Per the Consumer Financial Protection Bureau’s own Newsroom May 28, 2014 the CFPB Takes Action Against Realty South for Mortgage Disclosure Violation and orders the firm to pay $500,000.00
Back in 2006, about a year after I got into real estate, I noticed several local Brokerages working very closely with affiliated companies like Title companies or Mortgage Lenders. Fresh out of real estate school, these business affiliations were always a point of contention with me because, it felt like a fine line RESPA violation. Granted, the company I worked for at the time had it’s own business affiliations, namely a specific Title company that was attached to almost all of their brokerage office but, we had a single page disclosure to consumers that made it clear, they didn’t have to use any affiliated business service provider and had the right to use whoever they wanted for any required service. In essence, I felt safe about using affiliated business service providers because, we made it clear, it was nothing more than a suggestion and not a requirement.
With all that being said, I do remember some brokerages (not the one I worked for) where consumers weren’t given the choice, option or disclosure that they didn’t have to use the brokerages preferred Lender or Title company. I remember walking into brokerages where big signs at the door greeting me with advertisements like, “ABC Bank Offers the Best Rates for Realty USA Clients”. Or course, I changed the names to protect their identities but, these types of ad’s were common place in some brokerages around here.
Well, back then, I don’t guess many people thought twice about the RESPA violation or potential violation because, whoever heard of any being fined or charged with a crime? Sure, we heard stories but, they were always in some far off state about some no name broker so, who really worried about that happening here?
Well, in light of recent news from the CFPB, people better start wising up quick. The CFPB is here and they are looking to make a name for themselves off the convictions and fines for violators. To be crystal clear, this is a good thing, my industry needs some serious enforcement. Truth is, the serious lack of enforcement over the years has created a industry where honest mistakes, systemic errors, gross incompetence, and in some cases, nefarious intentions are routine with some brokerages. It’s sad to say this but, it’s true. I am frustrated every day….no exaggeration….every single day by at least 2 or 3 Realtors who call me to ask me questions about my clients confidential transaction information that when I reply to them, “I am sorry but, I reserve those discussions with my clients only”….they blow up, accuse me of not knowing my job. It’s pathetic…..it really is. My point is, I am an advocate for enforcement, at least at this stage, all the enforcement we can get will be a good thing.
I challenge Brokers to read the CFPB newsroom articles. They may be surprised at just how the CFPB is going after violations. In fact, one article I read said that they fined a broker for a violation because, in their opinion, even though they did disclose, it didn’t go far enough. Brokers, you better be doing a good job at protecting yourself and ensuring your business affiliations are properly disclosed and no funny business is going on or, I may be writing a blog about your run in with the CFPB soon.