Fidelity National Financial has agreed to refund $2.2 million to central Florida residents in the wake of an investigation by Florida’s Department of Financial Services into alleged illegal referrals to title agencies for business, the department said today.
Under the refund program, Fidelity National title customers who paid for title insurance provided by one of 60 title agencies in central Florida will receive 30 percent of the title insurance premium paid at the time of closing within the next 120 days. Fidelity also paid a $1 million fine, the department said.
Fidelity National Title Insurance Co. did not admit wrongdoing and cooperated with the department, according to Tom Gallagher, Florida’s chief financial officer, and the consent order in the case. Fidelity officials did not return phone calls asking for comment by press time.
Last week, Fidelity agreed to pay about $1.2 million to consumers nationwide to settle Colorado’s investigation of alleged title insurance-related kickbacks. Fidelity has reached similar settlements with Arizona and California’s insurance departments.
Colorado’s investigation of nine title insurers, including Fidelity, led to the earlier 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.
In the Florida case, Fidelity also agreed to terminate its relationships with title insurance agencies that allegedly received illegal payments for referrals of title insurance business. The department alleged that Fidelity set up bogus affiliated business arrangements to funnel improper payments.
Such arrangements are barred under state laws and the federal Real Estate Settlement Procedures Act, known as RESPA.
Florida’s Financial Services department is also taking action to revoke the licenses of the 60 title agencies allegedly involved in these illegal arrangements. Investigators with the department’s Division of Agent and Agency Services said the alleged sham entities did not have separate telephone lines or offices, did not have full-time employees, and business operations were in name only.
“The recent housing boom in Florida is a big component of our state’s recent economic success,” said Gallagher. “This office will continue to do everything it can to keep our economy growing, and protect Florida homeowners during the process of purchasing a home.”
Fidelity National title customers who paid for title insurance from any of 60 central Florida title agencies will get a refund. The agencies include 21st Century Title Agency, Capital Title and others, listed on the department’s Web site.
Companies under investigation nationwide for title insurance misdoings 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.
On Sept. 7, the Arizona Department of Insurance said Fidelity had agreed to refund more than $600,000 to nearly 4,000 title insurance policyholders in Arizona as a result of a multistate settlement.
In July, Fidelity reached a settlement with the California Department of Insurance following the agency’s investigation into captive reinsurance practices. While admitting no wrongdoing, Fidelity agreed to refund approximately $7.7 million to those consumers whose California property were subject to a captive reinsurance arrangement and also agreed to pay a penalty of $5.6 million.
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