Following accusations of orchestrating "kickback" conspiracy schemes, three of the largest US title insurance companies have been fined $38 million. The settlement is expected to affect over 82,000 Californian homeowners.

California’s state insurance commissioner John Garamendi said that the three insurance companies – LandAmerica Financial Corporation, First American Title Insurance Company and Fidelity National Financial Incorporated – and their subsidiaries collectively cost homebuyers $25.4 million.

Garamendi explained that, in order to generate custom, the three companies paid kickbacks to lenders, builders and real estate agents who created reinsurance companies that were nothing more than shell outfits.

In order to ensure that property ownership is undisputed, title insurance is compulsory for lenders in home purchases in California. However, the three insurers exploited the fact that many US consumers were unaware of their right to shop around for policies.

The kickback schemes, said to have started as long ago as 1995, involved the three insurers charging buyers additional reinsurance fees of $100. They would then, in turn, send these fees to the very same builders, lenders and real estate agents who initially generated the custom.

It’s just incredible that the nation’s largest title insurance companies would conspire with homebuilders, with realtors and with the nation’s largest banks to rip off consumers, Garamendi said in a press conference in San Francisco, But that’s what happened.

LandAmerica agreed to refund $2.6 million and pay $1.9 million in penalties.

In addition to pledging $15 million in refunds to California consumers, First American agreed to pay $5 million towards administrative and investigative expenses incurred by Garamendi’s office.

Fidelity denied any foul play but agreed to pay out over $13 million in refunds and fines.

As a result of the legal action, up to a dozen other US states are making similar inquiries.