SFAA Objects to Proposed Montana Rules Eliminating Aggregate Liability Provision for Public Adjusters’ Bond
SFAA advised against a proposed rule from the Montana Commissioner of Securities and Insurance that would delete a provision limiting the surety’s aggregate liability to the bond amount for the bond required from public adjusters. SFAA noted that the proposed rules could affect the bond’s availability by increasing the surety’s financial exposure. The proposed rules state that the intent of the changes is to remove superfluous language without changing the meaning of the rule. Our comments noted that eliminating the limit on the surety’s aggregate liability could result in a material, unintended change as the statute does not limit the surety’s aggregate liability.
SFAA Submits Recommendations on Oregon Mortgage Servicers License Bond Rules
SFAA made recommendations on the claims provisions to the Oregon Department of Consumer and Business Services concerning proposed rules for bonding mortgage loan servicers. The rules would require the bond to remain in place for five years after the mortgage servicer ceases to be licensed in the State. Direct actions also are permitted on the bond and claims must be filed before the bond expires. SFAA recommended that two or three years for the limitations period for claims would be more workable. SFAA also recommended that the limitations period to take action on the bond should begin when the surety cancels the bond or when the servicer ceases to be licensed, whichever occurs earlier. We recommended that the rules be clarified so that the claimant has a period of time after the bond is cancelled or the license period ends to make a claim, and that the claims period is not long that that it increases uncertainty for the surety, which could impact the availability of the bond.
The bond or letter of credit would have to be in an amount ranging from $50,000 to $200,000, based on the mortgage servicer’s total unpaid principal balance of residential mortgage loans in Oregon. SFAA did not comment on the bond amount specifically, but noted that a higher bond amount would require the bond principal to have greater financial resources based on the surety’s underwriting process.
The U.S. Environmental Protection Agency (EPA) will not adopt final regulations for its proposed financial responsibility requirements for hard rock mining operations for metals and non-metallic fuel minerals that SFAA opposed. Surety bonds would have been accepted to meet the requirement and SFAA noted that the bond requirement could have been duplicative of existing state and federal reclamation bonding requirements. We also opposed provisions that would have permitted direct actions on the bond. Other stakeholders also noted the potential for duplicative financial responsibility requirements and the potential problems with the direct action provisions. The EPA agreed with these concerns and will not move forward with its proposal.
The 2018 January/February Edition of the SFAA Newsletter has been posted. Beginning this year, each Newsletter will be available to the public. In addition to our regular Association news, we will be providing original content for our members and supporters to share. In this issue, we examine Carillion’s Collapse and Why Bonding Matters.