On April 27, the Federal Bureau of Investigation raided the offices of national title agent Titleserv in Woodbury, N.Y.
The agent officially closed its doors on April 8 and had a skeleton crew in place to clear out the remaining pipeline.
Jim Margolin, a spokesman for the FBI, couldn't provide many details other than the search started at 8 a.m. and agents gathered the information they needed, looking for evidence of a criminal act in connection with an ongoing investigation. The search warrant affidavit is under seal.
The Title Report reached out to Titleserv for further comment, but the company would not address the specifics of what happened. We also asked JPMorgan Chase and CitiMortgage, two of Titleserv's largest clients, for their comments on the situation, but both declined. Both of the lenders had reportedly dropped Titleserv as an agent prior to the official closing announcement.
Carl Samson, president of New Jersey Title Insurance, one of Titleserv's underwriters, also could not comment on exactly what happened with the national agent. "We heard a couple of rumors within a day, but we have not confirmed anything," he said. "My understanding is several of their large accounts did stop sending business to them."
This situation has now left some work for Samson and his team.
"We'll have to do some of the funding on closings in the pipeline, which they would have typically done," he said. "To the extent that it's appropriate, we will do that to try and accommodate the various parties. We try to do the best we can and mitigate [issues] for anyone inconvenienced by this."
As a result of this news, Titleserv's competitors immediately hit the ground running in order to capture the lost business. In particular, TitleVest issued the following statement late last week:
"As of this week a major title agency/settlement company was dropped as an approved vendor with several lenders. We have been advised that some lenders are requiring new title and lien searches to be completed before closing. • In light of the challenging circumstances you may be experiencing, we have reallocated our work force to handle transactions that need to close immediately. We have extended our typical work hours over the coming weeks to include late nights and weekends to provide extra assistance in this regard."
The Title Report spoke with Brian Tormey, executive vice president of TitleVest. He said his team did in fact work over the weekend in order field all of the phone calls and emails.
"The TitleVest team has been working hard to go above and beyond for clients left in the lurch by Titleserv's overnight blow up," Tormey said. "They were a competitor and a national player. They were closing a lot of deals on a weekly basis. We look forward to capturing a significant share of the business they previously handled."
Tormey also didn't feel that Titleserv's fall reflected on his own company's future in this down economic environment.
"Their exit from the marketplace does not in any way concern us regarding our future in the marketplace," he said. "We have a strong future and will be growing."
Titleserv opened its doors in 1986. The company was accused of taking part in an illegal kickback scheme in 2002 by the Department of Housing and Urban Development, but the case closed in October 2003 without charges being filed.
The Title Report will continue to follow this story as it develops.
Questions? Comments? Contact Chris Crowell at [email protected]