HUD settles case against major real estate broker: Coldwell Banker accused of giving gifts and other benefits to referring agentsMortgagePress.comRESPA,HUD
The U.S. Department of Housing and Urban Development has
announced a $250,000 settlement with Coldwell Banker Residential
Real Estate Inc. for violations of the Real Estate Settlement
Procedures Act. HUD asserted that Coldwell's Atlanta real estate
brokerage offices paid higher sales commissions and offered gifts
and other incentives to its sales agents, for referring business to
an affiliated title company.
Coldwell maintains an ownership interest in Regency Title
Company in the greater Atlanta area. After a yearlong
investigation, HUD found that Coldwell offered its sales agents
incentives including trips, Atlanta Braves baseball tickets and
agent-of-the-month ads in local newspapers, based on the number and
volume of referrals to Regency Title. In addition, HUD discovered
that certain agents who referred business to Regency Title received
higher sales commissions or were paid immediately at the time of
closing.
"Clearly, when companies create incentives and base compensation
on referrals by their real estate sales agents to their affiliated
businesses, that's against the law," said Brian Montgomery, HUD's
assistant secretary for housing and federal housing commissioner.
"HUD is taking a serious look at affiliated business arrangements,
to make certain that business practitioners don't blur the line
between legitimate relationships and those based on kickbacks and
referral fees."
Coldwell agreed to the $250,000 settlement payment to the U.S.
Treasury and to cease the business practices that triggered HUD's
concern. In addition, Coldwell 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 more information, visit www.hud.gov.
