RESPA Violations - When a Commission Just Isn't Enough

The Real Estate Settlement Procedures Act (RESPA) sets forth the rules relating to the settlement of real estate transactions by brokers, lenders and title companies. One section of the Act makes it illegal to accept referral fees for the referral of settlement business, such as a real estate agent receiving compensation for sending a client to a certain title company. It also is illegal to charge clients fees for services that aren't performed.

Apparently, not everyone is satisfied with their customary commission or fees for real estate brokerage or mortgage origination. The Commerce Department is causing the closure of 35 First American Title Insurance Co. offices in Minnesota, according to the Rochester Post-Bulletin. It seems that 600 real estate brokers and mortgage originators invested in 80% ownership of these title offices. Though First American denies illegality, the Commerce Department forced the closures in lieu of litigation, stating that fees paid to the real estate and mortgage brokers were illegal kickbacks.

RESPA Section 8 is where these rules are found, and it can be complicated to interpret according to the FindLaw web site. Technorati Profile