Stewart Title faces $1.95 million fine in Washington state
Insurance commissioner alleges 195 illegal incentives, inducements
Tuesday, August 28, 2007
By Matt Carter
Inman News
Washington state officials are seeking $1.95 million in fines against Stewart Title Guaranty Co. for allegedly using illegal incentives and inducements to win business from real estate agents, brokers and agencies.
Insurance Commissioner Mike Kreidler said an investigation of records at Stewart Title of Snohomish County Inc. uncovered 195 violations of a state law that prohibits title insurance companies from giving more than $25 a year to individuals as business inducements.
In an Aug. 6 cease-and-desist order, the Insurance Commission alleged the title agency had picked up advertising costs for real estate agents and brokers, and made monthly "desk fee" payments to real estate agencies for space that often went unused. Authorities also alleged Stewart Title made donations to real estate agency charity auctions and an awards banquet, and sponsored a free training seminar for real estate professionals.
Stewart Title, in an Aug. 10 written statement provided to Inman News, said the company wanted to "be of assistance to the department and have contacted the named title agency to seek clarification regarding the items the Commissioner has enumerated."
Stewart Title did not immediately respond to a request for comment on Kreidler's latest announcement that he would seek nearly $2 million in fines. But the company will have a right to defend itself against the allegations at a hearing, which has not yet been scheduled.
Last October, Kreidler said an investigation of 11 title insurance companies found all were violating state law governing incentives and inducements. The practice was so pervasive, Kreidler said, that he would not attempt to fine companies for past violations. But Kreidler warned that future violations would lead to enforcement actions. The insurance commissioner issued an advisory in November clarifying the rules for title insurers and their agents.
In July, the commissioner fined Ticor Title Insurance Co. and First American Title $35,000 for allegedly providing inducements and incentives, but suspended all but $7,500 of the fines.
A spokeswoman for the commissioner, Sandi Peck, said Stewart Title faces heftier fines because of the greater number and severity of its alleged violations. She said an investigation of five other title insurance companies continues, and enforcement actions against four of those companies are planned.
"We're going to continue doing our spot-check investigations until the commissioner is satisfied there is compliance in the industry," Peck said. "A lot of the people within the title insurance industry are ratting on each other, so there is a lot left to do."
Many who are providing tips are "complying with the law, and are calling attention to the bad actors because they get an unfair competitive advantage."
In their initial investigation, Peck said the commission "heard from a lot of people that we needed to look at Stewart Title" of Snohomish County. "We were quite shocked to see the degree of what they were doing."
While some in the title insurance industry have welcomed the crackdown on illegal incentives, Peck said real estate agents and brokers are "upset about the actions we are taking." Some have complained that the $25 limit on gifts and incentives is unreasonable, Peck said, while others "want to know if we're taking this funding source from them, where can they make it up?"
Like the $25 statutory limit set by Washington lawmakers, Peck said, "That's not our business."
The Washington State Department of Licensing licenses real estate agents and brokers, and the insurance commissioner has no authority to take action against real estate professionals who accept inducements. A task force Kreidler has assembled will issue a report in about two months, which may include recommendations on whether to sanction those who accept inducements.
Send tips or a Letter to the Editor to
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
, or call (510) 658-9252, ext. 150.
http://www.inman.com/hstory.aspx?ID=64376
Home 
