February 28, 2005
FEDERAL GOVERNMENT ANNOUNCES SETTLEMENT WITH CHICAGO TITLE CO. OVER ALLEGATIONS OF FALSIFYING LOAN DOCUMENTS
Company to pay $6.2 million and revamp corporate practices
WASHINGTON - The Department of Housing and Urban Development, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision today announced a settlement agreement with Chicago Title Insurance Company following a joint investigation that uncovered suspected acts of residential and commercial mortgage fraud in the Houston, Texas real estate market. Chicago Title agreed to pay a $5 million civil penalty to the U.S. Treasury and to reform its settlement service practices nationwide. In a separate agreement with the Texas Department of Insurance, Chicago Title agreed to pay a $1.2 million penalty.
HUD, OTS and OCC claimed Chicago Title engaged in a pattern of violating Section 4 of the Real Estate Settlement Procedures Act (RESPA) by providing inaccurate HUD-1 Settlement Statements to lenders and their borrowers. The agencies determined that the HUD-1 Settlement Statements failed to accurately reflect the actual settlement costs in connection with home mortgage loans. HUD also alleged that Chicago Title's conduct was part of an agreement for the referral of business in violation of RESPA's Section 8 anti-kickback provision.
"This agreement underscores the level of cooperation among federal and state agencies to protect consumers and the integrity of the mortgage settlement process itself," said John C. Weicher, HUD Assistant Secretary for Housing and Federal Housing Commissioner. "When it comes to protecting the American Dream, HUD will continue to vigorously enforce every aspect of RESPA including making sure settlement costs are fully and accurately disclosed."
As one of the nation's largest settlement service providers, Chicago Title agreed to comply with RESPA, its implementing regulations, and HUD policy statements. Under the terms of the settlement, the company also agreed to implement new policies, procedures, and compliance controls governing settlements in all its branches and offices that will support the integrity of settlement documents, fraud prevention, and compliance with Sections 4 and 8 of RESPA.
The Agreement announced today also requires Chicago Title to revamp the manner in which it conducts real estate settlements nationwide, including training of employees and officers to properly complete the HUD-1 Settlement Statement. The company will monitor these training efforts and provide any corrected Settlement Statement to lenders. Chicago Title has indicated it has begun the process of addressing its deficiencies and is cooperating with the HUD, OCC and OTS.
In a separate action, the OCC also announced consent orders against two former bank officers involved in the fraudulent scheme. Tom Trammell, former Senior Vice President and Private Banking Manager of Southwest Bank of Texas (NA, Houston, Texas) as well as Whitney National Bank (New Orleans, Louisiana) is permanently banned from the banking industry and will pay a $250,000 fine. A second Consent Order imposes a lifetime ban on David Ranostaj from the banking industry. As former Vice President and Loan Officer of both banks, Ranostaj wa s assessed a $130,000 fine. Trammell and Ranostaj have also entered into agreement with the banks to pay restitution.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.