Senate Bill 7732, introduced on May 2, 2025, aims to amend Section 6408 of the New York Insurance Law. Officially titled the Deed Theft: Bank and Lender Accountability Act, the bill introduces a new subsection (e) that would prevent any title insurance company organized or qualified under the article from paying claims to a lender or mortgage lender when the underlying transaction involves a “false or fraudulent” conveyance. 

According to the bill: 

“Notwithstanding any other provisions of this article, no person, firm, association or corporation organized or qualified under this article shall make payments to a lender or mortgage lender on claims based on a title insurance policy... when the transaction conveying such title is false or fraudulent.” 

This amendment could significantly impact how title insurers and mortgage lenders manage claims related to deed theft, a growing concern in major metropolitan areas. It would place the burden of verifying transaction legitimacy more heavily on financial institutions and insurers before a policy is issued or a claim is paid. 

For title insurance companies, the bill suggests a need to reinforce due diligence processes and implement stricter fraud detection mechanisms. Lenders and mortgage institutions may need to enhance verification protocols or reassess their reliance on title insurance as a failsafe in transactions involving potentially compromised deeds. 

Currently, Senate Bill 7732 has been read twice and referred to the Senate Committee on Insurance. If enacted, it will take effect 90 days after becoming law.