State probes three title companies over marketing expenses

Days after enacting — and then delaying — strict new rules to curb excessive marketing among title insurers, the state is investigating three companies’ gift-giving and marketing expenses.

The state’s Department of Financial Services has requested itemized lists of marketing expenses and descriptions of gifts given to clients from Everest Abstract, Riverside Abstract and Royal Abstract, Crain’s reported.

DFS also asked Everest Abstract to turn over a list of joint ventures, business affiliates and employees.

Crain’s reported the request was the result of anonymous tip, but it coincides with the agency’s broad crackdown on title companies, which historically rely on wining and dining to get new business.

Earlier this week, DFS enacted a series of regulations that ban such marketing. But just two days after the rule took effect on Dec. 18, the state agreed to delay implementing a key part of the rules that would prohibit title companies from treating clients to meals or entertainment.
The move was a win for the New York State Land Title Association, the industry trade group, that had been lobbying DFS and elected officials to delay the regulations.

Meanwhile, state legislators now plan to hold hearings on the new rules in mid-January.

In a statement Wednesday, DFS Superintendent Maria Vullo said she looked forward to testifying at any hearings that take place to shine a light “on the industry’s history of inappropriate, and in some cases, illegal conduct that has resulted in decades of inflated title insurance rates.” [Crain’s] — E.B. Solomont