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Putting others first: A look at the career of Carol Wagner

Jan 02, 2006

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.
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Jan 02, 2006
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