Our fears have been confirmed. In a memo dated earlier this month, Fidelity announced that, according to HUD, payments made under Real Estate Service Provider Access Agreements, used in conjunction with the TransactionPoint software, may violate RESPA. Fidelity announced that it has officially suspended all payments in conjunction with the Fidelity Access Agreements as of May 27, 2011. Did Fidelity tell you that payments under the Access Agreements complied with RESPA? If so, it appears that HUD does not agree.
We’ve long been critical of TransactionPoint – see our posts here and here. As early as June 2010, RE-Insider was one of the few publications in the nation investigating the legality of TransactionPoint. Hopefully, our warnings encouraged California brokers to take the next step and independently verify whether the TransactionPoint Access Agreement payments complied with RESPA.
RE-Insider never believed that it was permissible under RESPA for service providers to make payments for orders received through TransactionPoint. We tried numerous times to obtain the name of Fidelity attorneys that endorsed TransactionPoint or find a Fidelity in-house lawyer to go on the record about the legality of TransactionPoint and never received a call back.
Now we’re wondering if any broker received a written, legal opinion by a RESPA attorney assuring that the TransactionPoint “pay-to-play” Access Agreements were RESPA compliant. It is hard to believe that any broker started taking payments without first obtaining a legal opinion that RESPA would not be violated.
The fallout from this could be massive. What happens to the participating brokers now? How bad are the possible legal ramifications for each individually-licensed broker? What will Fidelity do if HUD, the Department of Real Estate or others come after the brokers that received payments under the Access Agreements?
As for the memo itself, we found it quite confusing. While announcing that it is suspending payments because HUD believes the payments may violate RESPA, Fidelity also claims that HUD called TransactionPoint a “valuable tool.” Note that this self-serving memo identifies Steve Murnin as the person to contact if you have any questions. Steve Murnin is the same Fidelity Vice-President that explained the role of Fidelity in marketing TransactionPoint in a court declaration published by RE-Insider (click here) Wow! We have a question for Mr. Murnin – – what is the exposure under RESPA for each broker that received a payment from a service provider under one of the TransactionPoint Access Agreements?
Will brokers continue to accept TransactionPoint Access Agreement payments from other vendors that have not suspended payments? Why would any broker ever consider doing so? We are interested in those brokers’ answers.
How will this situation affect the participants in the TransactionPoint Access Agreements, including brokers, agents, and vendors? Please share your thoughts.