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SANTA FE, N.M._New Mexicans should be able to save money in closing costs when they buy a home or refinance their house under legislation Gov. Bill Richardson signed into law on Friday.

The new law overhauls the state's title insurance system to provide for price competition in rates, starting in July.

Richardson said the reform measure "means homebuyers will be able to shop for less expensive title insurance rates."

"It puts money into pockets of New Mexicans who purchase and refinance homes," Richardson said at a news conference.

Title insurance is part of the closing costs people pay when buying or refinancing a home. The insurance offers protection against losses if there's a problem with the property's ownership records.

Under the current system, the superintendent of insurance sets a uniform rate that title insurance companies must charge in New Mexico.

With the changes in law approved by the Legislature, the state will establish a price ceiling for title insurance. Insurers can charge a lower rate in individual counties if it's approved by the superintendent of insurance, who heads the insurance division in the Public Regulation Commission. It's voluntary that insurers offer lower rates.

"It's going to be very beneficial for consumers," said House Speaker Ben Lujan, D-Santa Fe, who sponsored the legislation.

Mortgage rates are low across the nation, and supporters of the law said the title insurance overhaul offered another incentive for people to refinance or buy a home _ potentially helping the New Mexico housing market and economy .

"We think this bill is a modest state-level stimulus for homebuyers and homeowners," said Fred Nathan, executive director of Think New Mexico.

The Santa Fe-based independent think tank published a report in 2007 that advocated price competition in the title insurance market and estimated consumers could save millions of dollars. New Mexico, Florida and Texas are the only states in which the government determines the price for title insurance.


Lujan said the legislation was a compromise developed with the industry, the PRC and groups that advocated an end to price regulation of title insurance rates.

Other provisions of the new law:

_A listing of title insurance rates will be available to the public through the PRC. Supporters say the information can be posted on the regulator's Web site.

_Larger discounts on title insurance policies for homeowners refinancing their loans. Those provisions will take effect in May. Currently, no discount is available to someone who refinances more than 10 years after buying a home. The legislation provides for at least a 20 percent discount for a refinance between 10 years and 20 years after a home was purchased. At least a 60 percent discount will be provided for a home refinancing within three years.

_Title insurance agents can retain at least 80 percent of gross premiums as commissions. The remainder goes to the insurer. Starting in July, agents can get 81 percent of the price paid for the insurance.

_Prohibit title insurance agents from paying fees or giving "any consideration or thing of value" to a contractor, real estate broker or other person to refer customers to them.

_Indian tribes and pueblos can receive a title insurance discount for land they buy and then transfer to be held in trust by the federal government. That provision takes effect immediately.

"Hopefully we can spur some activity because the business is just not out there at this time," said James Owensby of Hobbs, president of the New Mexico Land Title Association.

He estimated about 140,000 title insurance policies had been issued last year for homeowners but said it will be lower this year because of the downturn in the economy and housing market.