Kampeter [a DOI spokeswoman] said the insurance department did not take action against Guaranty Title last year because LandAmerica officials indicated they were working with the company to achieve solvency by replenishing its accounts.

“We were aware of the shortages in the audit … and we were monitoring the actions of the underwriter to ensure the problems were fixed (so) that there wouldn’t be any interruption of services provided to Missouri consumers,” she said. “They had detailed procedures in place that they were going to do to ensure those accounts would be back in balance.”

In reality, though, Guaranty Title was headed for financial ruin, and Kampeter said state officials who had been in contact with LandAmerica about rectifying the accounting problems were puzzled when the company went under.

Barry Schwartz of Branson Hills Development Co., one of Guaranty Title’s customers now suing the agency for nonpayment and alleged fraud, said he would liked to have known about the red flags last year. His company started using Guaranty Title about a year ago to handle a high volume of closings.

“You’d think they have some sort of responsibility to the consumer to let them know there’s a problem,” he said.

“A discrepancy in an agent’s level of escrow funds may occur for a variety of reasons and can be extremely complex,” Habenicht wrote. “It is important to investigate potential issues, and we do so on a regular basis. We conduct regular reviews of our agents and work with them to identify potential areas where they can strengthen their internal controls.”