California Escalates Title, Escrow War by Broderick Perkins
In a flurry of recent activity against title and escrow companies in California this month, the state seized control of two companies, placed monitors at a third and announced new industry regulations to protect consumers. Early this month, California's Department of Insurance seized Big Bear, CA-based Universal Title Co. and its 12 Southern California offices and accused the company of dipping into escrow funds to pay its bills. "If left unchecked, the company's activity could have jeopardized the life savings of California consumers striving to attain the American dream of home ownership," said insurance commissioner Chuck Quackenbush. The department also took control of three offices of Sacramento Title Co. in Sacramento, Fair Oaks and Galt as well as various storage facilities. The department froze the bank accounts of Sacramento Title, a Universal Title Co. affiliate, after finding records indicating the company was financially unstable. In a third action, department examiners took on-site positions to supervise Marin, CA-based Pacific Coast Title and it's offices in Novato, San Rafael and Mill Valley. By Feb. 9, still under department control, Sacramento Title and Universal Title Company offices reopened with promises that they will assume all monetary damages. Escrow, title industry suits California has been waging war against the title and escrow industry since last spring when State Controller Kathleen Connell filed a Superior Court suit that alleges the industry bilked consumers out of a half billion dollars since 1970. By late last year, her office identified or recovered more than $13.6 million owed to home buyers and sellers. The recovery followed audits of some of the 200 title and escrow companies named in the suit -- the nation's largest every against the industry. "It is my intention to recover every cent illegally withheld," Connell has said. Last week, Quackenbush announced a settlement agreement with Fidelity National Title regarding the Connell lawsuit. Additional private court cases remain pending in California along with at least one filed by a private attorney in federal court. "Home buyers should be acutely aware that at the close of escrow, their accounts should total out at zero, with all charges and costs accounted for. Any remaining funds should be immediately returned to the buyers and sellers," Connell said. New consumer regulation Capping a busy month keeping tabs on the title and escrow industry, Quackenbush announced a new regulation (ER-35) requiring escrow companies to provide customers with the choice of establishing interest-bearing accounts for their escrows, or reduced rates resulting from escrow companies' banking relationships. In addition, escrow companies much charge a single, all-inclusive rate for all escrow services, except for certain miscellaneous charges law requires to be itemized. "We address several problems that will deliver to consumers streamlined escrow processes and more options as to how they can best benefit from the investment of their escrow monies," said Commissioner Quackenbush. "The single-fee approach, in particular, will enable consumers to comparison shop, which can ultimately mean lower prices for them as they review their options in the marketplace," he added. | 
