Titleserv shuts down without explanation

The FBI on Wednesday raided the closed offices

The FBI on Wednesday raided the closed offices of Titleserv title insurance company, at 88 Froehlich Farm Blvd. in Woodbury, which went out of business early this month. (April 8, 2011) Photo Credit: Newsday/John Paraskevas

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Woodbury-based Titleserv, a title insurance agent that operated in 47 states, has shut down, it announced Monday.

A brief statement from president James Conway III said it closed Friday but did not give any reason: "Titleserv and its professionals are working with Titleserv's lenders, title companies and creditors to provide for the flow of information in an effort to minimize disruption."

Titleserv also offered appraisal and settlement services -- which can include transferring funds between buyers and sellers -- and the 25-year-old business had some big clients, including Chase, which said it learned of the shutdown Friday. The company's exit from a besieged lending industry prompted attorneys, an underwriter and others Monday to gauge the impact on their business.

"That was really a bolt out of the blue," said Carl Samson, president of New Jersey Title Insurance Co., an underwriter for Titleserv.

Samson said his sales agent contacted Titleserv Friday and was told it was closing. He said his auditor went as scheduled to the Woodbury headquarters Monday to get files but was turned away by Conway, who said an appointment must be made with Titleserv's attorney.

"It wasn't something that necessarily gives you a lot of good feeling about what was going on there," Samson said. "We needed some of the files, and we wanted to see if there were files that had been closed where documents hadn't been recorded."

Samson said he's working with lenders to get mortgage funds directly to pay off sellers or their refinance lenders.

Titleserv had about 160 employees, most of them in Woodbury, according to Dun & Bradstreet, which gathers data on businesses. On Friday laid-off employees left the office building with boxes. They declined to comment, with one saying, "It's been a rough day."

At least one competitor, Manhattan-based TitleVest Agency, has scrambled to fill the void. Its executive vice president, Brian Tormey, sent out a blast email Friday, touting its 24-hour turnaround time in title searches.

"We were enticing our staff to stay late and work over the weekend with double pay," Tormey said Friday.

Federal regulators raided Titleserv in 2002 to investigate alleged kickbacks to attorneys for referring business, but the probe ended 18 months later without any charges.

Bill Purschke, Titleserv's executive vice president at that time, said in a 2004 interview with Newsday that the negative publicity had hurt the company: "This has been a cloud that has been hanging around -- and in the minds of people it's had a lasting impression."

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