What does the bill say?

 If payment is received at the location and in the manner specified by the mortgagee:

• The pay-off servicer / the mortgagee must accept and may not return or destroy any payment received in reliance on a payoff statement;

• The pay-off servicer / the mortgagee must promptly apply such payment to the unpaid principal, interest or any other amounts due under the mortgage.

Failure to comply results in fines to the mortgagee.

Why is this important?

• Title companies would now have the force of law and the remedy of escalating fines to correct pay-off servicer business practices.

• This bill is a milestone for NYSLTA, as it is the first time we have proposed a legislative cure for a title industry problem.

• By first strategically presenting this issue to the DFS Banking Division and Insurance Division and gaining their understanding of the problem, we are positioned to have the regulator's acknowledgement for the need to cure when queried by the legislative staff.

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• The NYSLTA furthers its credentials as a consumer advocate.

After several title agents reported problems with pay-off services, the NYSLTA began outreach in 2019 and succeeded in arranging meetings with senior executives at SPS. Although solutions and changes in their business practices were discussed and promised, the change never came about.

We continued to seek corrections with payoff-servicers. We had a series of email and ZOOM communications with the Mr. Cooper company. Small improvements were accomplished but the problems persisted industry-wide.

In 2023, the NYSLTA Advocacy Committee met with the DFS Banking Division to alert them to these issues. In 2024, our DFS Consultant at Greenberg-Traurig addressed the problems with pay-off servicers and other title insurance issues with the DFS Insurance Division.

Late in 2024, the NYSLTA discussed this issue with Assembly Member Catalina Cruz, who expressed interest in helping us. Working with our lobbyists at Greenberg-Traurig, the Advocacy Committee outlined a legislative measure which Assembly Member Cruz and her staff turned into the bill attached to this email.

Next steps