California regulators have suspended a title insurance marketing representative and fined her employer $21,600 in the first enforcement of a new state law with "zero tolerance" for business inducements to Realtors and lenders.
The marketing representative, Lizett Alcaraz, and her employer, Commerce Title Co., were accused of providing marketing lead lists to Realtors and lenders in Riverside County as an inducement for them to refer business to Commerce Title.
The lists allegedly included notice of default lists, reverse mortgage lead lists, lists of adjustable loans coming due with phone numbers of borrowers, REO lead lists, and farm lead lists with mortgage information on real estate properties.
The California Department of Insurance said Alcaraz agreed to pay $1,570 and to refrain from marketing and selling title insurance for 30 days. Commerce Title, which is licensed in 37 California counties, agreed to pay $21,600 in penalties and $2,500 in fees and costs.
It was the first enforcement of a new law, SB 133, which took effect Jan. 1 and makes title marketing representatives as well as title companies liable for violations of anti-rebate laws.
SB 133 established a zero-tolerance policy prohibiting title insurance companies or their employees from providing inducements to Realtors and lenders, including any expenditures for food, beverages and entertainment.
The law requires that title marketing representatives hold a valid certificate of registration. So far, the Department of Insurance said it has issued 1,913 certificates.
SB 133 was endorsed by an industry group, the California Land Title Association, as regulators were contemplating a potentially more drastic step — strict enforcement of an existing law that prohibits title insurers from obtaining more than 50 percent of their business from joint ventures with real estate brokers and lenders.
Such joint ventures, also known as affiliated business arrangements (AfBAs) or controlled businesses, are a legal way for title insurers to split profits with Realtors and lenders who send business their way. …CONTINUED