David Saks: Realty Firm to Pay $500,000 for Inadequate Disclosures

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Realty Firm to Pay $500,000 for Inadequate Disclosures

Realty Firm to Pay $500,000 for Inadequate Disclosures

The Alabama Consumer Financial Protection Bureau (CFPB) ordered RealtySouth, the largest real estate firm in Alabama, to pay $500,000 for inadequate disclosures that could leave consumers unaware of their rights to choose service providers during the home-buying process. The practices identified by the CFPB’s investigation illegally benefited TitleSouth LLC, an affiliated company owned by the same holding company that owns RealtySouth.

“Disclosures give consumers the power to make informed financial decisions, and buying a house is among the biggest financial decisions most people ever make,” said CFPB Director Richard Cordray. “The Consumer Bureau will continue to take action against companies that attempt to modify disclosures and keep consumers in the dark.”

The Bureau charged that RealtySouth violated Section 8 of the Real Estate Settlement Procedures Act (RESPA), which prohibits kickbacks and payment of unearned fees in the context of residential real estate transactions.

RealtySouth’s preprinted form purchase contracts, which its agents provided to homebuyers preparing to make an offer on a home, either explicitly directed or suggested that title and closing services be conducted by its affiliate, TitleSouth.

While RESPA allows real estate companies to refer their customers to affiliated businesses, the law requires them to provide consumers an “Affiliated Business Arrangement” (ABA) disclosure that clearly states their right to shop around for a better price and that they are not required to use the affiliated company. The disclosure RealtySouth gave consumers did not comply with the law; it did not properly highlight consumers’ rights, and the required language was buried in a section of text that also made marketing claims about the company’s prices.

The case was referred to the CFPB by the Department of Housing and Urban Development. RealtySouth changed its disclosure forms immediately after being contacted by the CFPB.

Under the terms of today’s consent order, RealtySouth will pay a civil penalty of $500,000, ensure that its disclosures comply with RESPA, and ensure that its training materials emphasize that its agents cannot require the use of affiliates.

source Jim Gibbs




David Saks



Time&Temp Memphis

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Comment balloon 2 commentsDavid Saks • January 22 2015 05:40PM

Comments

$500,000...That's a hefty price to pay.

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate almost 6 years ago

Will they do it again, Rebecca ?

Only the RESPA Cat knows !

Posted by David Saks ((retired)) almost 6 years ago

This blog does not allow anonymous comments