Title insurance licenses shown on Closing Disclosure

Craig Haskins, COO

By Craig Haskins, Chief Operating Officer 

During the first couple weeks of November, the most asked question from lenders on TRID/KBYO was “why is Knight Barry licensed in Wisconsin but most of the other title agencies aren’t?” Quickly followed up with a second question “aren’t title agencies required to hold a license in Wisconsin?” What’s up with these questions lately? Because the Know Before You Owe (KBYO, formerly called TRID) rule requires that the lender display the Settlement Agent and the individual closer’s license numbers on the 5-page Closing Disclosure Form (CDF). The brief answer to these 2 questions is no, title agencies are not required to hold a license in Wisconsin, and yes Knight Barry is licensed in Wisconsin to make this TRID/KBYO process easier on you. Want to know why? Keep reading.

First a little background. In Wisconsin the Office of the Commissioner of Insurance (OCI) issues and administers three title insurance licenses: (i) title insurance company license (e.g. Chicago Title, Stewart Title and Old Republic to name a few), (ii) title insurance agency license (e.g. Knight Barry) and (iii) licenses for the employees of each. The Consumer Financial Protection Bureau (CFPB) has included a field on the CDF for the Settlement Agent license and the individual closer’s license number. So what’s the problem here? Why are some non-Knight Barry offices telling lenders to buzz off with the licensing requests?

The first field we need to discuss is located on Page 5 of the CDF labeled “ST LICENSE ID”. This is the license number for the Settlement Agent, otherwise known as the entity closing the loan (e.g. Knight Barry Title, Inc.). As discussed above, title companies are licensed in Wisconsin but there is actually no requirement in Wisconsin for the title agency to be licensed. We are not sure why that is, but there are several other states with the same non-requirement. Having said that, the title agency license is available voluntarily in Wisconsin from the OCI and costs a whopping $116.50 all in. Since Knight Barry thinks it’s important for our agency to be licensed to keep the lender in compliance, we have licensed all four of our entities.

So are those other title agencies wrong not to be licensed? No, it’s their option, but that begs the question: what does a lender insert in the first field since the title agency isn’t licensed? Or should the lender leave it blank? This is going to be the call of each lender. In some states it is illegal to leave a blank field or use the abbreviation N/A in a financial document. So I’m guessing that national lenders will want something in that field. I’ve seen some title agencies use their business license in that field which can be found on the Wisconsin Department of Financial Institutions website. Is that right? No one will know until the first fine flies.

The second field we need to discuss is the individual license of the closer shown on page 5 of the CDF labeled “Contact ST License ID”. In Wisconsin the license is called an intermediary license. This license is required for anyone who discusses title insurance coverages, exceptions, rates, etc. Since the closer almost always provides curative services, i.e. help clean up title exceptions by clearing mortgages, judgments and other encumbrances, we think the individual closer should be licensed. Knight Barry’s closers hold these licenses and will provide their license number on the CDF; but there are some types of closers who probably don’t need to be licensed – the notary or witness closer. These closers often have tasks related to briefly explaining the loan documents and collecting signatures but they’re not involved in any type of title insurance curative services. If a notary or witness closer is used then the license number in this second field should be the actual closer who handles the preparation of the settlement file.

Phew – thanks for licensing. Get it?