Real estate brands RE/MAX and Century 21, along with mortgage lenders Citigroup and Wells Fargo, may have been involved in alleged kickback schemes involving title insurance companies in California, according to news sources. The corporations associated with these brands have denied any knowledge about the investigations.
According to a Los Angeles Times report, California Insurance Commissioner John Garamendi named the companies as playing a role in the alleged schemes in which title insurance companies overcharge home buyers for title insurance, then split the fees with developers, home builders and real estate agents who sent the business their way.
Kevin Doell, a spokesman for international real estate brokerage powerhouse Cendant Corp., said, “Cendant expects all of its affiliates to be accountable and to act responsibly at all times.”
He said that Cendant has not been directly contacted about the investigation of alleged kickbacks. He also said he is not aware that any corporate-owned real estate brokerages are under investigation, and that Cendant-affiliated franchise brokerages are “independently owned and operated” and Cendant does not control the day-to-day operations of these franchises.
Cendant-affiliated franchise brokerages include Century 21, Coldwell Banker, Coldwell Banker Commercial and ERA, while Cendant-subsidiary NRT oversees several corporate-owned brokerage brands, including The Sunshine Group, The Corcoran Group, Coldwell Banker, Coldwell Banker Commercial, ERA and Sotheby’s.
Meanwhile, Daryl Jesperson, CEO for RE/MAX International, said the company is “not involved in any investigation nor have we been informed of any investigation.” RE/MAX has a contract with First American Title Insurance to advertise in RE/MAX publications, though he said this relationship “doesn’t have anything to do with title insurance – it has everything to do with marketing.”
First American Title Insurance this week agreed to refund about $24 million to consumers nationwide while under investigation by the Colorado Department of Insurance. The development was announced Sunday by Colorado Gov. Bill Owens, according to news reports. The parent company did not admit liability or wrongdoing.
Jesperson added, “We have been assured by (First American) that all of their relationships with RE/MAX brokers are totally RESPA-compliant.”
RESPA, short for the Real Estate Settlement Procedures Act, is a federal act that specifies illegal types of real estate-related kickbacks.
While the issue of alleged kickbacks by title companies “is obviously a very big issue to various insurance commissioners across America,” Jesperson said, “We are not involved.”
He encouraged California Insurance Commissioner John Garamendi to take a look at RE/MAX’s books to see for himself. “If the commissioner wants to come and take a look he doesn’t need a subpoena – our books are open,” he said.
Laurie Janik, general counsel for the National Association of Realtors, said in a statement that the association is not aware that any specific members who are under investigation for receiving alleged kickbacks by title companies, “despite the use of the term Realtor to identify some of the alleged guilty parties.”
Janik also said the association “provides guidance for its members on RESPA compliance, and in fact addressed these types of structures in a white paper published earlier this year.”
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