SENATE BILL REPORT

SB 5739

BYSenators Vognild, Warnke and Smitherman

Revising requirements for escrow agents for bonds and errors and omissions policies.

Senate Committee on Commerce & Labor

Senate Hearing Date(s):February 19, 1987; February 20, 1987

Majority Report:  Do pass.

      Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Anderson, Cantu, Lee, Sellar, Vognild, Wojahn.

Senate Staff:Mark McDermott (786-7429)

                  April 10, 1987

House Committe on Financial Institutions & Insurance

AS PASSED SENATE, MARCH 11, 1987

BACKGROUND:

Escrow agents operating in the state are required to hold a certificate of registration issued by the Department of Licensing.  Certificated agents must have a fidelity bond, which protects the agent, and an errors and omissions policy which protects the consumer.  Banks, trust companies, mutual savings banks, savings and loans, credit unions, insurance and title insurance companies, agencies or lending institutions approved under the National Housing Act, attorneys, real estate brokers and agents who do not charge a fee, and bankruptcy trustees are exempt from these requirements.

The Director of Licensing, with the concurrence of the Insurance Commissioner, may determine that fidelity bonds and errors and omissions policies are cost prohibitive, or are not reasonably available to a substantial number of certificated escrow agents.  In this circumstance, an association of escrow agents may be authorized to organize a mutual corporation for the purposes of protecting the agents and the consumer against losses arising from escrow transactions.  In addition, the bond and error and omissions policy requirements may be waived.  Both the mutual corporation and the waivers may exist for a fixed time period not to exceed 90 days after the end of the next regular session of the Legislature.

The Department of Licensing and the Insurance Commissioner have determined that the fidelity bonds and errors and omissions policies are not reasonably available.

SUMMARY:

The fidelity bond requirement is eliminated.

The time limit on the existence of the mutual corporation is eliminated.

The time limit for a waiver of the errors and omissions policy is changed to one year.  The Director of Licensing may grant a renewal of the policy waiver.

A procedure and criteria are established which allow the Director to issue a certificate of waiver.  A new applicant applying for a certificate of registration may apply for a certificate of waiver.

RCW 18.44.060, which requires a new bond if the old one is cancelled, is repealed.

Fiscal Note:      requested

Senate Committee - Testified: Dean Morgan, Escrow Association; Arlene Zimmer, Escrow Association

HOUSE AMENDMENTS:

The amendment changes the minimum time limit for a written notice of policy cancellation from 30 days to those time limits provided in RCW 48.18.290.

Additional changes are made to clarify language in the bill.