Old Republic Title Co. has agreed to pay California regulators $399,000 to settle allegations that the company provided illegal rebates to lenders as an inducement for business.
In announcing the settlement, the California Department of Insurance said Old Republic provided discounts to certain lenders, charging them a discounted escrow contract rate offered for multiple loan transactions, and a portfolio residential refinance rate, even though the lenders did not meet the qualification criteria for those rates.
The Department of Insurance said it began investigating Old Republic in April, after receiving written complaints that the company was not adhering to the rates on file with regulators for residential title insurance and escrow services.
State insurance regulators said they discovered "a high incidence of rating errors that resulted in undercharges," which is considered unlawful rebating.
"While this behavior may seem innocuous at first glance, unlawful rate inducements raise rates for everybody," Insurance Commissioner Steve Poizner said in a press release. "Enforcing adherence to filed rates is essential for transparency in rates for consumers and businesses in California, and helps ensure fair title insurance pricing for everyone."
Old Republic agreed to pay $375,000 in penalties and $24,000 to the California Department of Insurance for the reimbursement of attorney fees and costs, regulators said.
Old Republic, which did not respond to a request for comment, last ran afoul of California insurance regulators in December 2001, when the company agreed to pay $1 million to settle allegations that it provided illegal inducements to real estate agents.
The inducements allegedly included more than 4,000 computer training courses, promotional booklets, continuing education courses, and cold-calling parties.
According to Old Republic’s most recent quarterly report to investors, the company is a defendant in lawsuits in Connecticut, New Jersey, Ohio, Pennsylvania and Texas that allege Old Republic failed to provide consumers with reissue or refinance credits on premiums charged for title insurance covering mortgage refinancing transactions, as required by filed rate schedules or state rating bureaus.
The Pennsylvania lawsuit has been certified as a class-action lawsuit, the company said, and settlement agreements have been reached in the Connecticut and New Jersey cases. Neither settlement is expected to exceed $2.9 million, Old Republic disclosed.
***
What’s your opinion? Leave your comments below or send a letter to the editor.
