Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.
Monday, October 22, 2012
Florida Regulator Orders Title Insurer Shutdown Over Potentially Crippling Volume Of Claims, Unsatisfactory Cash Reserves; Firm Fingers Rogue Agent's Alleged Incapacitating Escrow Ripoff As Cause
In Orlando, Florida, the Orlando Sentinel reports:
Citing a regulatory mandate and a potentially crippling volume of claims, K.E.L. Title Insurance Group — owned by the partners of Orlando's KEL law firm — has withdrawn from the title insurance business and is trying to get into a state "rehabilitation" program for troubled insurers, the company confirmed [].
With its cash reserves faltering, K.E.L. Title stopped issuing policies [] and severed its ties with agencies that had sold its policies and performed real estate closings, the company said. It said it had been "instructed" by the Florida Office of Insurance Regulation to take those actions.
Company officials said the business' cash-surplus reserve had fallen below the state-required minimum; meanwhile, they were negotiating with insurance regulators over terms of entering "rehabilitation" — a sort of state-led business restructuring.
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In the state's "Rehab and Liquidation" program, if a title insurer can't pay its claims, the state raises cash to cover them by imposing a statewide surcharge on policies sold by other title insurers. The only way an insurer can emerge from the program intact is to be acquired by another insurer, something that has not happened in the program's history, a regulatory spokeswoman said.
Lynd blamed K.E.L. Title's woes mostly on a South Florida-based title-agency worker whom he accused of stealing hundreds of thousands of dollars in escrow money while fabricating real estate sales documents. The title company was blindsided by the scam, he said, which took place more than three years ago but was discovered only this year during certain foreclosure litigation.
The company has paid more than $1.6 million in scam-related claims so far this year alone, according to Lynd, who said the insurer alerted state regulators about the problem.
"It was a systemic theft by this agency's employee," Lynd said. "These incidents took place in 2008 and 2009, but it takes a long time for title claims to surface related to this kind of fraud. We're not the only ones who've been victimized; a lot of title insurers have been impacted by these kinds of scams."
When asked why K.E.L.'s audits had not detected the theft, he insisted that conventional audits would not have turned up such a surprisingly sophisticated scam.
"It would have been impossible to know [sooner] about this kind of theft. I mean, there were fabricated documents that made the transactions look normal on paper," Lynd said. "And there's just not an opportunity for us to review every single closing for all our agents. To some extent, you have to trust they will follow the requirements of their license, to act responsibly and professionally."
K.E.L. Title's explanation drew criticism, however, from one long-time title insurance lawyer.
"If a single agency is able to create enough fraud to bring down an entire company, you've obviously got a huge internal problem," said Cliff Shepard, a veteran real estate lawyer who is also legal counsel for the city of Maitland. "It tells you there weren't adequate controls in place to red-flag this kind of thing in your audits; otherwise, they wouldn't be in this mess."
CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)
Land Contract/Contract For Deed/Rent-To-Own Rackets
The New York Times: The Housing Trap (In the wake of the housing crisis, low-income families have turned to seller financing to buy homes but these deals can be a money trap)
Beware The Fine Print: Consumers Forced To Sign Away Their Rights To Use Court System
The NY Times: Arbitration Everywhere, Stacking the Deck of Justice(Part 1 in series examining how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court)
Foreclosure Mills' Abysmal Record In Complying With New NYS Foreclosure Requirements
Justice Deceived: How Large Foreclosure Firms Subvert State Regulations Protecting Homeowners
MFY Legal Services Report On Questionable Practices By Process Servers In Debt Collection Cases
Justice Disserved: A Preliminary Analysis of the Exceptionally
Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York
Mortgage Mess Redux: Robo-Signers Return (A Reuters investigation finds that many banks are still employing the controversial foreclosure practices that sparked a major outcry last year)
CNN Video: As Foreclosures Mount, Florida Court Turns To 'Rocket Docket'
The Wall Street Journal: A Florida Court's 'Rocket Docket' Blasts Through Foreclosure Cases (2 Questions, 15 Seconds, 45 Days to Get Out; 'What's to Talk About?' Says a Judge)
"Produce The Note" Strategy When Dealing With Missing Promissory Notes In Foreclosure Actions
ABC Video: Fighting Against Foreclosure (Some homeowners have found a new tactic to keep the banks at bay)
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