NU Online News Service, Oct. 14, 3:48 p.m.EDT

New York's top insurance regulator announced that he had formeda special enforcement unit to pursue crimes related to titleinsurance.

Superintendent James J. Wrynn said in a statement he has createda special Mortgage and Title Unit to fight crimes "committed bycriminals attempting to enrich themselves at the expense ofconsumers, financial institutions and municipalities."

"Complaints alleging title insurance premium theft haveincreased with the downturn in the economy. The insurancedepartment is going to be very vigilant and is channeling itsresources to enhance its ability to identify and root out this typeof criminal activity," Mr. Wrynn said.

He noted the recent arrests of two men accused of stealingnearly $6 million in title insurance premiums, as well as othercases involving complex criminal schemes targeting indebtedconsumers.

Title insurance policies are designed to protect buyers andlenders in real estate transactions by ensuring that sellers havelegal title to properties being sold. Title insurance is requiredin virtually all real estate transactions, the announcementnoted.

While the title insurance business is regulated by the insurancedepartment, there are currently no licensing requirements forindividuals selling the insurance, according to the department.

Unlike life or property and casualty insurance agents who arerequired to have specific professional qualifications and whoselicenses may be revoked for criminal activities, there are no suchrequirements for individuals selling title insurance, the agencysaid.

The department said it has urged the Legislature to approvelegislation that would require licensing of title insuranceagents.

Title insurance agents, said Mr. Wrynn, "in addition toproviding title insurance, hold large sums of money includingmortgage recording fees, real estate taxes, and other fees relatedto commercial and residential real estate transactions.

"The lure of these funds, combined with the downturn in theeconomy, appears to be fueling an increase in title insurancerelated crimes."

The new unit is organized within the New York State InsuranceDepartment's Frauds Bureau and headed by Deputy Chief InvestigatorHarry Jackson. The Mortgage and Title Unit will focus oninvestigating complaints of alleged fraud involving title insurancetransactions, it was explained.

The insurance department said its investigators have joinedother law enforcement agencies, including the FBI and U.S.attorneys, in investigations that have led to the recent arrests ofthe presidents of two title insurance companies.

In May, the department said Brian H. Madden, the president ofone of the largest independently owned title insurance agents inNew York State, was arrested for allegedly misappropriating morethan $5 million in real estate transaction fees that were collectedfrom property sellers and buyers and that were supposed to be paidto municipalities.

In July, Jonathan Boxman was arrested for allegedly defraudingtitle insurance clients of more than $1.7 million.

Another case, said the department, involved Aaron Dare, whopleaded guilty in April to grand larceny after being charged in a59-count indictment. Mr. Dare was accused of defrauding Albany areahome sellers, buyers and banks by carrying out schemes thatincluded obtaining multiple mortgages on single properties.

Mr. Wrynn warned consumers to be wary of schemes involving titlefraud used by so-called mortgage rescue companies.

He said that spurred by the downturn in the economy, companieshave sprung up offering a variety of schemes promising to helpconsumers who fall behind in mortgage payments, and these groupshave targeted financially troubled homeowners, low income peopleand others, including legitimate title insurance companies.

The schemes have included such tactics as the use of "strawbuyers" to purchase properties using false loan applications; theuse of significantly inflated property values to obtain mortgages;and the enticement of financially troubled homeowners to sell theirhomes in exchange for fraudulent lease-back arrangements, hesaid.

New York consumers suspecting fraud in connection with realestate transactions were urged to contact local law enforcementauthorities or the insurance department by calling1-888-FRAUDNY.