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.