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K. Hovnanian sued under RESPA for affiliated business practices

Only received this snippet from RESPA alerts. It's nice to see crackdowns in the industry regarding RESPA violations - or at least attempts to put companies on notice that many of us want to play on an equal playing field. If a company is BETTER than mine, or can win a client legally, so be it... but this AfBA steering/kick-back method of doing business has got to stop.

"The industry has long complained that some homebuilders unfairly lure consumers into using their affiliated companies by disincentivizing them from shopping for services elsewhere. Those disadvantaged competitors may have just found a new rallying point in a new class action lawsuit filed against Hovnanian Enterprises and K. Hovnanian American Mortgage alleging that they required consumers to use their affiliated companies in order to qualify for certain incentives in violation of RESPA. "

Posted by Rob Robinson- Lehigh Valley PA on 06/13/2007 07:32 AM

Comments (14)

respa, afba, aba, rob robinson, title, bertrum settlements, title insurance, lehigh valley, allentown, pa, hovnanian

Originally posted at: Rob Robinson Blogs: K. Hovnanian sued under RESPA for affiliated business practices

14 Comments on K. Hovnanian sued under RESPA for affiliated business practices

JUN

2007

I suppose it all depends on whose ox is being gored.

lol - maybe Lenn, maybe.

I've just always had a problem with companies not allowing a consumer the option of competition in this industry. It happens every day, in many areas, certainly not just new construction.

When I heard almost the same line from 69 Re/Max Realtors (out of 142 in one office) that I talked to or met say "Why would I consider another Title Company for my clients... I get a dividend check through the one I use every Quarter?"

That about sealed by feelings concerning AfBA's.

Interesting. I tend to agree with you on this one Mr. Rob.

I think that certin members make all of us look bad, example:

Richard D. Lenard, Prudential real estate agent in Smithtown NY was denied a motion to dismiss on March 27, 2007. Richard D. Lenard was the Prudential real estate agent in April 2000 for a home discovered to be infested with termites and the sale cancelled. Four months later in August 2000, Prudential agent Richard D. Lenard sold the same home to another customer without disclosing the termite problem to the second couple.

I have had a discussion with Mr. Lenard and find these allegations difficult to believe.

The courts can figure it out, but I edited my comments due to lack of source from 'robin', above.

SEP

2007

Hovnanian does not mandate you use their mortgage company. What they do is allow customers the option and if they choose the option, certain incentives may be given to them. I do not see how this violates any RESPA laws. There is no coercion. Many companies use incentives. If you look at Target, K=Mart, macy's, etc., you can see that if you you their respective credit cards, you will get additional discounts. No violation there.

SEP

2007

I hear ya Bobby, and haven't had a chance to check it out (vacation) . I simply reported the 'alert'. Perhaps you have more details on the allegations.

"...alleging that they required consumers to use their affiliated companies in order to qualify for certain incentives in violation of RESPA."

NOV

2007

Rob.... this is great. I actually lost a deal to Hovnanian's mortgage division. It was someone that was referred to me and wanted to use my services. But they had to fill out a mortgage application in order to place a contract on one of their properties. The client didn't feel like going through the whole process again. In my eyes, in this case, they were forced, not asked.

Overall... some people might not like you and I for making this stance, but this could open up more doors for us.

NOV

2007

I have seen many builders advertise savings if the buyer uses their mortgage company or title company. I did not know it is a violation of RESPA. I thought it is the same as when companies relocating employees insist on employees using their relo real estate offices.

Rob,

A level playing field is a great idea...I hope to hear more on this suit.

DEC

2007

I recently worked at a house ( I am a contractor) and they commented that K.Hovnanian was the worst company to purchase from and they still have problems with their home after two years. Thanks.

DEC

2007

Rob,

It will be interesting to see the end result....

Have a great Holiday

DEC

2007

My father-in-law is currently purchasing a condo from them. I read over the papers for them and they spell out, in capital letters, the fact that you have the right to shop for other services. If the verbiage was there before the allegations, I wouldn't see a problem violation. But I bet they stuck that STRONG wording in there after the fact.

On the GFE the seller is paying almost all the points on the loan. I guess that's what Bobby meant by "incentives".

I like how Bobby uses the analogies of those department stores. You're right Bobby, K-Mart and Macy's are not violating RESPA by offering those incentives on their credit cards! Geez.

MAR

2008

Breaking NEWS about RESPA
February 29, 2008

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