Did you hear? Fidelity just agreed to pay a $1.25M settlement to the state of California for alleged RESPA kickbacks violations. This is the same case that led to a 2011 settlement where Fidelity agreed to pay the federal government $4.5M for the same violations.

The agreement between the California Department of Insurance (CDI) and Fidelity National Title Insurance Company was to resolve allegations of illegal kickbacks paid out from 2003 to 2011.

Between the previous $4.5M settlement with the federal government and this new $1.25M settlement with the state of California, Fidelity and its companies will pay almost $6M, not including legal fees and other costs. But does any of that money help to indemnify brokers who accepted the TransactionPoint payments? After reading what Commissioner Dave Jones said, RE-Insider isn’t so sure.

“Illegal rebates by and to those involved in the home purchasing process compromise the best interests of the consumer,” said Jones.

Commissioner Jones specifically mentions not only those who paid the kickbacks, but those that received the payments. RE-Insider is sure that there are quite a few brokers who are nervous about the next part of the investigation.

RE-Insider will continue investigating whether the terms of this settlement will protect brokers who used the TransactionPoint software.

In the meantime, RE-Insider would love to get your response – what might come next?

Please let us know.

California Homeowner Bill of Rights has officially been signed into law. The laws are designed to ensure fair lending and borrowing practices for California homeowners.

The laws are designed to guarantee basic fairness and transparency for homeowners in the foreclosure process. Key provisions include:

• Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.

• Guaranteed single point of contact: Homeowners are guaranteed a single point of contact as they navigate the system and try to keep their homes – a person or team at the bank who knows the facts of their case, has their paperwork and can get them a decision about their application for a loan modification.

• Verification of documents: Lenders that record and file multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders who are in violation are also subject to enforcement by licensing agencies, including the Department of Corporations, the Department of Real Estate and the Department of Financial Institutions.

• Enforceability: Borrowers will have authority to seek redress of “material” violations of the new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale.

• Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply.

• Tools to prosecute mortgage fraud: The statute of limitations to prosecute mortgage-related crimes is extended from one to three years, allowing the Attorney General’s office to investigate and prosecute complex mortgage fraud crimes. In addition, the Attorney General’s office can use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.

• Tools to curb blight: Local governments and receivers have additional tools to fight blight caused by multiple vacant homes in their neighborhoods, from more time to allow homeowners to remedy code violations to a means to compel the owners of foreclosed property to pay for upkeep.

The California Homeowner Bill of Rights marked the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The Mortgage Fraud Strike Force was created in May 2011 to investigate and prosecute misconduct at all stages of the mortgage process. In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks for up to $18 billion for California borrowers.

Now that the race for the White House is over, still-President Obama must move quickly to answer the housing-related challenges facing the federal government. Inman News looks closer at decisions that will have to be made in the coming weeks:

1. The “fiscal cliff”: The fiscal cliff is a series of tax increases and spending cuts that will go into effect unless U.S. lawmakers come up with an alternative plan to reduce the federal deficit by $1.2 trillion as required by the Budget Control Act of 2011. The spending cuts, known as “sequestrations,” would automatically go into effect on Jan. 2 and be split evenly between defense spending and domestic spending.

2. The mortgage interest deduction (MID): Revamping the mortgage interest deduction is one of the solutions proposed to head off the fiscal cliff and could be part of a broader plan to streamline the tax code by eliminating some loopholes and deductions. Some experts have said the MID, which costs the government about $90 billion a year, is unlikely to survive in its present form, though what would take its place, if anything, is unclear.

3. Mortgage debt forgiveness: Another homeowner tax break may be on the table in fiscal negotiations: the Mortgage Debt Relief Act of 2007, which is set to expire at the end of this year. The law exempts up to $2 million in mortgage debt forgiven by a lender in a short sale, loan modification or foreclosure from federal taxation. The law applies only to mortgage debt incurred to fund the purchase or improvement of a principal residence.

4. Qualified mortgages: Now that we know the Dodd-Frank Wall Street Reform and Consumer Protection Act is here to stay — presidential candidate Mitt Romney had vowed to repeal it — there are two controversial rules contained within the law that are waiting to be finalized: the qualified mortgage (QM) and the qualified residential mortgage (QRM).

Wanda Coleman, 59, formerly of Pauma Valley pleaded guilty Wednesday, Oct. 31, to mail fraud after the FBI busted a mortgage fraud ring that duped lenders into issuing more than $20 million worth of loans over the sale of three dozen homes in Orange, Riverside and San Bernardino counties.

Here’s how prosecutors said it worked: Coleman ID’d a property for sale; and struck a deal with the seller to pay far more than the asking price. A straw buyer, and others, would submit forged bank statements and other false documents — from employment records to asset information — to clinch the loan.

In exchange, Coleman or her companies collected the excess. Straw buyers would then default on the notes, homes slipped into foreclosure and lenders were left licking their wounds.

The fraud racked up more than $11 million in losses, federal agents say.

For her part, Coleman faces a maximum sentence that’s as long as the conventional fixed mortgage: 30 years.

One of RE-Insider’s goals has always been to educate real estate agents about the possible pitfalls they negotiate daily.

Perhaps the biggest issue we’ve tackled has been RESPA compliance – especially for real estate agents.
RESPAnews recently came out with an in-depth story on how important it is for real estate agents to understand RESPA laws. Some highlights of the article are below:

With all the talk about new disclosure forms and servicing regulations, it may seem like RESPA is only an issue for lenders, closing agents and mortgage loan servicers. That is not the case. Real estate agents also need to be wary of RESPA.

“I would say the biggest concern is the huge changes to the closing documents and closing process,” Ken Trepeta, director of real estate services at NAR said. “We are very concerned that there will be much confusion and many delayed closings if the proposal is not fundamentally altered. In fact, we are advocating they drop the back end changes almost completely and focus on getting the upfront disclosure, [the Loan Estimate], right.”

The Consumer Financial Protection Bureau (CFPB) took over the regulation of RESPA in July 2011, and it appears the bureau is taking RESPA violations seriously. They’ve reopened a U.S. Department of Housing and Urban Development (HUD) investigation involving kickbacks and captive reinsurance. Recently, the bureau declined to set aside a civil investigative demand by one of the companies under investigation.

It’s clear that RESPA violations should not be taken lightly and that the CFPB is picking up right where HUD left off.
With all the talk about new disclosure forms and servicing regulations, it may seem like RESPA is only an issue for lenders, closing agents and mortgage loan servicers. That is not the case. Real estate agents also need to be wary of RESPA.

Remember, a RESPA violation carries significant consequences. A RESPA violation could mean receiving a fine of up to $10,000 for each offense and could include imprisonment for up to one year. In some cases, RESPA allows for a private cause of action, permitting the consumer to sue the violator for three times the amount the buyer paid for the settlement service.

To avoid a Consumer Financial Protection Bureau investigation, it’s best to review your interactions with other settlement services providers and make sure that you are RESPA compliant.