FirstAm Agrees to Fine, Ending 'Sham ABAs'

First American Title Insurance Co. has agreed to pay a $5 million fine and shut down 84 affiliated partnerships with real estate agents, mortgage brokers, and builders in Florida as part of a settlement with state regulators and the U.S. Department of Housing and Urban Development."Our joint investigation found these partnerships were created to generate referrals in violation of the Real Estate Settlement Procedures Act and HUD's policies against sham affiliated business arrangements," HUD Assistant Secretary Brian Montgomery said. The Santa Ana, Calif.-based company agreed to abide by HUD rules in operating future affiliated title companies in Florida that are separately capitalized and have full-time employees. First American said it is adjusting its practices to changing regulatory standards. "Homeowners who purchased title insurance through these joint venture companies were charged premiums consistent with the valid, filed rates for title insurance in Florida," the company said. "Rates were not adversely impacted by these business arrangements." First American can be found on the Web at http://www.firstam.com.