FDIC Reaches Settlement With HomeStreet Bank of Seattle Over RESPA Violations

The Federal Deposit Insurance Corporation (FDIC) has reached a settlement with HomeStreet Bank of Seattle for violations of the Real Estate Settlement Procedures Act (RESPA). HomeStreet Bank stipulated to the issuance of an Order to Pay Civil Money Penalty in the amount of $1,350,000.

 

Section 8(a) of RESPA prohibits giving or accepting a thing of value for the referral of settlement service involving a federally related mortgage loan. RESPA was enacted to enable consumers to better understand the home purchase and settlement process, and where possible, to reduce settlement costs.

 

The FDIC determined that HomeStreet Bank, through its now discontinued Home Loan Center-based mortgage banking business line, entered into certain co-marketing arrangements in which the bank and real estate brokers agreed to market their services together using online platforms. The FDIC also determined that the bank entered into desk rental agreements whereby the bank rented space in the offices of real estate brokers and home builders. These arrangements and agreements resulted in the payment of fees by the bank to real estate brokers and home builders for their referrals of mortgage loan business, in violation of RESPA. HomeStreet Bank has terminated all of the co-marketing and desk rental agreements.

 

While co-marketing arrangements and desk rental agreements are permissible where the fees paid bear a reasonable relationship to the fair market value of marketing or rental costs, such arrangements and agreements violate RESPA when the amounts paid exceed fair market value and the excess is for referrals of mortgage business.

 

HomeStreet Bank agreed to the issuance of the Order without admitting or denying the aforementioned violations.

---