Real Estate Title Company CEO Testified for Exclusion

Real estate title company CEO Mike Pryor has testified on behalf of the title industry at a hearing conducted by the U.S. House Committee on Small Business in October.

The hearing was held to obtain testimonies on the proposed extension of the federal tax credit for first time homebuyers, but industry groups such as the title industry used the event to voice out their concerns about the planned Consumer Financial Protection Agency.

Pryor, president of Lenders Title Co., told legislators that the title industry wants to be excluded from the types of businesses covered by the proposed consumer protection agency. He reiterated that the industry is already monitored by state insurance departments and regulated by the U.S. Real Estate Settlement Procedures Act.

He said that the title industry, represented by the American Land Title Association, is composed of small businesses operated by title agents, abstracters, appraisers, lawyers and escrow professionals. He added that these businesses are local and that they employ only around two to 15 workers.

Pryor also testified that there are around 50,000 small real estate title companies around the country and all have been adversely affected by the housing meltdown. Each real estate title company has been spending around $6,975 a year per employee just to comply with existing federal regulations.

He even cited a study done by the U.S. Small Business Administration Office of Advocacy about the increasing regulatory burdens imposed on small businesses.

With new RESPA provisions that will take effect in January next year, another layer of regulatory costs will further burden title insurers, Pryor explained.

According to the Housing and Urban Development Department, the title industry will spend $62 million in software and training costs to comply with new RESPA rules and $46 million of the total costs will come from small businesses. Another $37 million will be spent for legal procedures, with $18 million coming from small title companies.

Pryor explained that if the title industry is included in enterprises that would be regulated by the new agency, title companies expect that they would again be flooded with new regulations, drowning them with another layer of federal mandates and regulations.

As a conclusion to his testimony, Pryor stated that the title industry did not cause the problems that started the housing crisis and that pushed for the proposed creation of the consumer agency. He said that putting every real estate title company under the authority of the proposed agency will not achieve the purposes of the bill.