In violation of the Florida Insurance Code and federal law, First American Title Insurance Company agreed to pay $5 million in penalties and costs after allegedly paying “kickbacks” to builders, bankers, real estate agents and brokers for the referral of business.
First American is required to sever its business relationships with 87 of its limited partnership title insurance agencies in Florida, and to conduct future business activities under strict requirements subject to review of a monitor who will report inspection results on a monthly basis for a period of one year.
Following a year-long investigation by the Department of Financial Services, both the U.S. Department of House and Urban Development and the Florida Office of Insurance Regulation were invited to join DFS in obtaining sanctions against First American. The three regulatory agencies reached an agreement with First American this week after concluding settlement negotiations.
The investigation looked into whether First American had created and utilized limited partnership entities to act as sham title insurance agencies as a means of funneling prohibited payments for the referral of business. The entities enlisted real estate agents, mortgage brokers, banks and homebuilders who referred business to First American’s sham title insurance agencies, resulting in unfair financial gains to First American and its affiliated title insurance agencies.
Source: Florida Department of Financial Services
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