Magazine article American Banker

No Charges in Federal Probe of Title Payments to Lawyers

Magazine article American Banker

No Charges in Federal Probe of Title Payments to Lawyers

Article excerpt

A federal investigation of a Long Island, N.Y., title and settlement services provider over its use of lawyers to provide title closing services has concluded without any formal charges being brought, a top executive said.

In August of last year, officials of the Department of Housing and Urban Development and the Postal Service swooped down on the Plainview, N.Y., headquarters of Titleserv Inc.

The company, which is now based in Woodbury, does business in New York, Connecticut, and New Jersey and plans to expand into Virginia,

The investigation was linked to concerns that payments to the lawyers might have represented a kind of kickback prohibited by the Real Estate Settlement Procedures Act.

The rationale for such payments may stem from how title business gets divvied up.

In New York, for example, attorneys for home buyers almost always decide who gets title business, said Andrew Knee, the president of First Long Island Title Agency Inc.

William Purschke, Titleserv's executive vice president, said the investigation ended in April after his company adopted some suggested changes in how it records information about the payments.

"Why they came in a raid fashion I'm not sure we understand or ever will," he said in an interview last week.

Phone calls to HUD's investigative offices in New York and Washington were not returned.

Mr. Purschke said that some larger lender clients stopped using his company, but that all returned within a few weeks. "The publicity was the hardest part about it," he said. …

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