California Department of Insurance Cracking Down on Title Reps -- SB133 enforcement action

Title Insurance ePro, MBA

The California Department of Insurance is serious about complying with SB133 legislation where NO value may be give to real estate professionals.  Here is one of their current press releases.


Commissioner Poizner Announces More Disciplinary
Actions Under New Title Insurance Law

Second Suspension Taken Against a Title Marketing Representative This Week

Continuing his efforts to crack down on illegal title marketing practices, Insurance Commissioner Steve Poizner announced today that the Department of Insurance has reached an agreement with Carmen Rojo and her employer Nations Title Company of California to resolve allegations of illegal rebating activities.

"Illegal rebates drive up prices for consumers and it turns out that giving away free lunches at a seminar for realtors and lenders cost a title marketing representative much more than the price of the meal," said Commissioner Poizner.  "Because we now have the ability to punish both the title marketing representative in addition to the title company, this new authority will curb marketing abuses in the industry."

Under the settlement, Rojo agreed to halt these activities and to a suspension of her certificate of registration for 20 days. She will not be able to market and sell title insurance during that time. Separately, Nations Title Company of California agreed to pay $4,000 in penalties and $1,000 to CDI for the reimbursement of attorney fees and costs.  

In March 2009, CDI began investigating and examining the marketing practices of Rojo and her employer Nations Title Company of California after receiving written complaints alleging illegal rebating activities. The Department investigated marketing activities in Nations Title Company of California's Norwalk office since January 1, 2009. Based on results of the investigation, CDI alleged that Rojo presented an offsite educational seminar for realtors and lenders on Feb. 25, 2009. The topics included bankruptcy, loan modifications and marketing, and overcoming fear and goal setting. The seminar was advertised via fliers distributed by Rojo. It is illegal to provide educational programs that are not exclusively related to title insurance business. In addition, a complimentary lunch was provided to the approximately 50 realtors and lenders at the seminar. The cost of the food and beverages and other costs associated with putting on the seminar is estimated at more than $2,100.

Prior to the new legislation (SB 133) sponsored by the California Land Title Association, the Department of Insurance had no enforcement authority over the individual title marketing representatives who engaged in illegal rebating activities. While the practices were illegal, the Department only had recourse against the title insurers. Under the new law, effective January 1, 2009, the Department is authorized to bring administrative actions against individual title marketing representatives along with title insurers who engage in illegal practices to refer title business.  

The new law establishes zero tolerance for enticing realtors and lenders with food or beverage or entertainment as an inducement to refer title business. Additionally, it provides the Department with regulatory oversight of title marketing representatives by establishing a certification program and disciplinary action including the imposition of a monetary penalty to be paid out of personal funds and suspension of the certificate of registration. A title marketing representative must hold a valid certificate of registration from CDI to act in that capacity. To date, CDI has issued 1,913 certificates of registration to title marketing representatives.

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Scott Hoen

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Comments (3)

Goodbye Active Rain
Out of Real Estate

So much for lunch meetings.  Listen to our services while you all pass out from low blood sugar.

Jun 08, 2009 02:13 PM
Sandra White
John L Scott Real Estate - Port Townsend, WA
Experienced Residential Resale Broker

Seems a bit severe, but I think in the long run it will be for the best.  When I was working in CA a lot of companies with their own title and escrow offices were doing everything but using a hammer to get my buyers to use their services when I presented an offer with a different title co.  They were getting credit towards their quota for commission and it was very offensive and bad for the buyer.  CA is the leader in these practices and it eventually reaches the rest of us.  Thanks for the update.  Good post.

Jun 08, 2009 02:15 PM
Scott Hoen
Carson City, NV
Carson City Clerk Recorder / Public Administrator

The consumer ends up on the short end of this one.  Title rates are going up and not down with the decrease in marketing costs and less information is getting to the consumers as well.  The Title Company can invite the agent and buyer to the closing table and the buyer can get a cup of coffee and the agent can't -- that is determined to be a beverage an that is not allowed.  The agnet can get a glass of water.

Jun 10, 2009 10:43 AM