IL regulators fine title agency PNTN $14M for letting lawyers not registered as agents sell title insurance

By Jonathan Bilyk | Nov 9, 2018

IDFPR Secretary Bryan Schneider   Youtube screenshot

An organization which provides services to and promotes the role of attorneys in the title transfer process in real estate transactions has come under the scrutiny of state regulators, which has ordered $14 million in fines for allegedly allowing attorneys who are not registered as title insurance agents to score commissions from the sale of title insurance policies.

On Nov. 2, the Illinois Department of Financial and Professional Regulation issued a cease-and-desist order to Professional National Title Network, a Chicago-based organization which labels itself “the nation’s Bar Related Title Agency” and boasts about 1,500 attorney members in the Chicago area. On its website, PNTN says it has been in the business of “support services” for attorneys involved in the title insurance business since 1986, with a “singular goal of protecting and promoting member law firms.”

In its order, the IDFPR accused PNTN over its use of a so-called “Examining Attorney Program,” which the department said was “created and maintained … for individuals and small firms to do the ‘usual duties of registered title agents,’ as independent contractors with PNTN.”

According to the order, the program has involved “approximately 103 agent members” who were not registered as title insurance agents with the state of Illinois, yet conducted real estate closings and were “doing the work of, registered title insurance agents,” and were paid a percentage of the title insurance premium in exchange for their services.

Menchaca   IDFPR

According to the order, the participants in the PNTN program conducted closings for 14,056 real estate transactions from January 2012 to October 2018.

The IDFPR said PNTN and the Examining Attorney participants worked with “multiple underwriters with whom PNTN is contracted,” but worked primarily through WFG National Title Insurance Company, a title insurance underwriting company affiliated with Williston Financial Group.

The order notes PNTN is a registered agent for WFG.

The IDFPR also served a cease and desist order on WFG over its participation in the PNTN Examining Attorney program.

The orders note Illinois state law forbids anyone from working as a “a title insurance agent unless duly registered by a title insurance company” with the state of Illinois.

In the orders, the IDFPR ordered both PNTN and WFG to pay $1,000 for each offense, or $14.056 million.  Each was also ordered to end their participation in the Examining Attorney program.

The orders were signed by Francisco Menchaca, director of the IDFPR Division of Financial Institutions.

The orders noted PNTN and WFG had 30 days to request a hearing on the orders.

PNTN did not reply to a request for comment from the Cook County Record to its general counsel, Joseph Rogul.

The orders come amid a legal tussle over attempts by the IDFPR to assert its authority to regulate attorneys who also act as title insurance agent, and as some push for reform and enhanced regulation of the title insurance process in Illinois.

In 2017, the Illinois Supreme Court deadlocked on the question of whether fees paid by title insurance companies to real estate attorneys in exchange for client referrals amounted to illegal kickbacks.

And earlier this year, a different organization which represents attorneys working as title insurance agents, Attorneys Title Guaranty Fund, secured a restraining order preventing the IDFPR from enforcing rules which would have compelled lawyers who serve as title insurance agents to disclose estimates of fees they might earn from selling title insurance.

ATG argued the IDFPR overstepped its bounds, as the state agency lacks the authority to regulate lawyers, even if they are also registered as title insurance agents. The case remains pending in Cook County Circuit Court.

For its part, PNTN was a vocal supporter of legislation, known as SB65, which would have essentially put attorneys representing the sellers in a real estate transaction in the driver seat in the acquisition of title insurance, all but blocking buyers from purchasing title insurance through an agent of their choosing, unless they can get the agreement of the seller or can demonstrate a cost savings.

That bill was passed by the Democratic majorities in the state House and Senate, but was vetoed by Ill. Gov. Bruce Rauner. However, Rauner, a Republican, was defeated on Nov. 6 by Democrat J.B. Pritzker, who will become governor in January. The fate of that legislation remains unclear, pending the change in administrations.

Earlier this summer, State Rep. Jeanne Ives, R-Wheaton, also filed legislation which would effectively bar lawyers from serving as both an attorney representing a party and a title insurance agent in the same transaction. That legislation, however, has not secured a co-sponsor since it was filed in July, and was assigned on Nov. 7 to the House Rules Committee. It is listed as HB5935.

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Organizations in this Story

Illinois Department of Financial and Professional Regulation Professional National Title Network

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