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Title firm's gifts, pay to Realtors violates law

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By Mike Benbow and Eric Fetters, Herald Writers
EVERETT - The state Insurance Commissioner has ordered Stewart Title of Everett to stop what he calls repeated violations of state law that prohibit using cash and gifts to gain business from local real estate agents.
Commissioner Mike Kreidler said an investigation of the firm shows that in a four-month period it spent nearly $40,000 for "desk fees," paid advertising, auction donations, Web-site promotions, parties and gifts.
By law, such expenditures are limited to $25 per year per person.
"I'm appalled that this company clearly has paid no attention to our message that this spending violates the law and won't be tolerated," he said in a news release. "This is unacceptable behavior and there will be consequences."
Kreidler said he has found 100 apparent violations by Stewart in a four-month period. He has the authority to issue a $10,000 fine for each violation.
Just last month, the commissioner fined two other title companies - Ticor Title Insurance and First American Title Insurance Co. - a total of $35,000 for more minor violations. Parts of both fines were suspended as long as the companies comply in the future.
Calls by The Herald to Stewart Title's local offices in Everett and Seattle and to its corporate headquarters in Texas were not returned Wednesday.
While the state is continuing an investigation of six title insurance companies, Stewart was the only one of the six to receive a cease-and-desist order, said Bill Ripple, spokesman for the Office of the Insurance Commissioner.
The state's critical look at violations of the gift rules shouldn't have come as a surprise. Last fall, Kreidler warned the title insurance industry that it would crack down on such practices after an investigation found "widespread and pervasive abuse" around the state, Ripple said.
"We've sent a clear message, and now we're telling them this absolutely has to stop," Ripple said.
One of the practices Kreidler highlighted at Stewart was a series of monthly payments for renting desk space in a real estate office. He said the payment sometimes exceeds $1,000 a month even though "the desk rarely is ever actually used by Stewart Title staff, but sits vacant with a 'Stewart Title' sign on it."
Other practices involve buying mutual advertising with agents and brokers and paying more than Stewart's appropriate share, Kreidler said.
From December through March, Stewart is accused of spending nearly $15,000 for desk fees, about $3,850 for donations and contributions, $18,000 for advertising, $1,300 for something called "Realty generator web" and $1,262 for a seminar on the economy for agents.
The title industry's trade group, the Washington Land Title Association, has sought to clarify some of the finer points of the gift rules since Kreidler's office cracked down. But the association's president, Curt Johnson of Fidelity National Title in Lynnwood, said it's a rule the trade group supports.
"It's really simple: You can't direct more than $25 a year to someone who can direct title business to you," Johnson said.
Herald writer Mike Benbow: 425-339-3459 or

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