What Can this Mean for Brokers?
RE-Insider was the first to question the legality of Fidelty’s TransactionPoint software last year in June. We continued to ask questions in December. And last month, we revealed that Fidelity suspended all payments to brokers made under their Real Estate Service Provider Access Agreements because of potential alleged RESPA violations.
Now HUD has taken decisive action and the title company is on the hook for a whopping $4.5 million in penalties. Fidelity has also agreed to cease certain TransactionPoint practices immediately. Here’s what HUD announced:
The U.S. Department of Housing and Urban Development (HUD) announced an agreement with Fidelity National Financial, Inc. (FNF) to settle allegations the title company paid real estate brokers and other settlement service providers improper kickbacks or referral fees in violation of the Real Estate Settlement Procedures Act (RESPA).
HUD claimed FNF and its affiliates and subsidiaries engaged in a widespread and years-long campaign to pay real estate brokers kickbacks for the referral of real estate settlement services, including home warranties and title insurance. (Read the actual Full Settlement PDF)
“This agreement should be a signal to others that these business practices won’t be tolerated,” said Acting FHA Commissioner Robert Ryan.
Although HUD is settling with Fidelity, it is not granting immunity to the brokers that accepted the kickbacks from TransactionPoint, as far as we can tell.
Where does this leave Fidelity’s brokerage partners? These professionals could face further prosecution from HUD or the Consumer Financial Protection Bureau (CFPB), when they take over RESPA enforcement on July 21.
Did Fidelity tell HUD the names of the brokers who accepted TransactionPoint payments? Will these brokerages have to wait and see which enforcement agency comes after them? RE-Insider ponders if, based on this precedent, individual agents and brokers may be looking at three times the amount received plus damages and attorney fees.
We also have to wonder whether brokers are looking to Fidelity for the legal help and money to cover the damages caused. Did Fidelity say that TransactionPoint access fees were in compliance with RESPA? What is Fidelity saying now?
This may be only the beginning of a nightmare of unimaginable size for the real estate professionals who used the TransactionPoint service and received access fees.
We’d like to hear your thoughts.