Missouri regulators have initiated enforcement actions against 16 title insurance agencies accused of charging rates not approved by the state and misrepresenting to consumers the actual cost of a policy.
Ten of the companies hit with administrative complaints by the Missouri Department of Insurance last week are also accused of using unfair rate schemes that resulted in higher charges for less knowledgeable customers. Two of those companies are suspected of using rebates or kickbacks to drum up business.
The title insurance agencies were given 15 days to request hearings to respond to the charges, which stemmed from a series of onsite investigations launched Oct. 24.
Robert Mecfessel, president of the Missouri Land Title Association, told the St. Louis Dispatch that the title insurance agencies had not violated the law or acted unethically.
“It’s our belief that the law is ambiguous and confusing and subject to various interpretations by the companies and the department,” Mecfessel said.
The Missouri Department of Insurance backs legislation to reform the industry, citing the closure of five title insurance agencies in a two-year period as evidence that stricter regulations are needed. In at least three instances, title agencies closed their doors when company owners or executives were convicted of raiding escrow accounts and sentenced to prison.
SB 953, a bill that would have restricted the practice of co-mingling escrow accounts, required title insurance companies to perform yearly audits of title insurance agencies, and authorized the department to enforce the federal Real Estate Settlement Procedures Act (RESPA), passed the Missouri House in May on a 154-2 vote but was delayed by a Senate filibuster.