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Michigan title co. to pay $150,000 in HUD settlement

July 8, 2005

Co. allegedly involved in kickbacks with real estate brokers

Inman News

A Michigan title company agreed to pay $150,000 in a settlement with the U.S. Department of Housing and Urban Development after a probe by HUD alleging violations of the Real Estate Settlement Procedures Act, HUD said today.

HUD said it determined that Metropolitan Title Co. paid real estate brokers for the use of conference rooms at rates substantially higher than their fair market value in violation of RESPA's anti-kickback provisions.

Howell, Mich.-based Metropolitan Title Co. oversees operations for Metropolitan and its affiliates, which together comprise one of America's largest independent title agencies. First American Title Insurance Co. acquired Metropolitan in December 2003.

While charging room rental fees does not necessarily violate RESPA, HUD found that the excessive payments made in this case were designed to disguise referral fees that the law prohibits, the agency said today.

Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business. It also prohibits a person from giving or accepting any part of a charge for services that are not actually performed.

"A referral fee by any other name is still a referral fee," said Brian Montgomery, Assistant Secretary for Housing-Federal Housing Commissioner, in a statement. "HUD will vigorously enforce the law to protect consumers from those who attempt to artificially inflate the cost of buying or refinancing a home."

In this case, HUD determined that Metropolitan Title Co. paid up to $150 an hour to lease conference rooms from real estate brokers even though Metropolitan's offices were available and convenient – in some cases, just three blocks away, the agency said.

HUD's RESPA investigators researched the general market value of conference facilities in the Detroit area and found the average hourly rental of comparable rental space was much lower than what First American paid, the agency said.

Metropolitan agreed to a $150,000 settlement payment to the U.S. Treasury and that all future office lease agreements conform to standard commercial leases, HUD announced. In the future, Metropolitan agreed that it would pay settlement service providers rental rates at the minimum level of the general market value for equivalent space, according to HUD.

Copyright 2005 Inman News

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