One of apparently did so because escrow accounts used to close real estate sales didn’t have enough money in them, according to a letter from its underwriter.
Foresight Title’s escrow account “has been frozen due to a shortage in that account,” Alliant National Title Insurance Company in Longmont wrote to a consumer last week in response to his demand for payment on a check he got from Foresight that bounced.
“Alliant National has hired a forensic accounting firm to help us figure out the extent of the shortage in Foresight Title’s escrow account,” the letter says. “If the funds have to be disbursed with a shortage, everyone with a claim to funds … will receive a proportional share of the available funds.”
Alliant is based in Texas but has offices in Colorado. A spokeswoman said the company had no comment about the contents of the letter.
Alliant’s letter is the first indication of why Foresight abruptly closed,
The consumer, who refused to allow his name to be published, last month filed a complaint with the Colorado Division of Insurance, which regulates title companies, and demanded reimbursement of $398, part of the money held in escrow to cover costs related to the sale of his home. The check sent to reimburse him for a utility bill bounced, he said, and his bank tacked on an additional $10 insufficient fund fee.
Title companies typically hold millions of dollars in escrow. The money is used to pay for final water and utility bills or other costs after closing.
State insurance regulators confirmed an investigation into both companies and their owners, but would not discuss the content of the investigation. They did not respond to efforts to confirm the details of the Alliant letter.
State incorporation records show Foresight was formed in 2014 by Michelle Hernandez, 43, who also was chief operating officer at Williams Title under the name Michelle McCollum, according to that company’s website.
Hernandez is the daughter of Elizabeth Newell-Williams, 63, who co-founded Williams Title in 2004 in the basement of her home.
Williams announced on its website that the principals were retiring and offered no explanation.
Both women had filed for personal bankruptcy at one time, federal bankruptcy record show, but neither company nor its ownership appeared to have any recent history of financial troubles.
Title companies can quickly run into financial trouble with millions of dollars floating between dozens of transactions. In the most recent example, in 2014, American Title Services was forced into bankruptcy when its owner, Richard Talley of Aurora, committed suicide with a nail gun after years of misappropriating more than $2.8 million of company funds was discovered.
