Purchasing everything you need for your home at one store can be convenient – it’s one of the reasons we have one-stop-shops. But when a realty firm doesn’t tell consumers they don’t have to use an affiliated mortgage service provider, well, that’s against the law. And as one company can attest it comes with a hefty fine.
The Consumer Financial Protection Bureau announced Wednesday that RealtySouth, the largest real estate firm in Alabama, must pay $500,000 for allegedly violating the Real Estate Settlement and Practices Act (RESPA), which prohibits kickbacks for referrals of real estate settlement services.
Investigators found that the company’s preprinted form purchase contracts either explicitly directed or suggested that title and closing services be conducted by its affiliate TitleSouth LLC. Additionally, the company did not provide consumers with an Affiliated Business Arrangement disclosure clearly stating their right to shop around for a better price.
The CFPB found that this practice illegally benefited TitleSouth, which is owned by the same holding company as 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,” CFPB Director Richard Cordray says in a new release.
Consumer Financial Protection Bureau takes action against RealtySouth for mortgage disclosure violations [Consumer Financial Protection Bureau]
by Ashlee Kieler via Consumerist
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