CFPB Slams RealtySouth for RESPA Violation – NMP Skip to main content

CFPB Slams RealtySouth for RESPA Violation

NationalMortgageProfessional.com
May 29, 2014

The Consumer Financial Protection Bureau (CFPB) has ordered RealtySouth, 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 homebuying process. The practices identified by the CFPB’s investigation illegally benefited TitleSouth LLC, an affiliated company owned by the same holding company that owns RealtySouth. “Disclosures give consumers the power to make informed financial decisions, and buying a house is among the biggest financial decisions most people ever make,” said CFPB Director Richard Cordray. “The Consumer Bureau will continue to take action against companies that attempt to modify disclosures and keep consumers in the dark.” The Bureau charged that RealtySouth violated the Real Estate Settlement and Practices Act (RESPA), which protects consumers during the home-buying process by prohibiting kickbacks for referrals of real estate settlement services. RealtySouth’s preprinted form purchase contracts, which its agents provided to homebuyers preparing to make an offer on a home, either explicitly directed or suggested that title and closing services be conducted by its affiliate, TitleSouth. While RESPA allows real estate companies to refer their customers to affiliated businesses, the law requires them to provide consumers an Affiliated Business Arrangement (ABA) disclosure that clearly states their right to shop around for a better price and that they are not required to use the affiliated company. The disclosure RealtySouth gave consumers did not comply with the law; it did not properly highlight consumers’ rights, and the required language was buried in a section of text that also made marketing claims about the company’s prices. The case was referred to the CFPB by the Department of Housing and Urban Development. RealtySouth changed its disclosure forms immediately after being contacted by the CFPB. Under the terms of the consent order, RealtySouth will pay a civil penalty of $500,000, ensure that its disclosures comply with RESPA, and ensure that its training materials emphasize that its agents cannot require the use of affiliates. 
Published
May 29, 2014
Regulatory Review, Reformatted

The progress made to date with NMLS modernization

Regulation and Compliance
Dec 01, 2021
November Surprise: Fed May Accelerate Tapering

Chairman Powell tells Congress of concerns about inflation, COVID-19 variant’s effect on recovery.

Regulation and Compliance
Dec 01, 2021
FHFA's 2022 Conforming Loan Limit Maxes Out At Nearly $1M

Baseline limit for Fannie, Freddie increases to $647,200, but for 'high-cost areas' loan ceiling set at $970,800 for single-family homes.

Regulation and Compliance
Dec 01, 2021
Regulators Are Back In The Saddle

There’s not only a new sherriff in town, it’s a whole gang of them.

Regulation and Compliance
Nov 29, 2021
CFPB Seeks Insight On Creating A Fairer Mortgage Market

The Consumer Financial Protection Bureau has been actively looking to create a fairer mortgage market, free of discriminatory engagements. To do so, it issued a Request for Information to seek input on rules implementing the Home Mortgage Disclosure Act.

Regulation and Compliance
Nov 17, 2021
Regulators Renew Effort to Protect Against Foreclosures

CFPB, The Fed, FDIC and other agencies will watch for compliance with COVID-19 protections

Regulation and Compliance
Nov 10, 2021