Title Company’s Tactics Assailed State Orders Spokane County Title To Halt Title Insurance Business

An outraged Spokane businessman says the state insurance commissioner is trying to shut down his title insurance operation because he’s giving consumers too good a price.

“We are furious about this,” John Schreiner, president and owner of Spokane County Title Co., said Friday. “We think what we are doing is good for the consumer.”

The people it isn’t good for, he says, are local attorneys who for decades have had a corner on doing real estate closings in Spokane.

Spokane County Title, owned by Schreiner since 1983, started doing closings in 1993, and Schreiner said local attorneys reacted “like hornets having their nest disrupted. They’ve made a constant barrage of complaints ever since.”

On Friday, Deborah Senn, the state insurance commissioner, ordered Spokane County Title to stop transacting title insurance business for six months, starting Aug. 19.

In a news release, Senn said the company is trying to “monopolize the region’s escrow-fee business with improper rebates.

“These practices hurt consumers by driving up insurance rates and by driving competitors out of business,” the news release quoted Senn as saying. “In the past few months, at least three other escrow offices in the Spokane area have closed their doors.”

The insurance commissioner claims that at $200 per closing, Spokane County Title was far below market costs. Senn said an examination by her office established that Spokane County Title’s escrow operations lost money during the first four months of the year.

“In effect, they were using the escrow business as a loss leader,” Senn said. “We have very clear state rules that govern insurance inducements and rebates, and this level of subsidization far exceeds those legal limits.”

The state’s insurance code forbids insurance companies and agents from providing rebates or discounts other than those specifically allowed under the contract. Title companies cannot provide rebates or anything of value exceeding a sum of $25 over any given year.

Schreiner responded that it’s absurd to conclude that the other escrow offices went out of business because of Spokane County Title’s closing fee.

“Look at what’s been going on in this market the past year,” he said.

Through June, home sales in Spokane County were running 40 percent below year-ago levels. Refinancing activity also plunged, as interest rates rose and home sales slowed.

The drop in the market has pushed several companies out of business here.

“For them to blame us for that is unbelievable,” Schreiner said.

“And we are absolutely not using the escrow business as a loss leader,” he added. “We can be profitable at $200 a closing.”

During each of the past two months, Schreiner said, the company has done 240 closings. That amounts to $48,000 income a month.

“We can make a profit on that,” he said sarcastically.

Schreiner said local attorneys charge one half of one percent, or about $500 on a $100,000 home, for the same service.

He said Senn issued her order of suspension without offering Spokane County Title a hearing. He said the company is requesting a hearing immediately, which should have the effect of staying the suspension.

“We will go through the entire appeals process,” Schreiner said. “And we intend to pursue this through the courts if necessary.

“I just can’t imagine why anyone would say this is bad for the consumer.”

, DataTimes