Class Action Lawsuit Filed Against Fidelity for TransactionPoint RESPA Violations

Editor’s Note: It has come to RE-Insider’s attention that this lawsuit was originally filed in June of 2012 and dismissed in September of last year. RE-Insider apologizes for the confusion. We do, however, still feel that this lawsuit is an important discussion topic for agents and brokers and we will continue to seek clarification on the issue of liability.

Just as RE-Insider predicted when the HUD settlement came out earlier this month, angry homeowners have filed a federal consumer fraud class action lawsuit against Fidelity National Title Insurance and other major title insurers alleging the companies kicked back fees to real estate agents for real estate settlement services.

This class action suit comes on the heels of Fidelity agreeing to pay a $1.25M settlement to the state of California for alleged RESPA kickbacks violations after a previous case that led to a 2011 settlement where Fidelity agreed to pay the federal government $4.5M for the same violations.

According to the lawsuit, lead plaintiff Matthias Hildebrandt claims Fidelity National Financial Inc. settled with the U.S. government in 2011 for violating the Real Estate Settlement Procedures Act (RESPA). RESPA protects homebuyers by prohibiting kickbacks and fees for real estate settlement services in federal backed mortgage loans.

Fidelity paid predetermined fees for each referral, but real estate agents and brokers “performed no bona fide work for the fees,” according to the lawsuit. “In short, the scheme allowed defendants and participating real estate agents and brokers to camouflage illegal kickbacks and referral fees as sub-license payments.”

The new lawsuit alleges that Fidelity ran the scheme through their web-based platform TransactionPoint, which “allowed kickbacks and referral fees to be disguised as ‘sublicense fees’ or ‘access fees.’”

The class alleges Fidelity paid millions of dollars in kickbacks and referral fees, to “hundreds, if not thousands” of real estate agents and brokers.

Also named as defendants are Commonwealth Land Title Co., Chicago Title Co., Ticor Title Co. of California, Lawyers Title Co., Fidelity National Disclosure Source LLC, and Fidelity National Home Warranty Co. The class is seeking restitution and damages for RESPA violations.

Agents should be concerned – will the liability end with Fidelity?

Re-Insider would love to hear your thoughts.

  • Ben

    Ouch!

  • mike_f

    love it! i am always amused about how sellers agents get their drawers all in a wad over title and escrow. i’ve had offers come back countering ONLY title and escrow. really? do you really give a rats ass over who writes the title policy? we all know it’s a respa violation to get greased…now hopefully many agents will have their licenses impacted for such silly nonsense.

    the fun part here is that the payoffs were probably tiny compared to the cost to defend. let’s hope this drives home the letter AND the spirit of the respa laws

  • Temecula Realtor

    As a Realtor, I am disgusted with the greed in our industry. Realtors work very hard to make a commission, but why do we need to steal from the consumers? I am so very thankful for all of my clients and I look out for their best interest. It is NOT about the money, the money will always come if we are honest with our clients. I hope that each real estate agent and title rep who contributed to this gets some big fines and is forced to pay restitution….they deserve it! If you want to be a thief, get out of my industry! Remember this: God is always watching every move you make, even when nobody else is looking. Take a long look in the mirror and learn about character.

  • Tired of Greasy Palms

    the sad part is the Fidelity run companies have a long history of having been found guilty of unethical business conduct. it’s not just a few bad apples in the bunch, it’s part of the fidelity culture. slowly, but surely, FNF is finally paying the piper. BTW, lets not forget last week’s settlement involving robo-signing company: LPS. formerly a fidelity company with 10 out of the 14 top execs coming from Fidelity.