Title Insurer Settles Kickback Charges With District for $500K
District of Columbia Attorney General Brian L. Schwalb reported that Universal Title will pay $500,000 after an investigation by his office found that the company was engaged in an illegal title insurance kickback scheme.
The attorney general’s office said Universal offered real estate agents discounted ownership interests and lucrative profit-sharing in entities that it created for the purpose of incentivizing the agents to make business referrals to Universal.
“This anticompetitive, conflict of interest-plagued conduct restricted District homebuyers’ ability to shop for the best price and service when purchasing title insurance and escrow services and also harmed law-abiding competitors in the title insurance industry,” the announcement of the settlement stated. The insurer’s actions were all in violation of the District’s Consumer Protection Procedures Act (CPPA), according to officials.
The insurer denies the allegations referred to in the settlement.
This settlement follows past enforcement actions regarding kickbacks in the title insurance industry. In August, the state secured more than $3.2 million from four other title insurance companies.
Under the terms of the settlement, Universal will pay $500,000 to the District, which Schwalb said will devote a portion of the amount to restitution for affected consumers.
Universal will also stop giving real estate agents consideration for the referral business and will either cease its title insurance operations in the District or divest real estate agents from their ownership interests in the spin-off companies.
Required by most lenders for home loans, title insurance protects a lender and a homebuyer from defects in a title to property. Real estate agents commonly suggest title insurance companies to their clients. However, both federal and District laws prohibit kickbacks and other forms of compensation for the referral of title insurance and escrow business.
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