HUD No. 05-095
Contact: Brian Sullivan
July 7, 2005
HUD SETTLES CASE AGAINST MICHIGAN TITLE COMPANY OVER VIOLATIONS OF MORTGAGE RULES
Metropolitan Title Company accused of disguising referral fees
WASHINGTON - The Department of Housing and Urban Development today announced a legal settlement with a Detroit title company for violations of the Real Estate Settlement Procedures Act (RESPA). HUD determined that Metropolitan Title Company paid real estate brokers for the use of conference rooms at rates substantially higher than their fair market value in violation of RESPA's anti-kickback provisions. While charging room rental fees does not necessarily violate RESPA, HUD found that the excessive payments made in this case were designed to disguise referral fees that the law prohibits.
Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business. It also prohibits a person from giving or accepting any part of a charge for services that are not actually performed.
'A referral fee by any other name is still a referral fee,' said Brian Montgomery, Assistant Secretary for Housing-Federal Housing Commissioner. 'HUD will vigorously enforce the law to protect consumers from those who attempt to artificially inflate the cost of buying or refinancing a home.'
In this case, HUD determined that Metropolitan Title Company paid up to $150 an hour to lease conference rooms from real estate brokers even though Metropolitan's offices were available and convenient - in some cases, just three blocks away. HUD's RESPA investigators researched the general market value of conference facilities in the Detroit area and found the average hourly rental of comparable rental space was much lower than what Metropolitan paid.
Metropolitan agreed to a $150,000 settlement payment to the U.S. Treasury and that all future office lease agreements conform to standard commercial leases. In the future, Metropolitan agreed that it would pay settlement service providers rental rates at the minimum level of the general market value for equivalent space.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.