More tips on RESPA law, guidelines and violations for real estate agents and loan originators from former HUD investigator and RESPA expert, Dr. Gary Lacefield.

This week’s video deals with a mortgage company that solicited tickets to sports events and music concerts as well as dinners in exchange for referring business. 1-800-East-West Mortgage Company settled with HUD for $150,000.

View the RESPANewsUpdate.com video here. This educational video and the RESPANewsUpdate.com website were created by WebCasting.com, based in Dallas, Texas. This video is provided for free, compliments of Premier Mortgage Funding, Inc.

For more about Dr. Lacefield, visit RiskMitigation.net or GoGetRealEstate.com/Get/GLacefield.

HUD FDIC Kickback Case Gets 150K Settlement

The Department of Housing and Urban Development and the Federal Deposit Insurance Corp. announced a $150,000 settlement with one of the largest mortgage companies in New England for violations of the Real Estate Settlement Procedures Act (RESPA).

HUD and the FDIC found that 1-800-East-West Mortgage Company solicited and received tickets from certain settlement service providers to Boston Red Sox and New England Patriots events as well as music concerts and restaurant gift certificates in exchange for the referral of business. Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.

Brian Montgomery, HUD’s Federal Housing Commissioner stated that “RESPA can’t be any clearer when it comes to the giving or receiving of ‘things of value’ in exchange for the referral of business it’s illegal.” He continued that “The message to the rest of the industry should be equally clear - we will not only investigate those who give, but those who receive kickbacks.”

Chris Spoth, Acting Director of the FDIC Division of Supervision and Consumer Protection stated that “RESPA provides important protections for home buyers. We fully support enforcement of this important consumer protection legislation.,”

East-West is a wholly owned subsidiary of Commerce Bank and Trust Company of Worcester, Massachusetts, which is a state non-member bank supervised by the FDIC. Through a joint investigation conducted over the past year, HUD and FDIC determined that East-West instituted a “give-to-get policy.” East-West allegedly pressured certain closing attorneys, appraisers and title companies for gifts totaling tens of thousands of dollars that East-West used as employee incentives.

o maintain their status as East-West’s top settlement service providers, East-West allegedly expected certain attorneys and appraisers to pay for luxury seating at Boston Red Sox games and concert events at Fenway Park. In addition, East-West allegedly induced attorneys and appraisers to pay for semi-private barbeques and charitable galas with Patriot players. East-West also regularly requested gift certificates to numerous upscale restaurants in the Boston area.

East-West agreed to settle by paying $150,000, agreed to stop accepting kickbacks from settlement service providers, and to cooperate with the agencies’ ongoing investigation of the closing attorneys, appraisers, title companies and other settlement service providers who provided kickbacks to East-West. It appears that in this case, the indictments have only just begun.