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.