On Monday, July 11, HUD announced that they had reached a settlement with Fidelity for RESPA violations stemming from TransactionPoint. In signing the agreement, Fidelity denied all claims against it but agreed to settle in exchange for HUD halting any continued investigation. So while the HUD investigation into Fidelity may be case closed, the question needs to be asked: are brokers who accepted the TransactionPoint payments out of the woods?
In a word, no. Nowhere in HUD’s five-page agreement with Fidelity does it appear to provide any immunity against possible future prosecution for any and all brokers who used TransactionPoint. Protection against future prosecution is spelled out for any Fidelity action, but not for any brokers who may have been identified as a result of the investigation.
Now, with RESPA enforcement moving from HUD to the Consumer Financial Protection Bureau (CFPB), it is certainly possible, if not probable, that the new agency will want to come out of the gate making a big splash. Could the potential investigation of hundreds of brokers be that initial push that clearly demonstrates the CFPB’s intent to clean up the industry?
Has this agreement left brokers holding the bag for any further potential violations of RESPA? One Southern California broker told RE-Insider that they were indeed nervous about possible prosecution resulting from using the TransactionPoint software platform.
Back in November 2010, Fidelity enticed brokers to use TransactionPoint by actively marketing it to brokers, encouraging the use of its pay-per-click system in settlement services as a way for the broker to generate revenue. They assured brokers that the software platform had been vetted by lawyers and was RESPA-compliant.
Fast forward to June 2011. Fidelity sent a memo to brokers alerting them that Fidelity would no longer be making payments for using TransactionPoint because HUD had advised them that the fees paid to brokers might be a violation of RESPA laws. However, Fidelity admitted no wrongdoing and vowed to fight the investigation.
This week, after agreeing to pay the $4.5 million dollar fee, Fidelity vowed to “terminate any arrangement involving the payment of fees to any real estate brokers for use of the TransactionPoint platform.”
RE-Insider would love to get your take on what’s going to happen next. Do you know any agents or brokers who are worried about what might come next?
Please let us know.