imposed for those functions covered by Rate Manual §7.1 (“Service Charges”).

§3.1.5(c) (“Right to Impose Special Charges”) is revised to conform to the definition of Settlement Charge in §1.9 (discussed above).

Settlements with Disbursements

§6.1 (“Settlements with Disbursements”) is revised to set the initial settlement length, for which the minimum settlement charge of $300.00 is imposed, at 60 (formerly 90) minutes.

§6.2.3 (“Settlements of Greater than Normal Length”) is revised to provide that when a settlement with disbursements exceeds 60 minutes in length, an additional charge of $100.00 (formerly $25.00) is imposed for each additional hour (or fraction thereof) in excess of the initial 60-minute period.

Settlements without Disbursements

§6.3. (“Settlements without Disbursements”) is revised to set the initial settlement length, for which the minimum settlement charge of $150.00 is imposed, at 60 (formerly 90) minutes.

§6.4.3 (“Settlements of Greater than Normal Length”) is revised to provide that when a settlement without disbursements exceeds 60 minutes in length, an additional charge of $50.00 (formerly $25.00) is imposed for each additional hour (or fraction thereof) in excess of the initial 60-minute period.

Rate Manual Revisions; New Section Added.

§6.4.4 (“Settlements of Greater than Normal Length; Itemization of Charges”) provides that whenever a than normal length occurs, the insurer or agent must provide the applicant (upon request) with an itemization of the time expended. The same must include settlement-related functions performed both pre-and post-settlement.

SETTLEMENT CHARGES MODIFIED

Rate Manual Revisions; New Example Added to Appendix. An example illustrating the operation of §6.2.3 has been added to the Appendix portion of the Rate Manual. In this hypothetical situation, an agent conducts a settlement with disbursements. One hour is spent at the table, preceded by one hour in preparation time. Thus, the settlement charge is $400, computed as follows: $300 for the hour spent at the table (in accordance with §6.1) plus $100 for the hour spent in pre-settlement-related functions (in accordance with §6.2.3).

Although not addressed by the foregoing example, it is helpful to remember that post-closing settlement-related functions which are covered by Rate Manual §7.1 (“Service Charges”) may not be included as part of the settlement charge. So let us assume that after the hypothetical settlement discussed above, the agent spent an additional hour arranging for the satisfaction of a mortgage. The agent may not add another $100.00 to the settlement charge by characterizing that activity as a post-settlement function under §6.2.3. Rather, the agent should charge $75.00 for this activity in accordance with §7.1(b).

In addition, it should be noted that the additional charges for pre- and post-settlement-related functions permitted under Rate Manual §§ 6.2.3 and 6.4.3 are separate and distinct from those permitted under §3.1.5(c) (“Right to Impose Special Charges”), and may not be duplicated. Therefore, an agent may not charge $100 for pre- settlement-related functions under §6.2.3, and also charge for the same activities under §3.1.5(c).

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