There is an all too familiar scenario for home purchasers and refinancers that has consistently been one of the major mortgage-related consumer complaints to state and federal agencies for the past few years -- title insurance trickery and "good faith estimates" of settlement costs that turn out to be hundreds (if not thousands) of dollars off the mark.

At least ten states are investigating alleged title insurance fraud. These investigations involve not only a number of America's top title insurance companies but two super-size lenders, a national real estate company, and a large number of large homebuilding corporations.

One scheme under scrutiny in California, Washington and Colorado, is very complicated and involves not only the title company and the middleman -- the lender, homebuilder or real estate company -- but a reinsurance company, usually a subsidiary of the middleman.

In New York, Attorney General Eliot Spitzer is wrapping up a two-year probe. he is expected to accuse major title insurers of charging inflated fees that let them cover kickback payments to major developers.

In Florida, a title agent accused of stealing more than $1.1 million in customer escrow funds took the money along with her boyfriend and coworkers on a Las Vegas junket, but didnt bet on getting caught.

Kathryn Knight, 37, also known as Kathryn Weed, was operating Weed & Associates Title Services when American Pioneer Title Insurance Company conducted an audit and discovered discrepancies in Weed & Associates escrow account.

Fraud detectives determined that Knight misappropriated in excess of $1.1 million from the escrow account and used these funds to buy vehicles, the Las Vegas getaway and make a down payment on a $9 million land purchase. Her title agent license was immediately revoked and she faces up to 60 years in prison if convicted on the charges, according to Florida's Division of Insurance Fraud.

What to Watch for

Different or previously undisclosed charges for processing and other charges may appear out of nowhere on the HUD-1 settlement sheet. You are dealing with a number of entities, including a lender, a real estate professional, settlement agent and often a mortgage broker. Be sure to find out about the services and fees of each one ahead of time and make sure the actual charges match the estimates.

For example, when a property owner sells or refinances his or her house, she should expect to pay certain fees, including fees to the real estate agent, as well as to the settlement agent.

Title companies generally act as settlement agents. As such, they must establish and maintain escrow accounts which contain assets held in trust.

Settlement agents are also required to track all receipts and disbursements from each settlement and escrow account, and, among other things, affirmatively agree to secure and file all documents which are part of the transaction.

In exchange for performing these services, the title company charges customers fees as well.

Be alert, read the documents and ask questions about new or previously undisclosed fees. If you have recently sold or refinanced your home and paid a lot of unexpected or undocumented fees in connection with your transaction, you should file a consumer complaint.