New Mexico’s Public Regulation Commission is asking why former Insurance Superintendent Eric Serna did not investigate a title insurance company that admitted giving more than $300,000 to a builder in what a state official termed as kickbacks.
That inquiry will be part of a larger investigation into the title insurance industry, said PRC Chairman Ben R. Lujan.
Serna said he had no knowledge of the matter.
New Mexico has the fifth highest title insurance costs in the nation, according to Bankrate.com, which ranks states on title insurance and other closing costs in buying a home. Title insurance for a $200,000 mortgage in New Mexico costs $895; the national average is $663.
Consumers have filed three lawsuits against the PRC and New Mexico title insurance companies, alleging people are paying too much.
Serna resigned last May in an agreement with the PRC, which asked the attorney general’s office to investigate a contract between the Insurance Division and a Santa Fe bank that made contributions to Con Alma, a health foundation he founded. Serna had resigned as Con Alma’s president the previous month.
Greg Stephens, president of the New Mexico Land Title Association, said he welcomes any investigation.
Lujan said the PRC asked insurance companies about two years ago whether they gave illegal inducements in return for business.
Officials at First American Title Co. admitted giving more than $300,000 to a builder in a practice called reinsurance, said Chuck Denton, head of the title insurance bureau. Reinsurance means an insurance company hires another company to insure particularly risky portions of coverage, Denton said.
However, in this case, the builder who received money for reinsurance was not covering claims and was not expected to, Denton said.
It amounted to a kickback, said Denter, who said he did not know the builder’s name.
Lujan said the company agreed to refund the $300,000, but the PRC did not do an audit to make sure it followed through. Serna did not investigate further, and Lujan said he wants to know why.
Serna said, however, that since no one ever filed a complaint about the First American reinsurance matter, he had no knowledge of it.
Carrie Gaska, a spokeswoman for First American Title Co. headquarters in Santa Ana, Calif., said the company had no comment other than a 2005 news release about a reinsurance settlement in Colorado. In the Colorado case, First American said it halted all reinsurance, did nothing illegal and was making refunds to avoid the appearance of improper conduct.
The PRC also will investigate whether title insurance underwriters influenced title insurance agents to turn down a proposal that would have given the agents 5 percent more of the industry’s revenue in New Mexico, Lujan said.
Title insurance agents currently get 80 percent and underwriters get 20 percent. The commission proposed a split of 85 percent to agents and 15 percent to underwriters. Agents rejected the proposal.
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