Attorney General Brian Schwalb announced Thursday that four title companies — Allied Title & Escrow, LLC (Allied), KVS Title, LLC (KVS), Modern Settlements, LLC (Modern), and Union Settlements, LLC (Union) — will pay a combined $3.29 million to settle allegations of illegal kickback schemes uncovered by the Office of the Attorney General (OAG).
The investigation revealed that the companies offered real estate agents lucrative financial incentives in exchange for business referrals, distorting the District’s title insurance market and limiting homebuyers’ options.
Earlier this year, the Biden administration announced it would consider a controversial pilot program to waive title insurance requirements for certain qualified homeowners. The proposal, part of the president’s broader initiative to improve access to affordable housing, has sparked debate among housing advocates who fear that it could disproportionately harm communities of color.
Experts view title insurance as a crucial yet often misunderstood product. It provides comprehensive protection for homeowners’ property rights and lenders’ financial interests. Unlike other insurance products, it involves a one-time fee, and title professionals conduct extensive upfront work to identify and resolve any title issues before a property sale is finalized.
Critics argue that waiving these requirements could lead to significant risks, particularly for African Americans, Latinos, and other vulnerable communities.
“District residents are entitled to make fully informed decisions about how to spend their hard-earned money, especially when it comes to making the high stakes purchase of a home,” said Attorney General Schwalb. “These four companies violated the most fundamental principles of a free and fair marketplace: they hid information from consumers, limited their choices, and hurt other businesses that play by the rules. Today, we’re exposing and putting an end to these elaborate, secretive, and illegal kickback schemes.”
The OAG’s investigation found that Allied, KVS, Modern, and Union used shell companies and other mechanisms to offer real estate agents exclusive investment opportunities in exchange for referrals. Officials said the kickbacks, including profit-sharing and extravagant yacht parties, incentivized agents to steer homebuyers toward these companies, reducing competition and harming law-abiding competitors.
Critics of the Biden administration’s title insurance waiver proposal point out that when homeowners refinance their loans, title issues such as undisclosed liens or other encumbrances can still arise. If title insurance were waived, government-sponsored enterprises like Fannie Mae and Freddie Mac could be forced to bear the risk, essentially turning them into de facto title insurers. Advocates argue this could lead to unintended consequences, particularly in communities of color, where property rights and financial stability are already under threat.
Under the settlement, Allied will pay the District $1.9 million, while the city will receive $1 million from KVS, $325,000 from Union, and $65,000 from Modern.
The District plans to allocate up to $1.75 million from these settlements toward restitution for affected consumers; the OAG will provide additional details to homeowners in the coming months.
All four companies have agreed to cease offering real estate agents any consideration for referring title insurance business and will either end their title insurance operations in the District or divest real estate agents from their ownership interests in the shell companies.
Schwalb praised KVS for its immediate cooperation and cessation of the illegal practices. He said Modern and Union also cooperated with the investigation, and all four companies agreed to end these practices before the investigation concluded.
“Homeownership is one of the most significant investments a person can make, and title insurance is a critical safeguard in protecting that investment,” Schwalb emphasized. “Waiving these protections could have far-reaching consequences, especially for communities already facing challenges in securing their financial futures.”