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Government Takes Aim At Kickback Schemes

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Pamela Crowley (Florida)

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http://www.washingtonpost.com/wp-dyn/content/article/2005/12/02/AR2005120200725.html

Government Takes Aim At Kickback Schemes
It's one of American real estate's seamier practices, and it's almost impossible for consumers to detect: kickbacks and sweetheart payoffs among real estate agents, title and escrow companies, lawyers, and lenders, all for referrals of home buyers' mortgage or closing services.

Now the federal government is mounting its most aggressive campaign in decades to stamp out illegal referral fees. Though it hasn't attracted widespread attention, the government's anti-kickback effort this year has racked up six times the number of out-of-court settlements with alleged violators than it did in 2004.
... East-West employees allegedly asked for and received tens of thousands of dollars' worth of Boston Red Sox and New England Patriots tickets, plus restaurant gift certificates and concert tickets, from lawyers, title companies and appraisers to whom loan officers referred client business.

A joint investigation by the Housing and Urban Development Department and the Federal Deposit Insurance Corp. found that East-West maintained a "give-to-get" policy that pressured settlement services professionals for "gifts . . . that East-West used as employee incentives," HUD said. East-West "expected certain attorneys and appraisers to pay for luxury seating at Red Sox games and concert events at Fenway Park. In addition, East-West induced attorneys and appraisers to pay for semi-private barbecues and charitable galas with Patriot players."
Brian Montgomery, federal housing commissioner and top gun for the anti-kickback campaign, says the law "couldn't be any more clear" as far as "giving or receiving" referral payments. "The message to the industry should be equally clear -- we will not only investigate those who give, but those who receive kickbacks."

Montgomery's office reportedly has large numbers of active investigations to pump up the pressure in 2006, and it is considering creating a Web site where industry and consumer tips about referral-fee schemes can be communicated to federal investigators.

As a result, maybe the word finally will get out: Real estate referral kickbacks are bad for consumers. They violate federal law, invite heavy financial penalties and could even lead to jail time.
 

Terrel L. Shields

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FHA fined a big Tulsa Realtor million plus for Homebuilder / title / realtor kickbacks a few years ago...They went on like nothing ever happened.
 

Lobo Fan

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I don't know too many appraisers that could afford $10,000 parties for clients. Unless they were getting paid better than I. If they were paying $1,000 per appraisal then maybe.
 

TJSum

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I agree Lobo, I'm not sure I could afford to buy a potential client a Happy Meal right now at MickyD's. All kidding aside, it most likely was done by large appraisal companies. You know who that leads us to, the only kind of appraisal companies that have that type of volume, hmmmmmm....
 

Mike Kennedy

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New York
kickbacks and sweetheart payoffs among real estate agents, title and escrow companies, lawyers, and lenders, all for referrals of home buyers' mortgage or closing services.




Somehow ....... Mortgage Brokerage subsidiaries of Real Estate Brokerage firms have escaped unscathed??????????????
 

Larboard

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Michigan
The article is over two years old. I haven't seen or heard of much activity on this recently. Other than some confusion among the Federal Circuit Courts of Appeal over how many entities need to be involved in order for a kickback to exist.

I guess mortgage fraud is stealing the headlines.

Does anyone know if this is still near the top of HUD's priority list.
 
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