Maryland regulators said Wednesday that they have suspended the license of a Crofton-based title company after learning that more than $1 million meant to be held aside for real estate transactions was instead used to pay business expenses.
John J. Dwyer and Joseph C. Hughes, co-owners of Beltway Title and Abstract Inc. and related settlement companies, did not appear at a hearing Wednesday to defend themselves, the Maryland Insurance Administration said. Licenses for all the firms were suspended.
The insurance administration said it knows of at least $1,028,500 that was misappropriated and urged consumers to call the agency at 410-468-2354 if they find that their mortgages or closing expenses were not paid off. Fidelity National Title Group, the title insurance underwriter for Beltway Title, will make the payments instead, state regulators said.
"We're going to work with the industry and all producers to find the best way to ensure that Marylanders can have faith that when they close on a house, it's done properly," said Beth Sammis, the state's acting insurance commissioner. Her agency intends to issue regulations governing the annual audits that title companies' insurers must conduct.
Beltway Title handled real estate closings in Maryland, collecting and then dispensing money to lenders, tax collectors and others due a share of the funds. Problems came to light in December after auditors for Fidelity National discovered that money had been transferred from Beltway Title's settlement funds account to its operating accounts since April, the insurance administration said in documents released Wednesday.
"Upon questioning by Fidelity National representatives, it was admitted that funds were being taken … to pay for employee payroll and other office expenses," the license suspension order states.
Fidelity sued. In January the Montgomery County Circuit Court authorized a restraining order freezing Beltway Title's bank accounts.
Beltway Title's owners could not be reached at their offices Wednesday. Richard Daniels, the attorney representing them in the lawsuit, declined to comment.