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 OCCs 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 Titles 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
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The Office of the
Comptroller of the Currency was created by Congress to charter national banks,
to oversee a nationwide system of banking institutions, and to assure that
national banks are safe and sound, competitive and profitable, and capable of
serving in the best possible manner the banking needs of their customers.