Vested Land Services LLC has long avoided joint ventures and other business arrangements with mortgage brokers, real estate agents and attorneys. Unfortunately, in these cases, the end-user of the title insurance process - the homebuyer or homeowner - usually doesn't know she is being steered to a title agent that has a financial arrangement - a kickback - with the lender or real estate agent or attorney. Sometimes it's disclosed but in a fashion designed to avoid the customer's curiosity as to the nature of that arrangement.
Moral of the story -
know your title insurance agent!
A recent settlement in a case involving a national lender and title insurance company was made public. Here's the news release from Bloomberglaw.com
Title Insurance Kickback Case Ends in $1 Million Settlement
Deal
Aug. 11, 2021, 3:07 PM
https://news.bloomberglaw.com/banking-law/title-insurance-kickback-case-ends-in-1-million-settlement-deal
Suit one of several alleging schemes between lenders,
insurers
Judge advanced case in January after initially dismissing it
Sierra Pacific Mortgage Co. will pay $990,000, plus up to
$280,000 in legal fees, to resolve racketeering claims over an alleged scheme
to refer mortgage borrowers to a title insurer that gouged them and kicked back
some of its excess profits, according to a federal court filing in Baltimore.
Each of the approximately 307 homeowners ripped off by the
conspiracy would get about $3,200 out of the settlement, the lead plaintiffs
say in a motion seeking preliminary approval for the deal from Judge George
Levi Russell III.
That recovery would provide a “substantial benefit,” given
that “in most instances this award is many times more than the kickbacks paid”
or “the increased costs resulting” from them, according to the settlement
motion.
“Like all complex commercial cases and class actions, this
case was not without its associated risks,” the filing says. “While class
counsel firmly believe this case is strong, no case is full-proof.”
If approved, the agreement would end litigation in the U.S.
District Court for the District of Maryland over kickback allegations involving
Sierra Pacific and All-Star Title Inc., which isn’t named as a defendant.
The proposed class action, filed in 2019, is one of several
alleging violations of the Racketeer Influenced and Corrupt Organizations Act
and the Real Estate Settlement Procedures Act by mortgage providers taking
kickbacks from All-Star.
Each of the lawsuits accuses a residential lender of
referring customers to All-Star, which was allegedly able to charge an inflated
rate for title settlement services thanks to the steady source of customers.
Russell initially dismissed the claims against Sierra
Pacific in March 2020, saying its “payments to All Star fall squarely within”
RESPA’s “safe harbor” provisions because they were for services rendered.
But he vacated that decision in January, admitting he’d
fundamentally misunderstood the allegations, including the direction of the
alleged kickbacks. It’s plausible those weren’t “bona fide” payments for “goods
or facilities actually furnished or for services actually performed,” the judge
said.
Smith, Gildea & Schmidt LLC and Joseph, Greenwald &
Laake PA are co-counsel for the homeowners. Sierra Pacific is represented by
Weiner Brodsky Kider PC.
The case is Walls v. Sierra Pac. Mortg. Co., D. Md., No.
19-cv-595, motion for preliminary settlement approval filed 8/10/21.
We are the New Jersey title insurance agent that does it all for you.
For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!
For your real estate purchase or mortgage refinance or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
a/k/a Dr. Title
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow@vested.com
@vestedland
Disclaimer:
The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided.
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