Fidelity enters $2.5 million settlement with Washington state
|November 7, 2005|
Nearly 600 consumers to get refunds
Fidelity National has entered into a $2.5 million settlement with the Washington State Department of Insurance for alleged kickbacks, guaranteeing nearly 600 Washington consumers a share of the settlement.
According to the agreement, some consumers who used Wells Fargo to finance their home loans were directed to Fidelity National for title insurance. In turn, Fidelity allegedly passed on a portion of the premium to a captive reinsurance company owned by Wells Fargo.
Fidelity has admitted no wrongdoing in the matter. A company spokesman did not return a message asking for comment by press time.
Washington consumers who purchased title insurance from Fidelity National for Wells Fargo loans during 2003-2004 may be eligible to participate in the settlement, the Washington insurance commissioner said last week. Refunds will range from $20 to $60.
"Home buying and refinancing can be very stressful events for people," said Washington State Insurance Commissioner Mike Kreidler in a statement. "It's disturbing to learn that two of the largest players in lending used this ritual to establish an illegal referral and kickback scheme that cost Washington homeowners thousands of dollars."
Last week, Fidelity signed an agreement with the California Department of Insurance in an investigation of alleged kickbacks in that state. Fidelity agreed to reimburse California consumers $7.7 million within 120 days, pay monetary penalties of approximately $5.4 million, and pay $175,000 to reimburse the department.
Title insurance industry practices have been in the spotlight nationwide this year, with investigations of major title insurance companies taking place in Colorado, California and other states. The probes have centered on title insurance practices of paying kickbacks to real estate brokerages, lenders and others for referring large volumes of business to them.
In April, Stewart Title of California was hit with $750,000 fines and costs by the department for alleged illegal kickbacks to real estate agents.
The Title Insurance Working Group within the National Association of Insurance Commissioners worked with Colorado and Washington state insurance regulators to probe a series of alleged phony reinsurance contracts between title companies and subsidiaries of real estate agents, developers and lenders.
Under these alleged elaborate schemes, the title insurers agreed to give about half of the premium on title insurance policies to captive reinsurance companies created by the other conspirators. The parent companies of those captives would in turn refer business to the title insurer.
The arrangements were designed to kick back a large share of the title-insurance premium in exchange for the referral of the customer to the title company, a violation of the law, and a practice that harms consumers by potentially forcing up title insurance rates, according to California Insurance Commissioner John Garamendi.
Copyright 2005 Inman News