Suits allege $18M missing from Titleserv escrow
Three lawsuits filed against Woodbury-based title insurance agent Titleserv since its abrupt closing April 8 allege that more than $18 million slated for paying off mortgages, taxes and other costs is missing.
New Jersey Title Insurance Co. and Oregon-based WFG National Title Insurance Co. -- two title insurance underwriters -- as well as California-based Prospect Mortgage, a major residential lender, filed suits in State Supreme Court in Mineola and Manhattan.
The suits allege Titleserv failed to make payments from escrow accounts it controlled in connection with mortgages being refinanced. As lenders and borrowers submitted claims over the refinancings, the title insurance underwriters allege, Titleserv resisted letting in their auditors.
WFG says in court papers that roughly $7.9 million WFG had insured was missing from accounts Titleserv controlled.
Officials at New Jersey Title Insurance Co. said they are trying to track down at least $10 million in mortgage funds and $150,000 in policy fees owed.
In its suit, Prospect Mortgage cited about $1.8 million missing for eight refinance borrowers.
The FBI raided Titleserv offices and took records three weeks after its April 8 closing.
Prospect clients Jeanne and Tom Atzl of Rockland County took out a $380,000 mortgage on their home in March to pay off a higher-interest loan on their investment property, but Titleserv has not transferred the money. "If I stole a can of corn from ShopRite, it wouldn't be long before they'd have me in handcuffs," Tom Atzl said.