HUD Settles Cases Against New Mexico Builder And Florida Title Company For Paying Kickbacks
|April 13, 2007|
WASHINGTON - The Department of Housing and Urban Development announced two settlement agreements with a New Mexico builder and a Florida title insurance company for violations of the Real Estate Settlement Procedures Act (RESPA). HUD alleged that Fidelity National Title Insurance Company and Longford Homes of New Mexico, Inc. were engaged in a business arrangement that violated RESPA's anti-kickback and referral fee provisions.
HUD initiated its investigation of settlement service practices in Albuquerque, New Mexico to determine whether Fidelity's marketing arrangement with Longford Homes violated RESPA. HUD concluded that Fidelity provided pre-paid "just sold" and "just listed" postcards and listing agreements to real estate agents at no- or below-cost.
In addition, HUD found that Fidelity essentially provided Longford with a $25,000 annual line of credit in exchange for the referral of settlement service business. That fund enabled Longford to obtain store gift certificates, event tickets and dinners for Longford employees and real estate agents.
RESPA was enacted in 1974 to provide consumers advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the homebuying process. RESPA specifically prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.
"Kickbacks and referral fees hurt consumers by artificially driving up the cost of buying a home," said Brian Montgomery, HUD's Assistant Secretary for Housing-Federal Housing Commissioner. "The law clearly prohibits the giving or taking of anything of value in exchange for the referral of settlement service business."
As a result of the agreements announced today, Fidelity agreed to pay $68,635 and Longford Homes agreed to pay $20,700 to the U.S. Treasury and to cease the conduct that HUD complained of.
Meanwhile, investigations in the Albuquerque market are continuing.