The CFPB is ordering 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. These illegal practices benefitted an affiliated company owned by the same holding company as the real estate firm.
The real estate firm was charged with violating the Real Estate Settlement and Practices Act (RESPA), which prohibits kickbacks for referrals of real estate settlement services, by either explicitly directing or suggesting that title and closing services be conducted by its affiliate. While RESPA allows real estate companies to refer customers to affiliated businesses, the firm did not provide customers with the required “Affiliated Business Arrangement” disclosure that clearly states their right to shop around for better prices and that states that they are not required to use an affiliated company.
Along with paying the civil penalty fine, the firm is also required to ensure that its disclosures comply with RESPA.