The Department of Housing and Urban Development today announced separate settlement agreements totaling $80,000 with four Detroit area real estate brokers for violations of the Real Estate Settlement Procedures Act, known as RESPA.
The settlements follow a related agreement this summer with Metropolitan Title Co., which HUD determined paid these real estate brokers for the use of conference rooms at rates substantially higher than their fair market value.
HUD reached agreements with the following real estate brokers in the Detroit area: RE/MAX Masters; RE/MAX in the Hills; Hometown One Associates (doing business as Remerica Hometown One); and Schweitzer Real Estate (doing business as Coldwell Banker Schweitzer Real Estate). In each case, HUD said it determined that these brokers received conference room rental fees from Metropolitan in excess of the general market rate for comparable room rentals.
Each of the four brokerage companies agreed to settle without admitting wrongdoing.
While charging or paying room rental fees does not necessarily violate RESPA, HUD determined in this case that the excessive charges and payments made were designed to disguise referral fees that violate the anti-kickback provisions of the law.
Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.
“Whether you give or whether you receive a thing of value in exchange for the referral of business, it’s against the law,” said Brian Montgomery, assistant secretary for housing-Federal Housing Commissioner. “RESPA speaks to both sides of this equation and HUD, for its part, will vigorously enforce the law when it comes to controlling kickbacks, whether you pay or whether you’re paid.”
Last July, HUD reached a settlement with Metropolitan Title Co. for paying excessive hourly rates to lease conference rooms from real estate brokers. HUD investigators researched the general market value of conference facilities in the Detroit area and determined the average hourly rental of comparable rental space was much lower than what Metropolitan paid to these brokers. Following the investigation of Metropolitan, HUD then pursued real estate brokers who benefited from these payments.
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