Garamendi Deals Subpoenas To Title Insurers
NU Online News Service, March 9, 4:27 p.m. EST?Six title insurance companies have been subpoenaed in California Insurance Commissioner John Garamendi's investigation of suspected illegal insurer payoffs to secure business, it was announced today.[@@]
A total of nine subpoenas were issued last week, according to a statement from the Department of Insurance.
Mr. Garamendi said he had found growing evidence that "title insurers and others have scammed consumers in the name of greed." He promised to "find out how widespread this problem is and to put a stop to this illegal activity."
So far the department has served a total of 13 subpoenas, and Mr. Garamendi said more will follow. He identified companies that have been served as LandAmerica and Fidelity National Title, two of the largest in the nation.
Others served were William Lyon Homes, KB Home, Re/Max, United Home Mortgage Corp, Shea Financial Services, and Wells Fargo Home Mortgage.
California follows Colorado in probing title coverage. Officials have charged that in exchange for developers and mortgage lenders arranging for their customers to use title insurers' services, the title insurers have paid kickbacks.
The payoffs allegedly took the form of premiums for reinsurance issued by captive insurers created by the firms funneling business to the title insurers.
Mr. Garamendi called the reinsurance contracts "phony" and said they potentially harmed consumers by forcing up title insurance rates.
Title insurance representatives have said that they made the arrangements after checking with the U.S. Department of Housing and Urban Development.
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