HUD Settles Lawsuit with Coldwell Banker, Property I.D. Corporation (a large hazard reporting company in California), Realogy Corporation, Cendant Corporation (now known as Avis Budget Group, Inc.)

It is about time HUD started cracking down on stuff like this... In Illinois - I know brokerages that have hidden joint venture agreements with mortgage companies - where they get kickbacks for referring business to the mortgage company. Their agents tell the client "It is more convenient if you just use X (who is renting space in their brokerage's office) since they are right here...".....

A settlement in a related federal class action lawsuit requires the companies to pay up to a combined $35 million dollars, much of it to California consumers who purchased hazard disclosure reports as far back as 1996.

The article states:

HUD determined that its request for an accounting and disgorgement of illegal profits in its lawsuit will be satisfied through the defendants' payments to consumers in the settlement of this private action filed under RESPA.

"I am extremely pleased the court agreed that HUD has the authority to seek injunctive relief and disgorgement of profits illegally received through kickback schemes in violation of RESPA." said Brian Montgomery, HUD's Assistant Secretary for Housing and Federal Housing Commissioner. "This settlement should be a warning to anyone who sets up sham affiliated business arrangements designed to collect improper referral fees, that HUD is willing and able to seek these remedies in federal court."

Property I.D. Corporation of Los Angeles made improper payments to large real estate brokers in California based on the referral of consumers to Property I.D. Such referral-based payments are kickbacks and prohibited under Section 8 of RESPA.

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