The Department yesterday announced a settlement agreement with Atlanta-based lender, Znet Financial, involving alleged violations of the Real Estate Settlement Procedures Act.

In addition, real estate broker ReMax of Atlanta, certain officers and affiliated companies, and 14 ReMax real estate agents agreed to the settlement after HUD determined all violated RESPA provisions concerning kickbacks and unearned fees.

RESPA prohibits kickbacks for the referral of real estate settlement business as well as giving and receiving of a portion of real estate settlement charges for which no services are performed.

A HUD investigation found Znet considered ReMax of Atlanta real estate to be Znet employees and paid them $400 when they referred a consumer to Znet. The real estate agents were actually "sham employees" who performed little or no origination work other than filling out loan application forms.

Under the terms of the settlement, the companies, their officers and the real estate agents agreed to stop the bogus employee compensation program. Furthermore, the ReMax agents will refund $400 to each consumer referred to Znet for a total of $9,200. In addition, Znet will make a settlement payment to the U.S. Treasury of $15,000.

Secretary Martinez last year proposed a sweeping reform of RESPA's regulatory requirements. For more information about this regulatory reform, visit RESPA Proposed Rule and Economic Analysis.