Industry News

HUD, Virginia title agency settle RESPA charges

Sham businesses allegedly used to generate referrals
Published on May 9, 2008

A Virginia title insurance agency has agreed to pay more than $30,000 to settle accusations that it formed 10 sham businesses to enrich attorneys, real estate brokers and agents, and mortgage lenders who provided business referrals. Officials with the Department of Housing and Urban Development alleged that American Land Title LLC, Big Spring Farm Inc. and Mark D. Gunn of Pearisburg, Va., violated provisions of the Real Estate Settlement Services Act (RESPA) that prohibit kickbacks for referrals or fee splitting for services that aren't actually performed. HUD alleged that between 2002 and 2006, American Land Title created 10 limited liability companies, or LLCs, granting minority interests in the affiliated businesses to local real estate attorneys, real estate brokers and agents, and mortgage brokers and lenders who profited when they referred business to the companies. Although each of the affiliated businesses had a separate checking account, Gunn was the only one aut...

Comments