Citing Stewart Title's "blatant disregard of the law," commissioner Mike Kreidler proposed a fine Monday of $1.95 million. It could be reduced after an upcoming hearing or via a court appeal.
Kreidler said he believes it's the biggest fine ever levied by this state's Office of the Insurance Commissioner. "It's the largest I'm aware of," he said from his office in Olympia.
The fine comes to $10,000 for each of 195 violations Kreidler's office discovered in an investigation this summer.
In that inquiry, the state found Stewart Title's Snohomish County operation spent tens of thousands of dollars for "desk fees," paid advertising, auction donations, Web site promotions, parties and gifts during a four-month period.
By law, such payments are limited to $25 per year per person, as the state wants to discourage title insurance companies from rewarding real estate agents for steering business to them.
The desk fees, some exceeding $1,000, were paid by Stewart for renting desk space at real estate agencies. But those desks often sat vacant, Kreidler's office found.
As a result of his findings, the insurance commissioner on Aug. 6 issued an immediate "cease and desist" order against Stewart Title.
Stewart's national corporate office in Dallas, Texas, declined Monday to comment on the proposed fine, instead reiterating the only public statement the company has made so far.
"Stewart Title Guaranty Company has received notice from the Insurance Commissioner from the State of Washington to cease certain marketing practices," the company stated in a written message. "We want to be of assistance to the department and have contacted the named title agency to seek clarification regarding the items the commissioner has enumerated."
With the proposed fine Monday, Kreidler issued a hearing notice, but no date has been set for that hearing. After the hearing process, Stewart Title can appeal Kreidler's findings in court, something the commissioner expects.
"Put it this way: I don't expect them to write a check tomorrow," he said.
Title insurance exists to protect lenders and property owners against any potential losses from defects in titles to the land or home being purchased. It's commonly required as a part of most real estate transactions.
The state's close monitoring of the gift rules shouldn't have come as a surprise to Stewart. Last fall, Kreidler warned the industry that his agency would crack down after an investigation found "widespread and pervasive abuse" of the gift law.
Last month, the commissioner fined two other title companies, Ticor Title Insurance and First American Title Insurance Co., $35,000 for more minor violations. Parts of both fines were suspended as long as the companies follow the rules.
Because he'd put the industry on notice, Kreidler said he was appalled that Stewart Title "wholesale ignored" the gift law.
"I quite frankly didn't believe it at first," he said.
Kreidler added he was appalled at the number and severity of violations found during a review of Stewart Title's records.
Stewart Title is one of six other title insurance firms under investigation as part of the state's effort to monitor the industry for compliance. A full report, including potential enforcement actions against other insurers, will be issued when the investigation is completed.
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