When Washington state officials this week announced the results of an 18-month investigation into the use of incentives and giveaways in the title insurance industry, they found the practice so pervasive that they decided to focus on future prevention and compliance rather than attempting to punish companies for past wrongdoings.
But that doesn’t mean homeowners who bought title insurance won’t sue the companies, claiming they were overcharged.
A lawyer for two couples who sued their title insurance companies Wednesday says he’s seeking class-action status to represent others who bought title insurance from the companies.
Washington State Insurance Commissioner Mike Kreidler “really made it very clear that consumers are on their own, and that’s what this lawsuit is,” attorney Thomas Loeser told the Seattle Post-Intelligencer. “It’s the consumers going after these companies for the illegal activities.”
The lawsuit names First American Title Insurance Co. and Pacific Northwest Title, but others are vulnerable to lawsuits as well, Loeser told the newspaper. The lawsuit seeks to recover the amounts the companies allegedly overcharged the plaintiffs and an injunction blocking further illegal inducements.
Washington state’s investigation of 11 title insurance companies found all had allegedly violated a law limiting the use of incentives and inducements to $25 per person per year. Some companies exceeded those limits by thousands of dollars, illegally wining and dining real estate agents, bankers and lenders in an attempt to obtain business referrals from them, Kreidler said. The inducements are prohibited because the costs are presumably passed on to consumers.
The report singled out First American as the top spender, averaging more than $120,000 a month in incentives and giveaways.
Loeser’s lawsuit claims Romulo and Purita Lorenzo of Mill Creek paid First American $515 for title insurance when they refinanced their home in 2004. Catherine Blaylock and Jill Maccinnes of Bellevue paid $490 for title insurance from Pacific Northwest for a condominium they purchased in August.
First American — which acquired Pacific Northwest Title in 2004 — provided Inman News with a written statement that addressed Washington state’s investigation, but which did not mention the lawsuit.
The statement said that although First American disputes some of its findings, the company welcomes “the clarity this report provides and we are in complete agreement with the suggested recommendations.”
First American “has sought clarity and uniform enforcement rules within our industry” and will “continue to work closely with the Office of the Insurance Commissioner and will do everything within our power to effect the changes outlined in Mr. Kreidler’s report.”