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 more details on overcharging for Detroit conference rooms. The leads to a HUD investigation and $150,000 in settlements.

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.

Title Company says It Will Change Its Ways and Pay $150K

The Department of Housing and Urban Development announced a legal settlement with a Detroit title company for violations of the Real Estate Settlement Procedures Act (RESPA).

HUD determined that Metropolitan Title Company paid real estate brokers for the use of conference rooms at rates substantially higher than their fair market value in violation of RESPA’s anti-kickback provisions. While charging room rental fees does not necessarily violate RESPA, HUD found that the excessive payments made in this case were designed to disguise referral fees that the law prohibits.

The settlement agreement accuses Metropolitan of violating both Section 8(a) of RESPA as well as HUD’s Statement of Policy 1996-3, Rental of Office Space, Lockouts and Retaliation. SOP 1996-3 sets forth the factors that HUD uses to determine whether conference room rental agreements between settlement service providers are legitimate room rentals, or whether they constitute illegal kickbacks for referrals of settlement services.

Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business. It also prohibits a person from giving or accepting any part of a charge for services that are not actually performed.

“A referral fee by any other name is still a referral fee,” said Brian Montgomery, Assistant Secretary for Housing-Federal Housing Commissioner. “HUD will vigorously enforce the law to protect consumers from those who attempt to artificially inflate the cost of buying or refinancing a home.”

In this case, HUD determined that Metropolitan Title Company paid up to $150 an hour to lease conference rooms from real estate brokers even though Metropolitan’s offices were reportedly available and convenient in some cases, just three blocks away. HUD’s RESPA investigators researched the general market value of conference facilities in the Detroit area and found the average hourly rental of comparable rental space was much lower than what First American paid.

Metropolitan has denied the allegations that it did not comply with RESPA or the regulations and has denied that it paid conference room rental fees that were above the general market rate. However, Metropolitan has agreed to a $150,000 settlement payment and that all future office lease agreements conform to standard commercial leases. In the future, Metropolitan also agreed that it would pay settlement service providers rental rates at the minimum level of the general market value for equivalent space.