OCC Issues Cease and Desist Order and Civil Money Penalty Against Chicago Title Insurance Company

WASHINGTON –The Office of the Comptroller of the Currency announced today that Chicago Title Insurance Company (Chicago Title) has consented to a cease and desist order and $5 million civil money penalty. The order was issued as part of joint investigation by state and federal authorities investigating Chicago Title settlement practices. Chicago Title was assessed a concurrent $5 million civil money penalty by the Office of Thrift Supervision (OTS) and the Department of Housing and Urban Development (HUD), as well as a $1.2 million penalty by the Texas Department of Insurance.  The OCC, OTS and HUD penalties will be deemed satisfied by one payment of $5 million to the OCC on behalf of the Treasurer of the United States.

The OCC began its investigation into Chicago Title settlement practices after uncovering residential and commercial mortgage fraud in the Houston, Texas, real estate market. The OCC then made referrals to the Texas Department of Insurance, HUD and the OTS.

“This was an outstanding example of how the OCC and its state and federal partners can work together,” said Acting Comptroller of the Currency Julie L. Williams. “When the OCC, other federal agencies, and our state partners can work arm-in-arm to combat abuses, American consumers and our financial system are the winners.”

The OCC, in conjunction with the OTS and HUD, determined that Chicago Title engaged in a pattern of violations of section 4 of the Real Estate Settlement Procedures Act, 12 U.S.C. §2601 et seq., and the regulations promulgated thereunder, 24 C.F.R. Part 3500 et seq. (RESPA), by providing inaccurate HUD-1 Settlement Statements to federally insured depository institutions and borrowers.  These settlement statements failed to accurately reflect all the actual charges and adjustments in connection with settlement of residential mortgage transactions.

The OCC’s cease and desist order requires Chicago Title to revamp the manner in which it conducts real estate settlements nationwide, including changes to its policies and procedures, training of employees and officers, audit, and Board oversight. These requirements are designed to address Chicago Title’s deficiencies, including the integrity of HUD-1 Settlement Statements and compliance with applicable laws and regulations.

Chicago Title has indicated it has begun the process of addressing its deficiencies, and is cooperating with the OCC and the other agencies.

The OCC also announced today that two former bank officers involved in the fraudulent scheme have entered into consent prohibition and civil money penalty orders as well. The order against 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, serves as a lifetime ban from the banking industry and assesses a $250,000 fine. The order against David Ranostaj, former Vice President and Loan Officer of both banks, serves as a lifetime ban from the industry, and assesses a $130,000 fine. The officers have also entered into agreement with the banks to pay restitution.

Acting Comptroller Williams emphasized that “with mortgage originations and refinances at historic highs, mortgage fraud is one of the fastest growing problems facing federally insured depository institutions today.  The settlement statement is the bedrock of millions of real estate settlements and refinance transactions per year,” she said. “There should be no doubt that if and when we learn that settlement companies are abusing the trust placed in them by consumers and lenders, our response will be swift and vigorous. When we learn of misconduct and abuses that span across jurisdictional boundaries, we will work collaboratively and effectively with our state and federal partners to eliminate the abuse,” she said.

Orders are available at www.occ.treas.gov