Real Estate News

Renewed federal order uses title insurance companies to increase visibility

Published: 24 Feb 2017

Last year, the government took great steps to scrutinize luxury home purchases by involving title insurance firms. The Financial Crimes Enforcement Network of the Department of the Treasury specifically set requirements for title companies to reveal home buyer information.

Now, the organization has reaffirmed these requirements for the next 180 days, and take place across six different metropolitan areas throughout the country, including New York City, Los Angeles County and Miami-Dade County.

In a press statement on the decision, the Network, also known as FinCEN, said that title insurance companies can contribute to investigations as the organization looks for possible crime. The renewed effort involves Geographic Targeting Orders (GTOs) that come with varying price thresholds based on the area. The highest of these is $3 million for the borough of Manhattan, and the lowest was for Bexar County, Texas, at $500,000, as this diagram said.

The decision also reportedly has the approval of industry groups, including the American Land Title Association. Jamal El-Hindi, FinCEN's acting director, said that the orders will help the organization take further steps to proper enforcement measures.

"The subject of money laundering and illicit financial flows involving the real estate sector is something that we have been taking on in steps to ensure that we continue to build an efficient and effective regulatory approach." he said.

Using these orders, FinCEN hopes to increase transparency in real estate and make it easier to identify buyers. The title insurance businesses would, under this plan, help regulators determine actual purchasers and see through the possible veil of "shell" companies for better visibility.

In October, The Real Deal recorded some of the arguments against these orders and reasons why opponents have been skeptical from a recent panel. These include concerns about problems within the orders themselves, as well as a possible drop in luxury sales because of it.