HUD settles case against Prudential for RESPA violationsMortgagePress.comHUD,Prudential,RESPA
The U.S. Department of Housing and Urban Development has
announced a $48,000 settlement with Prudential Locations LLC for
violations of the Real Estate Settlement Procedures Act. HUD found
that Prudential's Honolulu real estate brokerage office leased a
luxury car, offered vacations and provided other gifts to reward
sales agents that referred business to an affiliated mortgage
company.
Prudential is affiliated with and has a financial interest in
Wells Fargo Home Mortgage Hawaii LLC. HUD's investigation found
that Prudential hosted a "First Annual Wells Fargo Friends Party"
and invited only those sales agents that referred more than $1
million in business to Wells Fargo. HUD further found that during
this party, Prudential sponsored a drawing to award a three-year
lease of a Mercedes-Benz automobile to one of its agents.
Prudential also provided certain real estate agents attending the
party with trips to Thailand, Las Vegas and San Francisco. In
addition, HUD discovered that Prudential offered restaurant gift
certificates to referring sales agents.
"It's obvious that when you award prizes based on the amount of
business any sales agent refers, you're going to violate the spirit
and the letter of RESPA," said Brian Montgomery, HUD's assistant
secretary for housing and federal housing commissioner. "When real
estate companies tie gifts and other benefits based on the referral
to affiliated businesses, that's a kickback and that's against the
law."
RESPA was enacted in 1974 to provide consumers advance
disclosures of settlement charges and to prohibit illegal kickbacks
and excessive fees in the home buying process. Section 8 of RESPA
prohibits a person from giving or accepting anything of value in
exchange for the referral of settlement service business.
Prudential agreed to the $48,000 settlement payment to the U.S.
Treasury and to cease the business practices that triggered HUD's
concern. In addition, Prudential will notify all its real estate
agents that any compensation to them based on referring business to
affiliated partners is a violation of RESPA.
For a copy of the settlement or for further information,
visit www.hud.gov.
