The DC Attorney General is taking action against another title company for alleged fraud

District of Columbia Attorney General Brian Schwalb is back at it. On Thursday, his office announced the agreement as well General Subject over allegations that he was involved in a racketeering dispute with real estate agents in the Washington, DC area.

But like the four companies that Schwalb’s office took action against in August, this case did not involve violations of the Real Estate Settlement Procedures Act (RESPA).

Instead, civil cases are brought under the DC code. Section 31-5031.15 states that the insured “shall not give or accept, directly or indirectly, any consideration for the transfer of a title insurance business or escrow or other service provided by a title insurer.” It doesn’t do anything unless it is done jointly by its subsidiaries and the AG’s office finds that these companies are violating local law.

In a press release, Schwalb’s office said the investigation found that Universal offered real estate agents discounted ownership interest and profit sharing in companies created to encourage agents to refer business to Universal. This violates DC’s Consumer Protection Procedures Act (CPPA), the AG said.

This behavior allegedly limited home buyers from getting the best value and service when purchasing title insurance and escrow services, and negatively impacted other title companies in the area that did not engage in similar behavior.

In its investigation, the attorney general’s office says real estate agents who were part of joint ventures and businesses affiliated with Universal Title “seriously directed their homebuyers to obtain title insurance,” thereby increasing Universal’s profits and increasing revenue. agents’ fees.

“My office is committed to ending illegal kickbacks in the title insurance industry,” Schwalb said in a statement. “Universal’s secretive behavior has prevented District residents from making fully informed decisions about how to spend their hard-earned money when making one of the most important investments they will ever make—buying a home. Universal’s business plan violated core free market principles – it limited consumer choice and put law-abiding competitors at a disadvantage.”

In a statement, Universal said the AG’s allegations that the company is making mistakes and that its subsidiaries are targeting customers are untrue.

“Investors working under Universal Title have done so at or above market rates. In fact, our investment partners collectively raised $235,000 in the first round of financing with a limited ownership stake of 25%,” the statement read.

“The OAG’s contention that receiving distributions from a legitimate business violates the law contradicts the intent of the law and subsequent interpretation by the DC Department of Insurance, Securities and Banking (DISB).”

Additionally, Universal notes that nearly one-third of its investors did not speak to a single title or closing order, and that the corporate holding rate was 13%.

As part of the settlement, Universal agreed to pay the district $500,000, part of which will be used to pay restitution to affected consumers. In addition, Universal also agreed to end the practice of giving real estate agents consideration for the transfer of title insurance business. It will freeze its title insurance operations in DC or divest real estate agents of their ownership interests in spin-off companies.

“The OAG has cast a very large net, but its allegations have been applied to a set of facts and circumstances that are completely different from Universal Title,” the company’s statement read. “We strongly deny any illegal activity, but the crippling costs and time considerations that come with defense have prompted us to settle.”

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