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I AM SO SICK OF "BUSINESS ARRRANGEMENTS"

I like the part where the companies are allowed to deny they committed any illegal acts. For those of you that use some of these Title Companies, do you ever ask your contacts "what's up with this..."?

Just curious. If I was using FA for example - I'd want a thourough understanding as to how far down the ladder this culture is embedded. Where are the 'ethics', the 'standard operating procedures', the 'concern for the client's well being', the basic decency of running an honest business.

Shoot me.

http://www.mercurynews.com/realestatenews/ci_7592817?nclick_check=1

Harney: Regulators cracking down on title kickback schemes By Kenneth Harney Article Launched: 11/29/2007 05:14:01 PM PST

WASHINGTON - Rigged appraisals, lax underwriting and toxic loan products may dominate the headlines, but they are hardly the only issues causing problems in residential real estate.

The federal government and state regulators are targeting other housing-related misdeeds that can cost consumers big money - especially involving under-the-table kickbacks among builders, real estate brokers, loan officers, mortgage bankers and title insurers. Buyers and sellers are rarely aware of the cash changing hands, and as a result they are paying needlessly higher prices for services.

In a little-publicized series of legal moves in the past five weeks, regulators have reached settlements with six major home builders and one of the largest title insurers in the country. Under the settlement terms, the companies are scheduled to pay the government $6.4 million, while denying they committed any illegal acts.

The largest settlement was announced mid-November. First American Title Insurance agreed to shut down 84 "affiliated partnerships" formed in Florida with real estate brokers, mortgage brokers, banks and home builders. ....(more in link)

Posted by Rob Robinson- Lehigh Valley PA on 12/03/2007 11:13 AM

Comments (4)

aba, affiliated business arrangement, title, bertrum settlements, rob robinson, lehigh valley, pa, allentown, abstracting, fiduciary, ed rybczynski

Originally posted at: Rob Robinson Blogs: I AM SO SICK OF "BUSINESS ARRRANGEMENTS"

4 Comments on I AM SO SICK OF "BUSINESS ARRRANGEMENTS"

DEC

2007

If you didn't do anything wrong...why did you have to breakout the checkbook?

The market and the consumer are best served when each party to the transaction is i=ndependent of the other.

DEC

2007

I'm actually torn on this one. Undisclosed arrangements are certainly problematic. So are arrangements where there is a built-in increase in cost to compensate the referring party somehow. However, if the consumer is made aware of an existing relationship (such as RE broker also directly owning a title company), does his or her own due diligence, and then still chooses the affiliate, what is the problem? There is some value in the comfort and convenience this creates for the consumer. --Tom

Well Tom, as you read in my blog "Let my...ABA's GO"... http://activerain.com/blogsview/273318/LET-MY-PEOPLE-errrrrr

The problem I have experienced with the arrangements is that the consumer has NOT been well advised and educated by the professionals that represent them.

I certainly am not suggesting one simply hand over a phone book and say "find a Title Company"... that may also be counterproductive..... BUT at least it would be FAIR.

I have conversed with soooo many Realtors and Loan Advisor's that simply tell the client "we'll be using XYZ" for settlement. Almost (with the exception of investors) no buyer and many re-fi clients are familiar with even the basics of Title Insurance and the associated costs.

I have found sooooo many Realtors and LO's that simply find their 'owners business arrangement with a Title Company' a sad state of affairs as they find the Title agents incompetent and / or not trying to improve themselves as they have steady and contractual business from the Agency. In cases where the agent gets a piece of the action - they have flat out said to me "why use another - I get MONEY if I use Title Co. ABC".... REGARDLESS if that company is competent or not price competitive. MY CLIENTS WILL USE ABC.

The fiduciary responsibilities go out the window when Realtors (and LO's) hand over a client to a company simply for the sake of personal gain... or they are 'down the hall'.

You may not believe this is the case, and I am discussing only a minority.... but if so, I believe you are not paying attention. The practice is never documented of course, so you will not see anyone admit to it in AR for example..... but when I do personal one-on-one's with Realtors and LO's.... this is often the case when an ABA is involved. They also mention the PRESSURE from the broker owner.

I agree the client has responsibility. Due diligence is needed. Of course.

But to think the client has a clue what a Settlement Company does, and what they charge - and WHY they charge it - to even ask the pertinent questions.....well...naive is the word that pops into my mind.

If the in-house is priced well, a great company... heck - who would complain about that...refer away. But what the client DESERVES.... DESERVES.... is an option of say ... 3 Title companies the Agent is familiar, and the pluses and minuses of each.

Screw the kick-backs and lazy agents.

When I see full disclosure from an agent to the client, explaining they get paid kick backs by the Title company - thus you Mr. & Ms. Client are paying me on top of my commission, I am double dipping ..... then I will have my first heart attack.

I hear you, Rob, and I don't disagree with most of what you are saying.... but there are those of us who do real estate work on more than one front, with full disclosure to clients of their options. If it is done correctly (not just per the law), the consumer can be educated, protected and serviced well. Note that I have been following the fiduciary duty cases.

Can I just add that the cheapest real estate professional -- Realtor, title company, or otherwise -- is not always the best choice for the consumer. We got into the title business (from real estate law) after being sick and tired of title companies dropping the ball on our client's cases.

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