Half of failed title company's claims resolved

Underwriters pay off $2 million in settlements against Towson firm

Insurance

March 17, 2000|By Robert Nusgart | Robert Nusgart,SUN STAFF

Underwriters for Bankers Title Insurance Co. have paid off more than half of the claims made against the Towson firm that was taken over last month by the Maryland Insurance Commission after almost $3 million was found missing from its escrow funds.

The announcement -- in what the commission believes may be the largest case of this nature -- comes a little more than a month after Maryland Insurance Commissioner Steven B. Larsen obtained an order in Baltimore Circuit Court to place the title company in receivership.

The initial investigation found that more than $1 million was missing from escrow accounts used by Bankers Title to pay off mortgage obligations and other fees relating to 68 settlements from mid-December to February. However, further investigation placed the figure at $2.4 million, and commission spokeswoman Tori Leonard said the final amount would be closer to $3 million.

Leonard said 36 of the 68 affected settlements, amounting to about $2 million, have been resolved by Fidelity National Insurance Co. in Greenbelt and Commonwealth Land Title in Baltimore. Of the 36, two claims for $300,000 were paid by Commonwealth.

The other 32 claims are "in process, representing about $900,000, and we think those should be settled in the next month of so," Leonard said, adding that those files are being reviewed by Fidelity."We are pretty confident that they'll be settled favorably." Joseph Shepherd, Maryland state manager for Fidelity National, said his company "is trying to move as quickly as we can because we know there are some folks out there that do have valid claims under their title policies."

He would not comment on the specific number of claims or money involved but agreed with the commission's assessment of what had been paid thus far.

Shepherd called the situation an "incredibly serious matter for an underwriter," adding that there may still be "claims floating out there that no one knows of yet."

But Leonard said the commission is confident that it is aware of all affected files. "We think that this is it. We think we have captured all of the files," she said.

Leonard added there were no new developments in the criminal investigation being conducted by the commission's fraud division, but that the former principals of the firm -- Edwin Kirby and J. Edward Martin -- were continuing to cooperate with the investigation.

An auction of Bankers Title's office assets is scheduled for 10 a.m. March 25 in an effort to satisfy unsecured creditors. Leonard was unable to estimate the value of those assets and did not know how much is owed or how many unsecured creditors exist.

The commission will require creditors to file a "proof of claim." After verification by the commission, those claims will be paid from the auction's proceeds.

A preview of the auction will be held from noon to 4 p.m. March 24 at the firm's former offices at 100 West Road, Suite 400, in Towson.

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