The attorney general for Washington, D.C., announced Thursday a revelation into what the city says is the widespread use of illegal kickback schemes in the title insurance market.
Attorney General Brian Schwalb said multiple companies will pay a combined $3,290,000 after his office revealed they offered real estate agents discounted lucrative interests on ownership and other exclusive profit-sharing in exchange for business referrals that boosted those companies’ revenues. Essentially, these title companies are accused of having recruited real estate agents to offer illegal payouts in exchange for business referrals to their companies.
The attorney general’s office said the “conflict of interest-plagued, anticompetitive arrangements limited District homebuyers’ ability to shop for the best price and service when purchasing title insurance and escrow services.”
“District residents are entitled to make fully informed decisions about how to spend their hard-earned money, especially when it comes to making the high stakes purchase of a home,” Schwalb said in a statement .
“These four companies violated the most fundamental principles of a free and fair marketplace: they exploited consumers, limited their choices, and hurt other businesses that play by the rules. Today, we’re exposing and putting an end to these elaborate and illegal kickback schemes,” he continued.
The companies in question include Allied Title & Escrow, KVS Title, Modern Settlements, and Union Settlements. While the companies did not admit liability, they did agree to end the alleged kickbacks immediately.
The investigation found that Allied Title & Escrow, KVS Title, Modern Settlements, and Union Settlements violated district law by providing real estate agents with lucrative and discounted investment opportunities. In turn, the real estate agents would then make business referrals that generated increased revenue for the companies.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
In exchange for the referrals, the real estate agents received “kickbacks in the form of a split of the profits,” according to Schwalb's office. Up to $1.75 million from the settlements will be given as restitution to affected consumers.
Some lawmakers have questioned whether title insurance is even necessary in all cases. Earlier this year, President Joe Biden’s administration announced a pilot program that would allow homebuyers to waive title insurance on some refinancing deals. Title insurers paid $600 million in claims on $21 billion in premiums in 2022, according to the American Land Title Association.
Most Popular
Comments / 0