TDI Audit Review - Stewart...Jan 17, 2019 · Attorneys employed by a title insurance agent...

Welcome to today’s webinar!

TDI Audit Review

John Rothermel

January 17, 2019

In order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum of 55 minutes obtain the password (provided at the end of the

presentation) follow the instructions as given

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ATTORNEY INFORMATION

Because of opinions expressed by the Texas Department

of Insurance (TDI) concerning rebates, legal credit is

available only to:

Attorneys who own title agencies that are Stewart Title

Guaranty Agents

Attorneys employed by a title insurance agent licensed

with Stewart Title Guaranty or Stewart entities

Fee attorneys who have an Escrow Officer license

through a Stewart Title Agent or Stewart entity

We welcome any other lawyers to listen, but cannot provide

continuing education credit to you.

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TDI Audits Review

John Rothermel Senior Vice President

Regional Underwriting Counsel

Senior Underwriter SW Regional Underwriting Office

Stewart Title Guaranty Company

5

Information taken from the Texas Department of Insurance

(TDI) Summary of Operations Report for the 4th Quarter of

Financial Year 2018 (June to August) presented to Texas

Title Insurance Guaranty Association Board of Directors

10/29/2018.

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Compliance Audits and Escrow Audits Reports

QTR FY 18 FY 17 FY 16 FY 15 FY 14

Field audits completed 65 265 289 266 308 286

Field audit reports processed 67 269 296 252 317 276

Section 2651.151 audit reports received 61 586 558 555 553 566

Section 2651.151 audit reports reviewed 40 553 572 576 542 565

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Analysis of Title Insurance Agencies Licensed

as of 8/31/2018

Breakdown of Comprehensive Audit Status

Agencies audited

within last 2 years

Agents last audit

was 2-3 years ago

Agents last audit

was over 3 years ago

# of (new) Agents Never

Audited Region # of

Agencies

NTX CTX WTX HOU STX

217 120 96

131 35

189 103 90

109 29

14 9 3

18 5

4 0 0 0 0

10 8 3 4 1

Totals: 599 520 49 4 26

% of Total: 86.8% 8.2% 0.7% 4.3%

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REVISED Goal: In order to comprehensively audit every

agent at least once every 2 years, we need to conduct 300

comprehensive audits per year, which amounts to 75 audits

per quarter.

Last 12 months—

(9/1/17 – 8/31/2018) – 265 audits (within 35 of goal)

Last 3 months—

(6/1/18 – 8/31/18) – 65 audits (within 10 of goal)

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Experience Report Limited Reviews

Out of 63 comprehensive audits completed during the

quarter, 55 (85%) included a limited review of the agent’s

latest experience report. The following results were reported.

QTR FY 18

FY 17

FY 16

FY 15

FY 14

Number of experience reports reviewed 55 135 163 161 159 180

1. No material discrepancies noted. 52 124 147 160 155 172

2. Income and/or expenses reported in wrong categories

0 0 3 1 1 2

3. Total income and/or expense amounts reported didn’t agree with agency’s financial statements

3 11 13 0 3 6

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Insolvency

VIOLATION OR DISCREPANCY QTR YTD

Financial statements indicated agent was insolvent or had cash flow problems.

3 9

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Abstract Plant


Agency unable to retrieve instrument information. Unable to verify legal plant.

0 1

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Texas Insurance Code


§ 101.102 – Conducted unauthorized business of insurance. 4 10

13



§ 2651.001 – Issued polices for property in county where not licensed

4 16

14



§ 2651.301 – Failed to maintain separate escrow account (commingled escrow & operating funds).

9 35

15



§ 2651.151 – Annual escrow audit report prepared incorrectly or contained material inaccuracies or other problems

7 23

16



§ 2652.001 – Unlicensed person acting as an escrow officer 5 30

17



§ 2702.053 – Actual receipts and/or disbursements not in agreement with settlement statement or premium split not disclosed.

41 166

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Title Bulletins


Title Bulletin NO. 160 – All parties receiving portions of the real estate commission not disclosed on settlement statement.

19 64

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Procedural Rules


P-21: Schedule D of commitment not in file or premium split not disclosed on commitment.

26 98

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Procedural Rules


P-73: Failure to prepare/maintain Form T-64 (TD) when CD used.

33 129

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Rate Rules


R-1: Unauthorized fee charged for closing (or tax search) in addition to premium.

3 13

22

Rate Rules


R-2: Premium collected in installments or premium not collected at all.

0 0

23

Rate Rules


R-8: Refinance credit not given or not calculated correctly. 5 16

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Minimum Escrow Accounting Procedures &

Internal Controls


#1 – Monthly escrow trial balances not prepared or not prepared timely.

2 10

25


Internal Controls


#3 – Reconciliations not approved by management or reviewed by another employee.

4 12

26


Internal Controls


#5 – Only one signature on escrow checks when agency’s size required two signatures.

6 17

27


Internal Controls


#6 – Record did not include copies of all checks, invoices, deposit slips and receipt items.

16 43

28


Internal Controls


#9 – Escrow bank accounts not styled as “escrow” or “trust”. 7 32

29


Internal Controls


#10 – No management approval for disbursement made on accounts open for more than six months or no review for disposition of funds.

8 23

30


Internal Controls


#14 – Guaranty file number not displayed on all escrow checks or deposit tickets.

2 6

31


Internal Controls


#15 – Disbursement sheets missing, incomplete or incorrect. 19 77

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Internal Controls


#16 – Every disbursement not supported by invoice or sufficient other evidence.

33 128

33


Internal Controls


#17 – Escrow receivables not cleared timely. 4 25

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Internal Controls


#20 – Images of checks did not meet requirements 3 12

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Escrow Auditing


Pattern of posting errors. 2 17

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Escrow Auditing


Outstanding checks not cleared timely. 40 128

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Guaranty Files


Legal documents not recorded timely with county clerk or evidence of timely recording not on file.

12 43

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Guaranty Files


Funds not disbursed or escheated to state. 17 57

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Minimum Capitalization Rules


S. 5: Quarterly tax report not submitted timely. 12 48

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Contact Info

John Rothermel

SW Regional Underwriter

Senior Vice President

Senior Underwriter

Stewart Title Guaranty Company

San Antonio, Texas

210.590.1981

[email protected]

mailto:[email protected]

Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit you must:

– listen to the webinar for a minimum of 55 minutes

– obtain the password (provided at the end of the presentation)

– follow the instructions as given

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To Receive CE Credit Each individual seeking credit hours must send their own certificate request to:

[email protected]

Please include the following information: • Provide only this Presentation Name in the Subject Line of your e-mail – “TDI

Audit Review” In the body of your e-mail: • Name of Participant (as it appears on your Escrow Officer License); • Presentation PASSWORD given at the end of the webinar; • License Number Only (located on left side of Escrow Officer Certificate of License –

for example: License Number: 1234567-890123)

For Attorney CLE Credit also include: • Texas State Bar Number • Affiliation with Stewart

– Employed by Stewart Title Guaranty Company; – an affiliate; or – a Stewart agent

For more details, see the CE and CLE FAQs at:

http://www.stewart.com/en/stg/texas/education/texas-tips/ce-cle-faqs.html

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Recordings

www.stewart.com/texas

Under “Texas TIPS” tab

• Posted online 10 days after live presentation

• Other current courses available

Certificates

• Processing can take up to 10 business days.

• Contact us if you haven’t received your

certificate after the allotted processing time.

[email protected]

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http://www.stewart.com/texas


Join us for the next Texas TIPS webinar!

February 21, 2019

Basic Bankruptcy

Victor Davis

For Questions/Comments Email

[email protected]

or

[email protected]

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TDI Audit Review - Stewart...Jan 17, 2019 · Attorneys employed by a title insurance agent...

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