Sixteen homebuilders across the nation, including Colorado-based MDC Holdings, guaranteed business to a big title insurance company in exchange for kickbacks, Colorado insurance regulators allege.

MDC Holdings, which builds under the name Richmond American Homes, was the only Colorado-based company on the list, according to Erin Toll, the Colorado deputy insurance division commissioner who uncovered the kickbacks.

She told The Denver Post the builders' names were disclosed to the state by First American Title Insurance Co. in Santa Ana, Calif. Last week, the company agreed to pay $24 million refunds stemming from the alleged kickbacks in the five states where it made deals with builders. It admitted no wrongdoing.

The scheme has launched investigations in 15 other states.

Lenders require title insurance to guarantee there are no other ownership claims on a property they are financing.

The arrangements between title companies and homebuilders began in the 1990s when the title firms sought to lock in lucrative deals with builders, mortgage lenders and real estate brokers. In exchange, title insurers would refund part of the premium to builders, lenders and brokers.

Recipients of the kickbacks created reinsurance companies that would purportedly share risks with the title companies -- but they were shams because they never paid a claim, state officials say.

In a Nov. 30 letter to the Colorado Division of Insurance released Wednesday, First American's vice president and attorney James Dufficy said there "was and is no financial necessity" for the company to share risk with the builders, brokers and lenders through the reinsurance companies.

Toll said the scheme also amounted to a discount on title insurance that was unavailable to other insurance buyers, including "average people selling or refinancing a property."

Other builders on the list include Beazer Homes, Engle Homes, John Laing Homes, KB Home, Pulte Homes, Ryland Homes and Shea Homes, all of which have a strong presence in Colorado.

Max Johnson, vice president and general counsel for J.F. Shea Co. Inc., said the company believed the payment scheme was "perfectly legal."

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