ST. GEORGE — A contested bill deregulating part of the realty and title insurance industry passed the Utah Legislature Wednesday and is now on its way to the governor’s desk.
Senate Bill 121, sponsored by Sen. Daniel Hemmert, R-Orem, repeals a decades-old law that blocked mortgage or similar companies from owning a title insurance business.
The bill passed the Utah House Wednesday by a vote of 39-32 with the Senate passing the bill after an amendment making technical changes was added.
The argument for the original law is that by keeping the two businesses separate, or unaffiliated, title insurance agents are able to remain impartial, independent parties who work for the interests of all involved.
Having a title agent whose services are under the same umbrella or affiliations as a mortgage company doesn’t make that agent an impartial party, but rather someone beholden to the parent company, according to opponents, who said the bill could lead to agents cutting corners in favor of the affiliated company versus a home buyer or seller.
As this can bring more people into the mix of buying a home, it can cause closing costs to go up, Brad Griffths, of the Utah Consumer Advocacy Network, previously told St. George News and a Senate committee before that.
Those cost can also go up due to kickbacks for referrals that realty agents send to the affiliated business, Griffiths said, adding that those kickbacks are often covered under the umbrella of profit sharing.
He has also said that affiliated-business arrangement or not as transparent in their dealings as they should be and can result in industry monopolization instead of competition.
Read more: Consumer advocate: Bill would increase costs of buying a home in Utah
Looking at the close House vote, Griffiths said Wednesday his group “was clearly having an impact,” but simply ran out of time. If they were able to argue their point a day or two more, the bill might have been defeated.
However, Hemmert, along with the Utah Land Title Association, said consumers favor a one-stop shopping arrangement that the repeal of the old law would provide.
Jeremy Larkin, a realtor with Keller Williams Realty, and supporter of SB 121, said a problem consumers face is having to deal with different businesses when buying a home. He contrasted that experience with buying a car, which can generally be done at the same location.
“(SB 121) streamlines the process,” Larkin said. “We want to make it easier for people to buy and sell a home.”
Allowing title companies to be under the same umbrella as mortgage and realty companies will also provide an advantage when dealing with online services that are challenging traditional brick-and-mortar companies, Larkin said.
While Hemmert’s bill would have just repealed the current anti-affiliated business arrangements law at first, it met heavy resistance from the Utah Lands Title Association and other title and mortgage groups. That changed after meeting with the title association and others.
A compromise bill that won the title association’s support as it repealed the old law and replaces it with the federal Real Estate Settlement Procedures Act.
“RESPA protects the consumer every way from here to Tuesday,” Larkin said.
Under SB 121, title companies with affiliated-business arrangements will be regulated by the Utah Department of Real Estate. They are also to file reports as who owns the company and what its affiliations are, as well as report the percentage of revenue that comes from nonaffiliated business.
Legislators representing Southern Utah who voted in favor of the bill were Sens. Evan Vickers, Don Ipson, David Hinkins and Ralph Okerlund.
Those who voted against it were Reps. Walt Brooks, Brad Last, Phil Lyman, Merrill Nelson, Rex Shipp and Lowry Snow.
Rep. Travis Seegmiller was absent for the House vote.
Read more: See all St. George News reports and opinions on Utah Legislature 2019 issues
Resources
- Read full text of bill: Utah 2019 Senate Bill 121 — Controlled Business in Title Insurance Repeal
- Contact legislators
- Bill sponsor: Sen. Daniel Hemmert | House sponsor: Rep. Mike Schultz
- Southern Utah Sens. Evan Vickers, Don Ipson, David Hinkins and Ralph Okerlund | Listing of all senators.
- Southern Utah Reps. Travis Seegmiller, Bradley Last, V. Lowry Snow, Walt Brooks, Rex Shipp, Merrill Nelson and Phil Lyman | Listing of all members of the House of Representatives.
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