Have RE/MAX and First American Title Violated RESPA Regs?

Talk about RESPA violations:

A legal dispute between RE/MAX International Inc. and First American Residential Group Inc. over a $600,000-a-year marketing agreement has attracted the attention of Colorado regulators, who want to know more about how First American benefited from the deal and why it decided to pull the plug on the agreement last year.

According a lawsuit filed by RE/MAX in March, First American paid the real estate franchisor more than $2.4 million over four years for the exclusive right to market its title insurance and related services to RE/MAX franchises and agents.

RE/MAX sued after First American terminated the agreement in April 2007 and allegedly failed to make a scheduled payment of $693,000 the following July.

The lawsuit caught the attention of the Colorado Division of Real Estate’s director, Erin Toll, known for her past investigations of kickbacks paid by title insurers to win business from real estate agents, developers and lenders when Toll was the state’s deputy insurance commissioner.

Toll said she wants to know exactly what First American was getting for the more than $600,000 a year it paid RE/MAX under the agreement and why the company pulled out.

(Inman)

Legislative Changes to RESPA

Legislative Changes to RESPA

To further bolster consumer protection and to ensure uniform and consistent enforcement of RESPA, HUD intends to seek legislative changes to the Act that will complement the regulatory improvements made by the rule. Currently, RESPA does not provide HUD with enforcement mechanisms for some of the most important consumer disclosures and protections. A lack of enforcement authority and clear remedies for violations of critical sections of RESPA negatively impact consumers and diminish the effectiveness of the statute.

HUD will seek the authority to impose penalties for violations of specific sections of RESPA, including Section 4 (provision of uniform settlement statement); Section 5 (GFE and settlement costs booklet); Section 6 (loan servicing); Section 8 (prohibition against kickbacks, referral fees, and unearned fees); Section 9 (title insurance); and portions of Section 10 (regarding escrow accounts). In addition, HUD proposes the authority for the Secretary and State regulators to seek injunctive and equitable relief for violations of RESPA; require delivery of the HUD-1 to the borrower three days prior to closing; and establish a uniform statute of limitations applicable to governmental and private actions under RESPA.

To Read the full text of HUD’s proposed RESPA rule, visit HUD’s website.