TALLAHASSEE, Fla. – Nov. 19, 2007 – The First American Title Insurance Co. has agreed to pay investigation costs of $5 million and submit to a year’s monitoring of its business practices as part of a settlement agreement with state and federal agencies.

The settlement was announced Friday by the U.S. Department of Housing and Urban Development, the Florida Department of Financial Services and the Florida Office of Insurance Regulation.

It followed an investigation into First American’s business practices. Since at least 2003, the company had formed limited partnerships that acted as sham title companies, according to allegations in the settlement document. The businesses provided kickbacks to real estate agents, mortgage brokers, banks and homebuilders in exchange for title business referrals.

“Federal and state laws prohibit companies from taking unfair advantage of the market by providing payments to real estate agents and mortgage brokers for their referral of business,” said Florida Insurance Commissioner Kevin McCarty. “Such payments adversely impact the home-buying public by increasing the cost of buying a home . . .” he said.

The company denied any violation of federal or state law and said it had attempted to comply with all regulations. The company issued a press release saying that the state’s regulatory landscape had changed and that it had agreed to sever business relationships with entities “where the business model was a source of concern for regulators.”

The settlement document included a list of 87 limited partnership title insurance agencies in Florida with which First American had agreed to end relationships.

A monitor appointed by regulators will oversee the company’s business practices for a year, the agreement states.

Copyright © 2007 The Bradenton Herald, Fla., Sara Kennedy. Distributed by McClatchy-Tribune Information Services.