Title firms may keep interest House protects escrow earnings.

March 19, 1992|By David Conn | David Conn,Annapolis Bureau

ANNAPOLIS -- Title companies again narrowly avoided yesterday being forced to give up the interest they earn on their clients' escrow accounts.

By a 12-10 vote, the House Ways and Means Committee agreed not to use title company interest as the source of funding for the proposed Maryland Affordable Housing Trust, a fund that would help pay for affordable housing in Maryland.

For years, title companies have fought a turf battle with law firms over the interest earned on client escrow accounts.

Law firms are required by legal ethics and state law to donate the interest -- when it amounts to $50 or less per client -- to the Maryland Legal Services Corp., which funds services for the poor. But lawyers who own title companies are not bound by that law or by ethics code.

This year's threat to title companies came in a bill to create the affordable housing trust. Title companies have said taking their escrow interest would force them to raise housing settlement costs.

The title industry, backed by bankers, Realtors and home builders, persuaded Ways & Means members not to use the industry to fund the housing trust.

The decision to use an alternative funding source -- one-third of the roughly $2 million in fees that circuit courts charge for all documents -- led some committee members to withdraw their support for the entire housing bill.

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