Wall Street Journal: Title Insurer Pays $4.5 million to Settle Kickback Allegations
Jul 11, 2011
The following article was published in the Wall Street Journal on July 11, 2011:
Title Insurer Pays $4.5 million to Settle Kickback Allegations
By Alan Zibel
Title insurance firm Fidelity National Financial Inc. will pay $4.5 million to settle allegations that it paid kickbacks to real-estate agents who referred business to the company.
The Department of Housing and Urban Development accused Fidelity National of breaking a federal law that governs the real estate closing process. That law, known as the Real Estate Settlement Procedures Act, bans companies from paying fees in exchange for business.
HUD alleged that Jacksonville, Fla.-based Fidelity National, one of the largest U.S. title insurance firms with a roughly one-third share of the market, paid fees to real estate brokerages that signed up for an online system that automates the real estate listing and closing process. It alleged that the payments were designed to encourage the real estate agents to use Fidelity National’s settlement services. The agreement requires Fidelity National to stop paying real estate brokers that use the online system.
“This agreement should be a signal to others that these business practices won’t be tolerated,” Acting Federal Housing Administration Commissioner Robert Ryan said in a statement Monday.
Fidelity National denied the government’s allegations, arguing that the payments were for use of the online system alone and not for orders of settlement services. Officials at Fidelity National couldn’t be reached for comment.
Title insurers ensure that consumers have clear ownership to their homes. Fees can range from several hundred to several thousand dollars. Lenders insist on the insurance to protect them against the possibility that a taxing authority, another creditor or a disgruntled heir may have a claim to the property, among other risks. But rather than shopping around, most people accept title-insurance choices made for them by a real-estate agent, mortgage company or builder.