Stewart Title Fined $750k for Illegal Rebating
by Sharon Hassler, President, Go Get Experts
More tips on RESPA law, guidelines and violations for real estate agents and loan originators from former HUD investigator and RESPA expert, Dr. Gary Lacefield.
This week Dr. Lacefield discusses a 30-month probe into Stewart Title of California, Inc. The company reached a settlement of $750,000 plus costs of $160,000 for inducements to agents.
View the RESPANewsUpdate.com video here. This educational video and the RESPANewsUpdate.com website were created by WebCasting.com, based in Dallas, Texas. This video is provided for free, compliments of Premier Mortgage Funding, Inc.
For more about Dr. Lacefield, visit RiskMitigation.net or GoGetRealEstate.com/Get/GLacefield.
Stewart Title Fined $750k for Illegal Rebating
John Garamendi California Commissioner of Insurance signed an order fining Stewart Title of California, Inc. $750,000 and ordering them to pay $160,000 in costs for illegal rebating activity uncovered during a 30-month investigation.
A settlement reached with Stewart Title calls for the company to cease its use of inducements given or paid to real estate agents in exchange for the referral of business, a practice that is illegal in California.
John Garamendi stated that “Time and again we have caught the title insurance industry breaking the law in order to line its pockets at the expense of consumers. Let this latest fine be a warning: we will find these companies who continue to pay kickbacks, and I will do everything in my power to see that they are punished for their actions.”
The investigation found that the inducements Stewart gave to agents amounted to $594,102.67. They allegedly came in the form of payments for business support services, providing gift certificates and door prizes for Realtor events, making rent payments, funding special events and sponsoring broker activities. The activity reportedly took place in Los Angeles, Orange, Riverside, San Bernardino and San Diego Counties.
Mike Skalka, general counsel, Stewart Title Guaranty Co. stated that, “Stewart strives to follow all applicable federal and state laws regarding business practices on marketing activities; unfortunately, the California Department of Insurance has not clearly defined what constitutes a violation.” He stated that “Stewart has a strong reputation for integrity. We continue to seek guidance from governing bodies concerning lawful marketing activities.,”
The commissioner is currently also investigating the title industry for alleged kickbacks paid to captive reinsurance companies controlled by developers, lenders, builders and real estate firms. Evidence gathered has reportedly shown that as much as half of the premium consumers pay for title insurance is then paid by the title insurer to the captive reinsurance entity, allegedly to induce the captive’s owner to refer more business to the title insurer.