The state attorney general and a key state legislator intend to try to reform how Maryland regulates the title insurance industry, including barring those who have taken clients' money from returning to the business.
"It's almost incomprehensible that such people are allowed back into this business," Del. Michael E. Busch, chairman of the House Economic Matters Committee, which reviews legislation governing the insurance industry in Maryland, said yesterday.
Mr. Busch said he plans to fashion legislation to close a regulatory loophole that allows title insurance agents who have taken clients' escrow money from continuing to work in the field.
"That's like letting Jeffrey Levitt come back and run a bank," he said, referring to the former president of the now failed Old Court Savings & Loan Association, who was jailed in 1986 for stealing millions from the thrift.
Attorney General J. Joseph Curran Jr. also is considering his own set of recommendations to the state legislature on how to tighten regulation of the title insurance industry, one of his deputies said yester- day.
"The title insurance regulations have been a concern of Mr. Curran's for some time," said Deputy Attorney General Norman E. Parker. "There are loopholes in the regulations that he thinks should be closed."
The move toward reforms comes after an article in Sunday's editions of The Sun showed that title insurance agents who have been convicted of or admitted stealing money from company escrow accounts have returned with ease to the same industry. State insurance regulations don't bar them from working in the business again.
The article also showed that some title agents sidestep registering with the state by working for firms controlled by lawyers, who are exempt from the state's licensing requirements.
While title insurance is not well understood by those outside the insurance industry, it is a common element of most property sales transactions. It protects the buyer from responsibility for old liens against the property and covers the loss of mortgage money if it is stolen while being held in an escrow account.
Mr. Busch said that before making specific proposals, he planned to meet with state Insurance Commissioner Dwight K. Bartlett III and Mr. Curran to discuss a legislative initia
tive to clean up the title industry.
Mr. Curran's deputy, Mr. Parker, said the attorney general may propose closing the exemption that allows lawyers to sell title insurance without a state license.
The attorney general also may seek to have title insurance agents and brokers post a higher bond than now required, Mr. Parker said. The state now requires title insurance firms that are not controlled by lawyers to post a $100,000 bond; firms controlled by lawyers don't have to post bond.
Mr. Curran's legislative initiatives would be unveiled just before the newly elected General Assembly convenes Jan. 11 for the 1995 session, Mr. Parker said.
He said Mr. Curran's interest in tightening the state's regulation of the title insurance industry has been rekindled, in part, as a result of the case of Joseph E. Goldberg Sr., a Marriottsville resident who operated Land Title Research, a title insurance and property settlement firm in Ellicott City.
In October the state shut down and seized the records of Land Title, when an insurance underwriter found that $2.3 million was missing from the company's escrow account, where clients' money was to be temporarily held.
Mr. Goldberg is under criminal investigation.
State insurance administration officials said last week that dozens of properties in virtually every county in Maryland may be affected by Mr. Goldberg's alleged theft of the money.