The Department yesterday announced at it has reached a settlement agreement with national lender Allied Home Mortgage Capital Corp. for violating the Real Estate Settlement Procedures Act by charging consumers more than the cost of their credit reports. The practice is often called "upcharging" within the real estate industry.

RESPA prohibits kickbacks, referral fees and other unearned charges that artificially drive-up the price consumers pay to buy or refinance their homes. Specifically, it is illegal "to charge or accept a fee or part of a fee where no service has actually been performed."

In settling the case Allied has agreed to pay $370,000 to the U.S. Treasury and has promised to avoid upcharging for credit reports and other third party settlement services and to annually audit the closing practices of its branch offices.

Based on the Department's Homebuyer Bill of Rights, Secretary Martinez last year proposed a sweeping reform of RESPA's regulatory requirements in an effort to greatly simplify and clarify the homebuying process for consumers. In addition, the Department has significantly increased its enforcement effort to further protect consumers from junk fees, unearned costs and other charges that unnecessarily inflate the price of buying or refinancing a home.

For more information about RESPA visit Secretary Martinez's proposal to reform the mortgage settlement process on the Internet.