Having an insurance regulator and an FBI agent enter your office for any reason can be unnerving, as was the case with a fee attorney in Texas. A fee attorney closes real estate transactions in the name of a title insurance company per a written agreement in exchange for a portion of the title premium.

The gentlemen specifically wanted to examine the endorsement on a single, negotiated check. It seemed an odd request, but the fee attorney asked his closer to pull a copy (front and back) of the check from their online banking system. They immediately produced the check and the gentlemen examined the endorsement on the back.

Then, the men explained to the fee attorney the reason for the investigation. The check was made payable to a hazard insurance agency. The check, however, was cashed by the agency's owner and used for his personal expenses. No funds were ever transferred to the actual insurer or underwriter, leaving the homeowner's property completely uninsured.

In addition, a particular loan officer had directed the consumer (and many other consumers) to that specific insurance agency, making the loan officer potentially complicit. The fee attorney had never heard of such a thing and was completely flabbergasted.

After sharing the story behind the investigation, the insurance regulator and FBI agent left with a copy of the check. The fee attorney approached the closer in his office to tell her what he had learned. The closer listened, mouth agape.

After hearing the story, the closer advised she had dropped a check in the mail just 45 minutes ago to the same insurance agency. The fee attorney asked who the loan officer was on that particular transaction and she said it was the same loan officer under investigation.

The fee attorney called the homeowner and repeated the information he had learned from the two gentlemen who just left his office. He allowed the information to sink in and then suggested the homeowner purchase coverage with another company. The homeowner agreed immediately and hung up the phone to find another agent.

The fee attorney instructed the closer to void the check she had mailed, so it would not be honored when it showed as an exception on the positive pay report and to reissue it when the homeowner called back with the new insurance information.

The fee attorney did explain to the homeowner, per the FBI agent and insurance regulator, not all checks paid to this insurance agency were used for the insurance agent's personal expenses, but it was not worth risking the fact the homeowner may have an accident and then discover they had no coverage.

Clearly, neither the fee attorney nor the closer in his office had anything to do with recommending this insurance agency to the homeowner. As soon as they were aware of the situation, they notified those clients who could possibly be affected, hoping they did not become further victims by suffering a loss for their lack of insurance coverage.