Erin Toll, deputy insurance commissioner of Colorado and former title insurance researcher, launched a national title insurance scandal, won a payment of about $24 million for consumers and did something no one was ever able to do before: she made title insurance sexy.

Toll’s investigation of nine Colorado title insurers eventually led to the refunding of about $24 million to consumers by First American Title Insurance Co., and sparked dozens of similar investigations nationwide in states including Florida, Washington, California, Oklahoma, Minnesota and Washington.

Even now, real estate-related companies are shaking in their boots waiting for the next shoe to drop, as the New York Department of Insurance begins a similar probe and California’s insurance commissioner asks the Department of Housing and Urban Development to pursue the home builders and banks he says were involved in insurance kickbacks.

Perhaps even more importantly, consumers are talking about a form of insurance once so obscure most people hardly knew it existed – and hence getting a better idea of their rights.

It all started with Toll, whose ongoing probe caused Fidelity National, one of the companies under investigation, to terminate its captive reinsurance treaties across the country, and also generated First American’s $24 million refund. Both companies took these actions without admitting wrongdoing.

The companies are accused of phony reinsurance contracts between title companies and subsidiaries of real estate agents, developers and lenders.

Under these alleged elaborate schemes, the title insurers agreed to give about half of the premium on title insurance policies to captive reinsurance companies created by the other conspirators. The parent companies of those captives would in turn refer business to the title insurer. The alleged arrangements harm consumers by potentially forcing up title insurance rates.

As is often the case, a succession of unforeseen circumstances united to make Toll uniquely qualified for her watchdog tasks. Perhaps more so than any other state official, the attorney learned the job from the ground up – starting out at age 16 doing manual title searches in "dusty, smelly" offices.

"It was the 1970s," said Toll, recalling the horrifically low-tech procedures then in place for title searches.

"You had to go to the Hall of Records and haul these giant big books out and search manually in alphabetical order for names. You had to do it for deeds of trust, mechanic’s liens. It was all done manually," Toll said.

"If you had seen me do it in the late ’70s, you would have said, ‘That’s exhausting.’ You get big biceps from lifting these books two and a half feet long," Toll laughed. "And you have to go through all these years for all these types of lines. They’re (the books) big and dusty and smelly."

After graduating from college, Toll worked at Stewart Title in Boulder, Colo., in the modern era, where "everything was computerized," giving her an inside look at more current practices.

"The company had to pay $10,000 a month to belong to a title plant, and that plant has people updating the records," Toll noted. "It isn’t cheap."

Later on, after becoming and attorney and joining the staff of the Colorado Department of Insurance, Toll put her unique knowledge of the industry to good use in her investigation.

Toll, who is married with children and has a warm, girl-next-door quality, hasn’t let the fame generated by her activities go to her head. She is pressing ahead with the investigation, which she clearly pursues out of dedication as opposed to self-promotion.

For example, Toll not only spoke at a national real estate conference in April, she attended the entire event, held in Washington, D.C., by the Real Estate Services Providers Council.

"I think people were shocked to see me attend the conference and not just speak," Toll said. "But I don’t think you can effectively regulate unless you understand the industry. I was not going to lose the opportunity to educate myself. Even though the cherry blossoms were in bloom and I would have liked to walk around the Potomac."

The conference focused on how the industry should handle regulation. Not wanting to be disruptive, Toll kept a low profile, attending the workshops without fanfare. This led to a certain amount of consternation. "People were saying, ‘Erin Toll is among us!’" Toll recalled.

Many presenters at the conference said that in the past, there hadn’t been much enforcement of regulations such as the Real Estate Settlement Procedures Act, known as RESPA, which regulates the mortgage-closing process, and governs title insurance referral practices. Toll said. "In the past nobody cared about title insurance. It was the ugly stepchild of the insurance world," she said.

"I think this made such an impact at least partially because of the climate right now," Toll said. "Enron, Martha Stewart, consumers are demanding the light be shined on previously unknown practices. And title insurance – no one knew what it was, but now they’re saying, ‘Hey, we want to know what is going on!’"


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