Arizona launches real estate title insurance investigation
|May 5, 2005|
Follows in footsteps of Colorado, other states
Arizona's five largest title companies are under scrutiny as the Department of Insurance launches an investigation into their activities, following the example of Colorado, California and a number of other states.
The department is now looking at "the activities of the top five title insurance companies by market share," said Erin Klug, a spokeswoman for Arizona's Insurance Department. Those companies include First American Title, Fidelity National Title, Chicago Title Insurance Co., Lawyers Title Insurance Corp. and Ticor Title Insurance Co.
The investigation was prompted by a Colorado investigation of alleged kickbacks in the title industry that began in February, setting off probes nationwide. As a result, First American Title Insurance Co., one of the companies under investigation, admitted no wrongdoing but agreed to pay $24 million to home buyers in eight states.
California Insurance Commissioner John Garamendi is currently investigating the industry for illegal kickbacks paid to captive reinsurance companies controlled by developers, lenders, builders and real estate firms. In April, Garamendi fined Stewart Title of California $750,000 for involvement in the alleged schemes. Also, California's state legislature is currently considering an anti-kickback bill.
"We are reviewing specific allegations that have been investigated in other states to see if those same activities have occurred in Arizona and if they break any laws," Klug said.
Calls from "folks in the title industry" who had concerns about "level playing fields" also helped spark Arizona's investigation, Klug said. She said the calls from insiders came within days of the news of Colorado's investigation.
Title insurance is required by lenders to protect themselves and home buyers in case of property-ownership disputes. Colorado officials have alleged that insurance companies were paying kickbacks for business that was funneled to them by builders and others.
Copyright 2005 Inman News