Newsroom

DS-1 Form Litigation Update

On May 20th, the Illinois Department of Financial and Professional Regulation (IDFPR) agreed to halt implementation of a new 2022 Disclosure of Financial Interest (DS-1) Form and revert to use of the 1997 DS-1 Form for the foreseeable future.

Click here for the settlement agreement and click here for the related memorandum from IDFPR.

In summary, the settlement agreement indicates:

  1. “the producer or associate provides the 1997 DS-1 Form in compliance with the disclosure requirements under 215 ILCS 155/18(b)”;
  2. “a producer of title business (or associate thereof)” will not be penalized “for failing to provide the 1997 DS-1 Form if the only interest such producer, any associate of the producer, or both, have in the title insurance company, independent escrowee, or title insurance agent to which business is referred is receipt of a percentage of the premium for the transaction at issue or any other interest that is not an ownership interest, legal or beneficial”; and
  3. IDFPR may seek “an intervening Amendment to the Act or other binding change in the law [that] alters the Department’s authority or applicable legal requirements” regarding financial disclosure requirements.

As always, it is important to understand both the Section 18(b) referral payments and kickbacks provision of the Illinois Title Insurance Act as well as the statutory definitions of “producer,” “associate,” and “financial interest” when evaluating your DS-1 Form compliance.

Questions that continue being raised include, but are not limited to:

  • Impact on attorney-agents;
  • Determination of ownership interest, legal or beneficial, in an individual versus an entity; and
  • What, if any changes, will be sought in the next years regarding IDFPR’s authority.

***UPDATE***

Thank you to those able to join us on June 2nd for our short “lunch and learn” webinar to get caught up on the latest DS-1 form clarifications being sought from the state regulator. If wanting to review or catch up, CLICK HERE to follow our Your Tube channel with the DS-1 webinar recording.

Newsroom

Remote Notary Regulations Public Comment

On April 15th, the Secretary of State filed their First Notice of proposed regulations, which opened a 45 day period for public comment. See page 5 of the Flinn Report for a summary of the proposed rules and see page 5874 of the Illinois Register for the full filing.

For background, remote notary legislation was signed into law last summer as Public Act 102-160, and most aspects of the new law are effective the later of January 1, 2022 or implementation of administrative rules by the Secretary of State.

Following joint ILTA committee working group (Agents, Title Counsel, Legislative) meetings, draft public comments have been prepared to provide the Secretary of State an assessment on several areas of interest to the title industry prior to June 1st.

Click here for the ILTA public comment.

Other Laws & Regulations of Interest

Another bill relevant to at least “remote ink notarization” was also signed into law last summer as Public Act 102-167In particular, title practitioners and legal counsels may want to be familiar with Section 15-20 regarding “[r]emote witnessing and notarization during the COVID-19 emergency declaration,” and also Section 15-5 regarding the remote witnessing of documents other than wills.

Further assurances were also provided in Illinois law last summer regarding remote notarizations in other states through Public Act 102-500, which clarified that acknowledging someone’s appearance for a notary includes “in a manner prescribed by the laws or regulations applicable in the place in which the acknowledgment is taken.”

And although Illinois has set standards for remote ink notarization that does not include multi-factor authentication, please note guidance released last summer by Freddie Mac with a multi-factor authentication requirement. Click here for more guidance details from Fannie Mae and Freddie Mac, and be sure to check out the evolving MISMO standards.

Newsroom

Anti-Predatory Lending Database

Since ILTA’s August 2020 Anti-Predatory Lending Database (APLD) webinar (click here), the association has continued to work on clarifications and online platform changes to help with industry compliance.

In the fall of 2020 the Illinois Department of Financial and Professional Regulation (IDFPR) provided FAQ updates in response to some industry concerns (click here).

Industry conversations have continued with IDFPR, and in the summer of 2021, the state transitioned from APLD Manager Katie Liss to Michael Garvin (michael.garvin@illinois.gov).

In the fall of 2021, ILTA compiled a list of recommendations for regulatory changes (click here), of which IDFPR indicated interest in moving forward with several areas; however, specific industry examples of these recommendations have been requested by IDFPR.

CLICK HERE to register for ILTA’s joint committee APLD working group meeting on May 6th (open to settlement services, title counsel, legislative committee members) to help finalize examples and specific recommendations regarding numerous APLD regulatory concerns:

  • Loan originator system input lines are not identical to title industry input;
  • Input requirements for points and fees and miscellaneous data are not uniformly defined;
  • Input corrections are not allowed;
  • Applications expire before many transactions close;
  • System does not allow users to run reports for purposes of self-compliance audits;
  • System limits closing disclosure upload to 500 KB; and
  • Loan originators can no longer input PINs (parcel index numbers).

 

Newsroom

Remote Notary Regulations Filed

On April 15th, the Secretary of State filed their First Notice of proposed regulations, which opened a 45 day period for public comment. See page 5 of the Flinn Report for a summary of the proposed rules and see page 5874 of the Illinois Register for the full filing.

For background, remote notary legislation was signed into law last summer as Public Act 102-160, and most aspects of the new law are effective the later of January 1, 2022 or implementation of administrative rules by the Secretary of State.

*** Updated May 6th***

The joint ILTA committee working group (Agents, Title Counsel, Legislative) met twice following First Notice to conduct its assessment and provide recommendations on several areas of interest to the title industry prior to June 1st:

  • Confirm general notary, employer, and vendor responsibilities;
  • Standards for remote, online vendor approval, see Rule Sec. 176.805;
    • Clarify parameters on a notary’s use of one or more platforms, see Rule Sec. 176.300(c)(2); and
    • Clarify process for changing platforms, see Rule Sec. 176.300(d)(2);
  • Any additional identity authentication standards;
    • Confirm when multi-factor authentication is necessary;
    • Confirm Freddie Mac guidance and MISMO standards regarding multi-factor authentication;
    • Clarify 24-hour waiting period for failed authentication, see Rule Sec. 176.835(c)(7);
  • Certification standards to distinguish remote notarized documents, see Rule Secs. 176.730 & 176.865;
    • Confirm rule implementation of PA 102-160 Secs. 3-101(b-5)(4) & 6A-106(b); and
    • Confirm impact on pre-printed forms;
  • Privacy and storage standards/requirements, see Rule Subparts I & J);
    • Confirm new journal requirements and July 1 effective date for both remote and in-person notarization, see PA 102-160 Sec. 3-107;
    • Clarify overlapping notary and vendor responsibilities that may satisfy requirements, see Rule Subparts I & J; see also PA 102-160 Sec. 3-107
    • Clarify transfer of records after death of notary, see Rule Sec. 176.960(d)
  • Notary commission issuance and renewal requirements, see Rule Subparts C & D;
    • Confirm end of county certification effective July 1, see PA 102-160 Sec. 2-106 repeal
    • Confirm commission number application for both remote and in-person notarization, see Rule Sec. 176.300(f)(3);
    • Clarify impact of continuing education on commission renewal, see Rule 176.350;
    • Clarify continuing education vendor requirements, see Rule Secs. 176.205(c) & 176.215;
  • Cost and fees separate from remote, online vendor charges, see Rule Subpart D.

Other Laws & Regulations of Interest

Another bill relevant to at least “remote ink notarization” was also signed into law last summer as Public Act 102-167In particular, title practitioners and legal counsels may want to be familiar with Section 15-20 regarding “[r]emote witnessing and notarization during the COVID-19 emergency declaration,” and also Section 15-5 regarding the remote witnessing of documents other than wills.

Further assurances were also provided in Illinois law last summer regarding remote notarizations in other states through Public Act 102-500, which clarified that acknowledging someone’s appearance for a notary includes “in a manner prescribed by the laws or regulations applicable in the place in which the acknowledgment is taken.”

And although Illinois has set standards for remote ink notarization that does not include multi-factor authentication, please note guidance released last summer by Freddie Mac with a multi-factor authentication requirement. Click here for more guidance details from Fannie Mae and Freddie Mac.



Newsroom

Unlawful Restrictive Covenants

At the beginning of this year, a new state law went into effect allowing property owners to “execute and file a restrictive covenant modification to an unlawful restrictive covenant,” see Public Act 102-110.

The legislation was largely motivated by interested homeowners supported by their legislators, see Daily Herald January 5, 2022, so the association worked to avoid unintended consequences during the drafting of this legislation, but there is more work to do in its implementation.

The association has an opportunity to help county recorders and state’s attorneys offices provide a more uniform process, and will be taking recommendations from a joint ILTA committee working group to provide more education to association members as well as other interest groups.

A joint committee working group from the title counsel, legislative, or agent committees have convened to confirm working group goals:

  • Recommend elements for a more uniform form/process; and
  • Host one or more educational webinars in coordination with state’s attorneys, county clerks, and homeowner associations

For reference, below are two counties already providing some direction on this new process:

Click here to register for the next working group meeting on April 28th at 3pm to edit elements for a more uniform form/process.

ILTA Newsroom

ILTA Statement on New DS-1 Form

The Illinois Land Title Association continues to work on addressing questions to the Illinois Department of Financial and Professional Regulation (IDFPR) related to the pending Disclosure of Financial Interest (DS-1) Form and related DS-1 Form Instructions on March 1st.

Clarifications are being sought regarding the Department’s limited statutory authority, form content, disclosure timeline and record maintenance responsibilities, and subsequent regulatory examinations. Click here for ILTA’s February 9th statement regarding the new DS-1 Form.

UPDATEx1: on February 16th, IDFPR provided some clarifying examples (click here) and further explanations as summarized below:

  • The regulator’s focus is (1) making sure the DS-1 form is being sent and (2) information included is in good faith, with IDFPR also highlighting that they are not looking to regulate form compliance in an adversarial manner;
  • While the new DS-1 form is required as of March 1st, IDFPR is looking for continued industry feedback over the next several months to learn more how the form is being completed and to provide further clarifications;
  • Who must provide the form? The department is recommending two fundamental elements to consider – whether the producer/associate is (1) making a referral and (2) receiving compensation from that referral;
  • Endorsements do not need to be included on the form;
  • A form completion example in the linked IDFPR slide 10 includes input of both the fee percentage and amount, and while the department prefers both, only one of the two inputs is required – either percentage OR amount;
  • What does “etc.” mean? The term will be regulated as a reference to Section 19(3) & (4) “like product” and “like charges,” respectively (note: IDFPR will be relying on underwriters to confirm further recommendations on this compliance so ILTA has offered to convene a meeting with the regulator); and
  • Varying business arrangements such as financial interest in a portion of total year-end profits may not conveniently track with fee disclosure lines, but an attempt should still be made to complete the form with the regulator asking that producers be able to at least explain their calculation and not utlilize the calculation to “hide” compensation received from the referral.

UPDATEx2: on March 1st, the Illinois Real Estate Lawyers Association filed legal action for a temporary restraining order regarding implementation of the new DS-1 form, which was set for hearing on March 3rd at 10:30 a.m.; as of March 1st, IDFPR has not indicated any delay in implementation of the new DS-1 Form and related instructions.

UPDATEx3: on March 3rd, a temporary restraining order was granted regarding implementation of the new DS-1 form. The “old” DS-1 form is available by clicking hereThe next hearing date on the related litigation was April 8th, which was continued for briefing status on May 11th. We will provide updates as they become available (click here for the initial TRO court order).

 

Newsroom

New 2022 Financial Disclosure Form