Escrow Practices Cited by Controller

State Controller Kathleen Connell said Wednesday that ongoing audits into escrow companies operating in the state have determined the industry has withheld as much as $500 million from California home buyers during three decades.

“We have found . . . an industry-wide practice of pocketing hundreds of millions of dollars from unsuspecting home buyers,” Connell told members of the National Women’s Political Caucus of Ventura County.

“These are hard-earned dollars people have set aside to buy homes.”

In May, her office filed a class-action lawsuit against major escrow and title insurance companies seeking to recoup escrow money on behalf of the state and consumers.

“Our auditors have uncovered widespread and systematic illegal business practices which suggest that escrow and title companies have been illegally holding dormant and unclaimed escrow funds,” Connell said Wednesday.

The title companies being audited include American Title Co., Chicago Title Co., Fidelity National Title Insurance Co., First American Title Co., Old Republic Title Co., Gateway Title Co., Lawyers Titles Co., United Title Co. and Universal Title Co. All have offices in Ventura County.

Since the suit was filed, two of these companies--American Title and Chicago Title--plus three escrow companies that also conduct business in Ventura County have voluntarily remitted $860,000 to Connell’s office.

“We anticipate that this payment, while commendable, is just the tip of the iceberg,” shesaid.

Other representatives of the escrow industry have repeatedly denied the accusations.

By month’s end, Connell said, she will release the names of statewide customers who may be owed funds.

“Anyone who has ever employed the services of an escrow agent in any real estate or business transaction in California could be entitled to moneys recovered,” Connell said.