Entries in illegal kickbacks (3)
Title industry shakedown in Minnesota
The St. Cloud Times reported today that six Minnesota title companies were shut down by state authorities.
From the article:
The [commerce] department said in a news release on Tuesday that Premier Title Insurance Agency created and controlled “sham” affiliated businesses and paid kickbacks or other valuable items to partners for referrals of real estate closings and title insurance businesses. Fake businesses were set up with real estate agents, mortgage originators and developers to get around state and federal laws. The laws prohibit compensation for a referral for real estate settlement.
Ed Rybczynski
in title insurance, title industry, title insurance industry, affiliated business, illegal kickbacks, illegal kickbacks by title industry, illegal referral fees, illegal referral fees paid by title industry, affiliated business arrangements
|
3 Comments
| 
Email
| 
Print
Two Different Settlement Sheets?
Earlier this week, I posted, “The Silent Second Revisited”, on Active Rain. Jeff Belonger, a New Jersey mortgage banker made the following comment: “In regards to your throw away second. I might have to disagree on the fact that this hardly happens if you need a title company to do 2 settlement sheets. Sure, I am sure there are a few out there…. but they aren’t as likely or as desperate as a lender or realtor trying to do this. And in this case… they wouldn’t bother with it, unless it was a very small title company with not much at stake. A larger title company, making money already…having many clients…. I would have to say that they wouldn’t take part in this.”
Until recently, I would have agreed whole-heartedly with Jeff who apparently has a great deal of confidence in the title industry. In October, a study into the marketing practices of title companies was released by Mike Kreidler, insurance commissioner for Washington State. Kreidler’s investigation took 10 months to complete while probing into industry practices during an 18 month period. The results were alarming to say the least. Some of the most important and influential players in this nations title industry were guilty “per se” of blatant violations of federal and state laws that were promulgated to protect the interests of consumers. The laundry list of items and activities paid for illegally by title insurers includes expensive gifts, golf tournaments, extravagant parties, ski trips, shopping trips and tickets to sporting events. The violations were so rampant and wide-spread that regulatory enforcement was a practical impossibility. In one case, the report speculates that a particular underwriter was able to “attain superior market share” only by paying illegal inducements.
Initially, Kreidler’s interest in title industry practices was sparked by an inquiry by Colorado officials into a scheme contrived by title insurers, captive re-insurance arrangements. A technical description of captive re-insurance arrangements is beyond the scope of this commentary. A long story short, a number of title insurers hid behind the veil of an obscure insurance concept to illegally compensate sources for directed title business.
Equally as disturbing is a dramatic increase in the incidence of class action lawsuits against title insurers alleging anti-competitive practices (pricing) and failure to disclose material facts to consumers. It’s safe to say that the title industry is dominated by a handful of insurers following an aggressive stream of acquisitions. Title insurers employ armies of attorneys who provide advice and guidance to title agents everyday. What are title agents to do when underwriters fail to exemplify ethical and proper behavior? I hope that everyone takes a couple of minutes to read the report and form a personal opinion.
Ed Rybczynski
in best practices for title companies, title insurance, title industry, title insurance industry, respa, illegal kickbacks
|
3 Comments
| Email
| Print
Something of Value
A site named VideomagazineTV recently featured an film clip worth viewing, 6 Title Companies are Fined for Giving Away Free Virtual Tours. The segment, narrated by Dr. Gary Lacefield, highlights a recent HUD investigation into the marketing practices of 6 Texas title companies. The companies offer virtual home tours on their web-sites while charging some realtors for the service and not others. HUD determined the virtual tours to be an inducement for business under Section 8(a) of RESPA and fined the companies an aggregate amount of $130,000. The feds, concerned that realtors feel “untouchable” by state regulatory actions, have expressed interest in pursuing actions against those who accepted “something of value” in exhange for business. In this case, the HUD police took the form of contract investigators from Fairfax based Technical Analysis Center (T.A.C.). The title companies are allowed to continue offering the virtual tours as long as appropriate fees are charged.
Ed Rybczynski
in title insurance, title industry, title insurance industry, respa, illegal kickbacks
|
Post a Comment
| Email
| Print