State Charges 3 Title Insurers, Mortgage Originators
The Minnesota Department of Commerce has charged three title insurance companies and mortgage originators for alleged offenses ranging from misappropriating funds to charging fees for services not provided.
Albert Lea Abstract Company, sister companies Meredian Financial Corporation and Fortis Title Solutions Corporation, and New Millennium Title Group received enforcement actions last week that outlined alleged abuses and violations of Minnesota Law.
“We want to send a clear message today that companies doing business in our state must act responsibly and abide by our laws,” Commerce Commissioner Mike Rothman said in a statement. “These scams and swindles not only hurt consumers, but threaten healthy competition in the marketplace.”
Albert Lea Abstract Company: Linda Tuttle-Olson, owner of Albert Lea-based Albert Lea Abstract Company, allegedly misappropriated about $1.5 million in client funds and used “large amounts” of those funds gambling at a casino, the Department of Commerce said.
The department's investigation, which began in May 2010, found that in at least 37 separate cases, Tuttle-Olson took funds from escrow accounts and distributed them to other bank accounts and herself by “kiting” checks. Check kiting, a type of deposit fraud, refers to a process of floating worthless checks between accounts in order to create the illusion of having a balance from which money can be withdrawn; the accounts show inflated balances that enable checks to be honored instead of unpaid-essentially taking advantage of the time it takes a check to clear.
A prehearing conference on the matter will take place on June 16.
Separate from the department's allegations, Tuttle-Olson pleaded guilty to wire fraud last week in U.S. District Court, and she faces up to 20 years in federal prison.
Meredian Financial Corporation and Fortis Title Solutions Corporation: The Department of Commerce ordered Costa Mesa, California-based sister companies Meredian Financial Corporation and Fortis Title Solutions Corporation-along with owner Paul Ferris and former owner James Assali-to stop marketing themselves as residential mortgage originators and servicers in Minnesota until they meet certain conditions.
The companies allegedly operated a bait-and-switch scheme through which they induced Minnesota homeowners to pay “rate-lock” fees ranging from $500 to more than $6,000 in order to refinance homeowners' home loans. Meredian allegedly told homeowners that the fee was refundable in some circumstances and assured them that securing a loan with favorable terms was a near certainty.
But only 53 of more than 1,300 Minnesota consumers who submitted an application between September 2008 and September 2010 actually received a mortgage loan, the department alleges. The companies, Ferris, and Assali are accused of impermissibly collecting and failing to refund more than $30,000 in advance fees from 12 Minnesota consumers.
Minnesota Attorney General Lori Swanson sued Meredian in March, accusing it of convincing Minnesota consumers to pay for mortgage refinancing services that were never performed.
New Millennium Title Group: Bloomington-based New Millennium Title Group was charged with failing to properly supervise a partner title company-Real Source Title of Mahtomedi. Real Source was previously ordered by the department to pay a $100,000 fine, and its license and the licenses of its officers were revoked.
New Millennium also stands accused of making false statements in an attempt to drum up business, paying illegal rebates totaling upwards of $480,000, and offering other items of value to lenders and their agents to try to induce business. The department said that New Millennium and Real Source made numerous misrepresentations and false statements to induce lenders and borrowers to close on real estate transactions. In addition, New Millennium allegedly skimmed escrow funds via a sweep account-a bank account that automatically transfers money exceeding a certain level into a higher-interest earning investment option at the close of each business day. Minnesota law prohibits sweep accounts.
A prehearing conference on the matter is scheduled for June 9.