A bill that would formally create a commission to oversee the title insurance industry sailed through a state Senate committee Wednesday.
The Colorado Title Insurance Commission would be a nine-member body with three consumer representatives, and would replace the current 15-member council that for a dozen years has only offered suggestions on how to improve the industry.
Members of the Senate Business, Labor and Technology Events committee voted 8-1 to move Senate Bill 210 to the Finance Committee after hearing testimony from homeowners who lost thousands of dollars in purportedly protected escrow funds to theft.
Doug Marion testified how American Title Services had sold his Loveland home and its CEO, Richard Talley, pocketed more than $64,000 entrusted to him.
“We assumed the proper laws were in place to protect us,” Marion told the committee. “There’s a need for greater consumer protection, which is basically nonexistent.”
Talley committed suicide with a nail gun last year as authorities were about to uncover about $2 million he’d embezzled over several years, much of it from clients’ escrow accounts.
“There are easily $40 billion of consumer money — earnest money, down payments, proceed checks, lender’s funding — that go right through a title company’s trust accounts just in Colorado each year,” said Garry Wolff, a title-insurance executive who for years has lobbied for stronger regulations. “There is no protection required in any of them, nothing to protect the consumer.”
Though SB 210 originally looked to create a commission that would regulate and discipline the industry directly, amendments by sponsor Sen. Laura Woods, R-Arvada, whittled it down to a group that would advise the state’s insurance commissioner.
“The industry discussion of this bill describes it as a codified Title Advisory Committee, … (which) already exists, except now we’re adding to it the force of legislation so that it can’t be just turned off by the division if they get tired of it,” said Tim Killcoyne, president of Town & Country Title Services, who testified against the bill.
The Title Advisory Council is made up of industry members appointed by their peers and first met in 2003. Since then, Wolff noted, there have been at least six title companies that have folded, several of them because of embezzlement.
American Title went bankrupt following Talley’s suicide and is tied up in several federal lawsuits seeking to unravel Talley’s actions.
“This could be a very good tool for the regulator,” said Bob Howe with Title Company of the Rockies. “This commission can help with consumers. We’re a niche industry that handles a lot of money. This is a valiant effort.”
David Migoya: 303-954-1506, dmigoya@denverpost.com or twitter.com/davidmigoya
