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Letter to the editor

Title company to pay $5M

First American says it did nothing wrong but agrees to close partnership companies.

By HELEN HUNTLEY, Personal Finance Editor
Published November 17, 2007

Florida's second-largest title insurance company will pay $5-million to settle charges that it ran an elaborate kickback scheme to build its business, state and federal officials said Friday.

Regulators say that First American Title Insurance Co. illegally paid real estate agents, mortgage brokers, banks and home builders for referrals by making them partners in sham title companies. Eighty-four of these companies were created to funnel business to First American and payments to those making the referrals, authorities said.

First American denied breaking any laws, but agreed to shut down the partnership companies. First American will pay $5-million to the three agencies involved in the investigation and settlement, the Florida Department of Financial Services, the Florida Office of Insurance Regulation and the U.S. Department of Housing and Urban Development.

"We will not tolerate anyone who violates insurance laws designed to protect the public in order to gain an unfair advantage over their competitors," said Alex Sink, Florida's chief financial officer.

Insurance Commissioner Kevin McCarty said the referral scheme is a further indication that the regulations governing the title insurance industry need to be reformed.

First American says the partnerships were legal when they were created, but the company recognizes "the regulatory landscape is changing" and that it intends to fully comply. The company said homeowners did not pay more for title insurance as a result of the arrangement.

First American is one of the largest title insurers in the nation. It had 18 percent of the Florida market last year, writing $442-million in direct premiums. It is part of First American Corp., based in Santa Ana, Calif. Also under the First American umbrella is First Advantage Corp., a St. Petersburg-based background screening company.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified November 16, 2007, 23:21:24]