Regulators take over Towson title insurer

Md. insurance agency investigates, alleges missing escrow funds

Real estate

February 16, 2000|By Robert Nusgart | Robert Nusgart,SUN STAFF

The takeover of a Towson title company by the Maryland Insurance Administration may affect hundreds of buyers and sellers whose home settlements were handled by the firm.

The agency obtained a Baltimore Circuit Court order Monday allowing it to put Bankers Title Insurance Co. in receivership. That followed an emergency court order Friday suspending the licenses of chief executive Edwin Kirby and J. Edward Martin as the firm's principal agents.

The insurance administration said it was taking the action after a preliminary investigation indicated that more than $1 million in escrow funds and insurance premiums that are owed to home buyers, sellers and insurers was missing.

In the order, the administration said an investigation "strongly indicates that the respondents have engaged in a course and practice of failing to fully account for premiums and other funds collected during the course of settlements, of failing to properly remit funds due to both insureds, buyers, sellers and numerous other individuals and entities which they obtained during the course of settlement and of converting premiums lawfully owed to others."

A source familiar with Bankers Title Insurance Co. said yesterday that customers who had settlements conducted by the firm in the past several years should verify that mortgages were paid off and deeds properly recorded.

If they were not, sellers may find that they still owe money to lenders who were supposed to have been paid by Bankers Title.

"The title company would pay off the mortgage for the seller with the buyer's down payment and loan. If this was not done, then the seller is still obligated on the debt and the lien still exists against the property," said the source.

"As for the buyers, it means their ownership interest is subject to the lien of the seller's mortgage and their mortgage, too," said the source, who added that the title company conducted approximately 40 settlements a month.

Ultimately, the source said, Bankers Title's underwriters -- identified as Commonwealth Land Title Insurance and Fidelity National Title Insurance Co. -- would be responsible for paying the claims.

Kirby did not return calls to his home. No one was available for comment at the company's offices on West Road in Towson and at the World Trade Center downtown.

Martin said he was not an agent at the company. The insurance administration required him to have an insurance license, but he never conducted any business as an agent, Martin said.

Martin, who said he helped found Bankers Title in 1987 and has since been an investor in the company, said he has had no involvement in its operations.

"I have never written a check on any escrow or operating account of that company. I have never been involved in any real estate settlement or closing," said Martin, an attorney who has a litigation practice on the Eastern Shore.

"What exactly happened, I don't know, but no money ever came my way," Martin said. "I'm eagerly awaiting the results of the investigation."

"Our preliminary investigation has shown that the two agents are involved," said Elana Mezile, a spokeswoman for the insurance administration. The investigation will continue to determine which customers were affected, she said.

Staff writer Shanon D. Murray contributed to this article.

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