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Minnesota Commerce Department Fines Title Insurance Company for Violating Consumer Protection Laws Banning Kickbacks

11/6/2015 10:14:43 AM

For Immediate Release:

SAINT PAUL – Minnesota Commerce Commissioner Mike Rothman announced that his department has imposed a $45,000 fine against a Maplewood-based title insurance company that hosted boat cruises, wining and dining realtors and mortgage lenders to get their clients’ business.

The company, TitleSmart, provides title insurance and settlement services for residential real estate transactions.  Realtors or mortgage lenders often recommend and arrange for these services on behalf of their clients, who ultimately pay the costs as part of the transaction.

“This is about protecting consumers and ensuring a fair marketplace,” said Rothman. “Buying or selling a home is a big financial decision and it’s a complicated process. These transactions shouldn’t be tainted by conflicts of interest that can increase costs for consumers. When a company offers cruises, dinners and prizes to get business from realtors and mortgage lenders, consumers can’t trust that their best interests are being served.”

Under the terms of a consent order, the Commerce Department is imposing a civil penalty of $45,000 against TitleSmart and owner Cindy Koebele, with $20,000 stayed for two years. The company must also pay $5,000 in investigative costs and comply with all relevant federal and state laws.

The Commerce Department alleges that TitleSmart violated the federal Real Estate Settlement Procedures Act (RESPA), which prohibits fees, kickbacks and the giving or taking of “anything of value” in exchange for referrals of home settlement-related business. The Commerce Department also alleges that the company violated state law by offering payments or benefits of value to individuals who were not licensed to negotiate or solicit insurance.

According to the Commerce Department investigation:

TitleSmart hosted a boat cruise on the St. Croix River in September 2012 and again in September 2013.  Altogether, nearly 250 real estate and mortgage professionals attended these cruises along with their guests. These people were in a position to refer their clients to TitleSmart for settlement services.

In 2012, TitleSmart paid over $14,000 to provide the cruise along with food, alcohol and door prizes.  In 2013, the company paid nearly $20,000.

Between the 2012 and 2013 boat cruises, almost 68 percent of the real estate transactions closed by TitleSmart were referred by businesses that had at least one person on the 2012 cruise.

Between the 2013 cruise and May 1, 2014, almost 75 percent of transactions closed by TitleSmart were referred by a business that had at least one person on the 2013 cruise.

Every business that was represented on these cruises referred clients to TitleSmart.

Tips for Consumers

Rothman suggests that consumers ask the following questions if their real estate professional is recommending a specific title or settlement services company:

  • Why is your realtor referring you to the specific company?
  • Does your realtor have any business or marketing arrangements with the company?
  • Will your realtor receive any referral fees or other compensation (such as meals, free advertising, sports tickets or prizes) if you use the company?

Rothman emphasized that homebuyers have the right to shop around and choose their own title and settlement services company in a real estate transaction. He said consumers should also ask questions of the company:

Are the company and the closing agent licensed in Minnesota?

Are any discounts available to you, such as reissue or substitution discounts?

Are you getting standard or extended title coverage? What are the differences in price and coverage? 

Rothman encourages Minnesota consumers with questions about title insurance or related real estate issues to contact the Commerce Department’s Consumer Services Center by email at or by phone at 651-539-1600 or 800-657-3602 (outside the Twin Cities metro area).


Media Contact: 
Ross Corson 
Director of Communications 
Minnesota Department of Commerce 
P: 651-539-1463 | C: 651-368-5050 |

Banking & Finance



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