Four major real estate title and escrow companies now face class action lawsuits filed over a number of business practices, including allegedly charging customers for services performed by other companies involved in the residential real estate settlement process. The class actions also allege that two of the companies are earning interest from pooling clients’ funds and steering customers to the companies’ own higher-cost subsidiaries for unnecessary services. Title companies act as the middlemen in residential real estate transactions by taking money from the buyer or the buyer’s lender in exchange for the title. They also pay off the seller’s loans and give the balance of funds to the seller. These newly filed lawsuits challenging the companies’ practices are the latest wave of litigation to involve this industry. There had already been a number of antitrust lawsuits filed, claiming that the industry’s major players fixed prices and those cases appear to have merit.
The new lawsuits, filed in federal court in California and Washington state, are against Chicago Title Insurance Co., Fidelity National Title Co., First American Title Insurance Co. and Old Republic Title Ltd. These companies are accused of participating in a number of schemes. For example, it’s alleged that:
All of the companies improperly charged fees for re-conveyance, which is the process of extinguishing liens and trust deeds connected to loans paid off in the transaction. The lender of prior mortgages on the real estate typically does this work and charges a fee. The First American lawsuit also accuses the company of allegedly using a fraudulent scheme to “reap duplicate, unearned, and unreasonable” re-conveyance fees by steering customers to a subsidiary for re-conveyance work, even though the prior lender was doing the re-conveyance work.
The Fidelity National and First American lawsuits also claim the companies kept interest earned from funds and loans escrowed by the customers and their lender during the real estate settlement process, without disclosing that they were retaining pooled interest.
Source: National Law Journal
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.