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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA - page 28 / 38

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this analysis is far from complete or persuasive when there is an allegation of fraud as advanced

here.10 Plaintiffs claim that the amount shown on the HUD-1 is an overcharge and part of the

scheme is to misrepresent to Plaintiffs the correct amount of the premium for title insurance that

should have been charged. In this sense, it is a misrepresentation that the correct premium was

charged. Given the requirement under RESPA that a uniform settlement statement be used at

settlement, 12 U.S.C. § 2603, the HUD-1 has the imprimatur that the figures reflected on it are true

and correct. A purchaser of title insurance, or Plaintiffs in this case, would reasonably assume that

the charges listed on the HUD-1 were the charges legally due and owing and not an inflated

amount.11 See Markocki v. Old Republic Nat’l Title Ins. Co., 254 F.R.D. 242, 251 (E.D. Pa. Dec.

9, 2008) (Markocki II) (agreeing with Plaintiff that consumers reasonably relied on the title insurer

to abide by TIRBOP and Pennsylvania law).

In this case, viewing the facts at this stage in the light most favorable to Plaintiffs, the dollar

amount on the HUD-1 representing the premium for the title insurance was not true and correct and

was a misrepresentation which played a role in furthering the overall scheme to defraud. Title

10 Routine and innocent documents can be used as part of a scheme to defraud. See United States v. Schmuck, 489 U.S. 705, 710 (1989) (finding that routine mailings may satisfy the mailing element of the mail fraud offenses); Kehr Packages, 926 F.2d at 1416 n.3 (finding that mail fraud can be predicated on mailings which are “designed to lull the victims into a false sense of security”) (internal citations omitted); United States v. Brocksmith, 991 F.2d 1363, 1367-68 (7th Cir. 1993) (finding a “step in the plot” of the scheme to defraud included mail that contained no false or misleading information). Although mail, other than the HUD-1, in furtherance of the scheme to defraud may be relied on by Plaintiffs here, these cases are still persuasive authority that the use of routine and innocent-looking documents may also advance an illicit scheme.

11Section 2.9 of the TIRBOP Manual provides notice to a purchaser of title insurance at or prior to closing that if the conveyance or refinance occurs within ten years of a previous issuance of the same property, you may be entitled to a reduced rate. This provision would cause a purchaser who comes within its terms to believe that the rate charged at closing for title insurance was a discounted rate.

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