Investors Title to Pay Fine

Investors Title Co. agreed to pay $1 million to settle accusations that it paid real estate professionals to steer business its way, state Insurance Commissioner John Garamendi said Thursday.

The settlement was the latest announced by Garamendi’s office, which has been investigating title industry practices for more than a year.

Last month, three of the nation’s biggest title insurers paid $38 million in customer refunds and penalties for allegedly participating in sophisticated kickback schemes that Garamendi said boosted consumers’ rates.

Title insurance is required by lenders in home purchases and refinancings to ensure that property ownership is undisputed. In California, it is one of the largest line items in closing costs paid by home buyers and sellers.

But many, including Garamendi, contend that title insurance is overpriced, given the small risk that property ownership is contested. And many consumers don’t realize they have the right to shop around for policies.

The lack of disclosure has prompted regulators to step up scrutiny of the industry at a time when home prices are rising in much of the nation.

Regulators investigating Investors Title Co. found that the Glendale-based insurer had fabricated receipts for gifts totaling more than $108,000. The company also paid $145,000 in free printing, postage and other services to real estate agents, builders and lenders. Those parties weren’t named by Garamendi’s office.

Executives from Investors Title couldn’t be reached for comment. The fine, Garamendi said, is four times the amount of the distributions in question. Under state law, it’s illegal for title insurers to pay kickbacks to win business.

“What title companies need to realize is these illegal rebates aren’t worth it and we will uncover it,” Garamendi said.

Investors Title agreed to end the rebates and pay the fine, Garamendi said. It also agreed to suspend employees who were involved with the schemes for 10 days.

The investigation began in June 2001 and covered activities from May 2000 to November 2001. The settlement does not provide for customer refunds, Garamendi’s office said.