Title Insurance

First American Corp. of Santa Ana, the largest U.S. title insurer ranked by revenue, and 13 other insurers have been sued by homeowners in New York over claims that they fixed prices. The title insurers fixed prices in New York at rates about 67% higher than the U.S. average, says a class-action complaint filed Feb. 1 in federal court in Central Islip, N.Y. The Title Insurance Rates Service Assn., or TIRSA, a group of state title insurers, functions as a cartel, the suit alleges.

Do you know the difference between credit rescoring and credit repair? Apparently, some lenders don't. As a result, they are refusing to fund mortgages that they otherwise would approve. At the same time, some title companies are starting to play hardball with borrowers who have recently undertaken home improvement projects. Even if the work is relatively minor, and even if it has been completed, the companies are refusing to issue title insurance policies, effectively stopping refinancings in their tracks.

"Title Insurance Makes Certain Your Home Remains Yours" (May 20) appeared to be a nationwide treatment. Actually, the only area of the country that follows the practices outlined is New York state and several generalities were made that are potentially misleading. Consumers who pay for title insurance will find that only a small percentage of closing costs are for title insurance to provide indemnity against covered title risks, including failure of title resulting from forgery and to provide legal defense against covered claims whether valid or not. The article stated that title insurers check permits and the validity of certificates of occupancy.

First American Financial Corp. was known as Orange County Title Co. and had only one office when Donald P. Kennedy, fresh out of law school, joined the family firm in 1948. When Kennedy began leading its expansion beyond the county lines in 1957, the title insurance company had annual sales of less than $1.5 million. By 2006, First American was one of the world's largest title insurers and was developing vast databases that helped transform the real estate industry. It had hundreds of offices in the United States and abroad and revenue topping $8 billion - an expansion attributed to Kennedy, who died Saturday at his home in Santa Ana after three years of declining health.

First American Corp. agreed to a $5-million settlement to resolve a Florida investigation into whether it made improper payments to real estate agents and mortgage brokers to win business. The accord also calls for a monitor to review Santa Ana-based First American's business practices for one year, according to a statement from Florida's insurance commissioner.

California Insurance Commission John Garamendi said Thursday that he would hold hearings in January as a first step toward forcing title insurers to cut rates. Garamendi accused a handful of title companies with creating an uncompetitive market, especially in Southern California. A new study shows escrow fees are twice as high in Los Angeles as in San Francisco, he said. The title insurance industry called Garamendi's threat politically motivated. He is running for lieutenant governor in 2006.

Fidelity National Financial Inc., a title insurance holding company in Irvine, said Friday that it has agreed to acquire two title insurance companies from Reading, Pa.-based Meridian Bancorp for a combination of stock and cash. The two Meridian subsidiaries are Meridian Title Insurance Co. in Reading and American Title Insurance Co. in Miami. Fidelity said the deal will enhance its presence in the U.S. market by adding operations in East and Midwest states.

A landmark legal battle is taking shape for homeowners and mortgage refinancers--one that could stand in the way of huge savings for consumers nationwide. The national lobby representing title insurance companies and agents filed suit just before Thanksgiving to block a lower-cost mortgage market competitor. The American Land Title Assn.

SAFECO Title Insurance Co. has been renamed Security Union Title Insurance Co. The firm was purchased by Chicago Title & Trust Co. in January, 1987, and the name change was part of the sales agreement.

Fidelity National Title Insurance Co. has moved its Ventura County operations center to Camarillo from Oxnard. All title insurance covering properties in the county will be processed at the new location on Paseo Camarillo, but escrow branches will be maintained in Ventura, Oxnard and Thousand Oaks. The Camarillo office will also offer escrow services.

If you finance your home through the normal lending process, a title search will undoubtedly turn up any liens for delinquent property taxes, unpaid loans and unsettled claims by subcontractors for labor and materials. Titles aren't exactly riddled with hidden defects, but problems sometimes arise. Some of the more common hidden deficiencies include forged deeds recorded in the name of a fictitious owner, conflicting wills filed by heirs of a previous owner who had bequeathed the property to more than one person and missing heirs who turn up years later with a legitimate claim to a house.

After more than a century in business — and more than two years of planning — the time has arrived to split up First American Corp., the Santa Ana real estate services giant that employs more than 30,000 people and bills itself as America's biggest provider of business information. On Tuesday, each share of the company will be replaced by a share in each of two companies: the original title insurance and escrow business, which will trade as First American Financial Corp.

During the subprime loan era, it's well documented that lenders took all kinds of shortcuts -- such as failing to verify borrowers' employment or income -- to sell mortgages. Now Bank of America Corp., the nation's biggest mortgage lender, is saying the nation's second-largest title insurer did much the same thing and should be on the hook for more than $500 million in losses. In a lawsuit filed earlier this month, BofA alleged that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches.

California labor regulators have settled a lawsuit with a bankrupt title insurance company, recovering $4.29 million in back wages for 633 employees who were laid off in 2008. Denver-based Mercury Cos. abruptly closed the doors of affiliates operating in California and failed to pay workers wages, vested vacation benefits, commissions, expenses and notary fees, the state had contended. "In this case, a company closed without providing the proper notification and without paying final wages as required by law and was found to owe over $4 million in back wages," state Labor Commissioner Angela Bradstreet said.

First American Corp., one of the nation's largest title insurers, lost $8.3 million in the third quarter because of declining sales of title insurance and rising costs related to the housing foreclosure crisis. The net loss of 9 cents a share contrasts with a year-earlier profit of $46.6 million, or 49 cents a share. Revenue at the Santa Ana company fell 26% to $1.5 billion.

First American Corp. of Santa Ana, the largest U.S. title insurer ranked by revenue, and 13 other insurers have been sued by homeowners in New York over claims that they fixed prices. The title insurers fixed prices in New York at rates about 67% higher than the U.S. average, says a class-action complaint filed Feb. 1 in federal court in Central Islip, N.Y. The Title Insurance Rates Service Assn., or TIRSA, a group of state title insurers, functions as a cartel, the suit alleges.

Safeco Title Insurance, a Panorama City concern that ranks among the nation's top 10 title insurers, has agreed to be acquired by Chicago Title & Trust for $85 million. The purchase will give the Chicago company overall title insurance assets of $419 million, rivaling Los Angeles-based Ticor Title Insurers as the largest in the field. The deal is expected to close around year-end, assuming it gains clearance from state and federal regulators. Publicly held Safeco Corp.

The New York State Insurance Department on Thursday approved 15% rate reductions for title insurance companies operating in that state after an investigation into rebates and referral fees by state Atty. Gen. Eliot Spitzer and the department. The reductions reflect similar moves in California, where title insurers agreed to pay more than $25 million in fines and consumer rebates last year. The state Insurance Department is continuing negotiations with the industry about possible rate reductions.

You buy car insurance in case of an accident. Health insurance covers you if you get sick. Homeowners insurance helps you rebuild after a fire. But what do you get when you buy title insurance? Americans spend more than $16 billion annually for title insurance when buying, selling or refinancing their homes. But few people question the expense, even though they're probably paying too much, say consumer advocates and government regulators.

If you've ever purchased title insurance, chances are you went with the company recommended by your real estate agent. But by shopping around, you might have been able to save yourself hundreds of dollars. Don't be surprised, however, if you feel pressured to go with a specific title company. State authorities have repeatedly sanctioned title insurers for giving illegal gifts and kickbacks to real estate agents, lenders and builders to steer business their way.