Progressive Title Settles Agent-Kickback Case
The title insurance arm of L.A.-based real estate brokerage Fred Sands has agreed to pay $85,000 to settle charges that its Southern California offices paid illegal kickbacks to real estate agents for customer referrals, according to state regulators.
The settlement with Progressive Title is part of an Insurance Department investigation into allegations that title companies routinely shower real estate agents with illegal cash rebates and other incentives to win title insurance business. Regulators fear that such arrangements, which violate state and federal law, can lead some home buyers to pay more for title insurance based on the recommendation of agents receiving kickbacks.
Title insurance, which can cost between $300 and $1,000, is required by lenders and protects home buyers against liens or previous legal problems involving the property being purchased.
“Title rebates are an unfortunate and illegal practice in the title insurance business, and we seem to be seeing more and more rebates in the field,” state Insurance Commissioner Chuck Quackenbush said in a statement. A state Senate hearing on title insurance company practices is scheduled for today in Sacramento.
A state investigation of Progressive Title, a division of Fred Sands, found that the firm gave rebates--in the form of prizes--to real estate agents as well as customers. Progressive Title also cut rates for some customers and used rates that had not been sanctioned by the Insurance Department.
Officials of Fred Sands and Progressive Title were not immediately available for comment. Under the settlement announced Monday, Progressive agreed to stop the practices and pay a $50,000 fine and $35,000 for the state’s legal expenses and consumer education.
