Well, it looks like another California realty firm is forging exclusive — and highly questionable— business arrangements for settlement services, a move that appears to violate the Real Estate Settlement Procedures Act.
I just received a tip on this from a Prudential California Realty manager, who shall remain anonymous. If this is true, it’s not only an apparent RESPA violation, but a sad miscarriage of consumer trust. I’ll be investigating this issue further to see where it leads. I vow to keep the identities of all Prudential California Realty personnel confidential.
If you have information on this, contact me at mitch@respaobserver.com.
Thursday, July 30, 2009
Tuesday, July 28, 2009
Latest Freddie Mac Attack! Secret Monopoly Formed with First American Title!
Ever since the U.S. government took over control of Freddie Mac after bailing them out with over $200 billion of taxpayer monies, you’d think this insidious publicly-traded company would start acting with some level of President Obama’s transparency! No such luck.
This company, which is a significant reason we are experiencing a mortgage crisis that is devastating the American way of life, has just made a secret and exclusive alliance with one of America’s most unscrupulous companies in the real estate industry -- First American Title, who is notorious for violating RESPA across the United States, and who has a public history of lawsuits from government agencies across the nation. This very same company has ensured that one of its divisions, FANHD, is now the exclusive provider of NHD reports for EVERY California Real Estate Owned (REO) property sold in the state.
Freddie Mac is engaging in cornering the California REO NHD market to the benefit of one company, First American Title’s FANHD. In fact, it refuses to sell any REO properties if the buyer will not bend to their stipulation to use only one selected company. WOW!!!
Talk about unfair competition!! This is nothing short of a monopoly for all their REO transactions. Did anyone at Freddie Mac think about the illegality of their actions, and the complete disregard for the principles of fair competition in their illicit arrangement?
Here are some basic irregularities to consider:
1. Natural Hazards Reports are required by law in California and considered by RESPA to be a settlement service. Thus, the referral of these services is no different than the referral of title reports, which is a violation of RESPA sections 8 and 9.
2. Freddie Mac is under government control and required to comply with fairness in its negotiations. Freddie Mac has not put this service to bid nor published an RFP.
3. Freddie Mac with this arrangement is denying free market competition among NHD report providers in the REO market, thus violating federal and California antitrust and unfair competition laws.
4. The arrangement may impose restraints on trade in violation of the Sherman Act and under the Cartwright Act.
5. More importantly, this is fundamentally wrong for the state of California. This arrangement is creating additional unemployment and eliminating competition in the NHD industry.
If you haven’t done so already - send a message to our government officials to stop these insider dealings and support “timely” competition and the American way of life before it is taken away from all of us.
The quest is not only to create jobs, but also to preserve them!
cc. Secretary of HUD
FHFA
GAO
Governor Arnold Schwarzenegger
Senator Feinstein
Senator Boxer
President Obama
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This company, which is a significant reason we are experiencing a mortgage crisis that is devastating the American way of life, has just made a secret and exclusive alliance with one of America’s most unscrupulous companies in the real estate industry -- First American Title, who is notorious for violating RESPA across the United States, and who has a public history of lawsuits from government agencies across the nation. This very same company has ensured that one of its divisions, FANHD, is now the exclusive provider of NHD reports for EVERY California Real Estate Owned (REO) property sold in the state.
Freddie Mac is engaging in cornering the California REO NHD market to the benefit of one company, First American Title’s FANHD. In fact, it refuses to sell any REO properties if the buyer will not bend to their stipulation to use only one selected company. WOW!!!
Talk about unfair competition!! This is nothing short of a monopoly for all their REO transactions. Did anyone at Freddie Mac think about the illegality of their actions, and the complete disregard for the principles of fair competition in their illicit arrangement?
Here are some basic irregularities to consider:
1. Natural Hazards Reports are required by law in California and considered by RESPA to be a settlement service. Thus, the referral of these services is no different than the referral of title reports, which is a violation of RESPA sections 8 and 9.
2. Freddie Mac is under government control and required to comply with fairness in its negotiations. Freddie Mac has not put this service to bid nor published an RFP.
3. Freddie Mac with this arrangement is denying free market competition among NHD report providers in the REO market, thus violating federal and California antitrust and unfair competition laws.
4. The arrangement may impose restraints on trade in violation of the Sherman Act and under the Cartwright Act.
5. More importantly, this is fundamentally wrong for the state of California. This arrangement is creating additional unemployment and eliminating competition in the NHD industry.
If you haven’t done so already - send a message to our government officials to stop these insider dealings and support “timely” competition and the American way of life before it is taken away from all of us.
The quest is not only to create jobs, but also to preserve them!
cc. Secretary of HUD
FHFA
GAO
Governor Arnold Schwarzenegger
Senator Feinstein
Senator Boxer
President Obama
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Monday, July 27, 2009
Stop Freddie Mac & First American’s ill-conceived Monopoly!
I have just learned about a very serious legal breach and threat to our California real estate industry. After you’ve read this, tell me and tell our government what you think!
Did you know that Freddie Mac now refuses to sell an REO property to any buyer in California unless that buyer only accepts a First American Title-produced Natural Hazards Disclosure report? No one else’s NHD report will be permitted. Can you believe that?
Tell President Obama and Governor Schwarzenegger to NOT let Freddie Mac shut down an entire industry!
Here’s the scoop - Freddie Mac and First American Natural Hazard Disclosures (FANHD) have made an exclusive agreement cutting out every other NHD company (Can you say anti-trust?) for all Freddie Mac California real estate-owned (REO) properties. Under this exclusive arrangement, Freddie Mac requires all buyers of REO properties to agree to the sole use of FANHD natural hazard disclosure (NHD) reports.
This deal was done, I believe, without even the public posting of a public request for proposal –- a standard by every government agency.
Why should you care? In California the ONLY protection an REO buyer has is the NHD –- no other disclosure is offered. And who certified First American Title’s report as the best NHD money can buy? Nobody, that’s who.
It’s time to raise your voice and question this highly questionable and all too insider friendly relationship!
And don’t just tell the folks at Freddie Mac and First American Title’s FANHD you don’t like insider double dealing – tell our elected officials and their staffs in Sacramento and Washington DC to do what is right -- to stop these “privileged” arrangements, to support “timely” competition and the way of America life before it is taken away from all of us.
The quest is not only to create jobs, but also to preserve them!
cc. Secretary of HUD
FHFA
GAO
Governor Arnold Schwarzenegger
Senator Feinstein
Senator Boxer
President Obama
Did you know that Freddie Mac now refuses to sell an REO property to any buyer in California unless that buyer only accepts a First American Title-produced Natural Hazards Disclosure report? No one else’s NHD report will be permitted. Can you believe that?
Tell President Obama and Governor Schwarzenegger to NOT let Freddie Mac shut down an entire industry!
Here’s the scoop - Freddie Mac and First American Natural Hazard Disclosures (FANHD) have made an exclusive agreement cutting out every other NHD company (Can you say anti-trust?) for all Freddie Mac California real estate-owned (REO) properties. Under this exclusive arrangement, Freddie Mac requires all buyers of REO properties to agree to the sole use of FANHD natural hazard disclosure (NHD) reports.
This deal was done, I believe, without even the public posting of a public request for proposal –- a standard by every government agency.
Why should you care? In California the ONLY protection an REO buyer has is the NHD –- no other disclosure is offered. And who certified First American Title’s report as the best NHD money can buy? Nobody, that’s who.
It’s time to raise your voice and question this highly questionable and all too insider friendly relationship!
And don’t just tell the folks at Freddie Mac and First American Title’s FANHD you don’t like insider double dealing – tell our elected officials and their staffs in Sacramento and Washington DC to do what is right -- to stop these “privileged” arrangements, to support “timely” competition and the way of America life before it is taken away from all of us.
The quest is not only to create jobs, but also to preserve them!
cc. Secretary of HUD
FHFA
GAO
Governor Arnold Schwarzenegger
Senator Feinstein
Senator Boxer
President Obama
Monday, July 6, 2009
White-labeling alive and well?
It seems that the practice of "white labeling" may still be alive and well at one Southland realty firm.
White labeling, for those of you who don't know, is when a title company wholesales its Natural Hazard Disclosure (NHD) reports or data at a discount to real estate brokerage firms. Then the brokerage firms slap their own name on the reports, often selling them at an inflated price to unsuspecting consumers.
The practice is both unethical in direct violation of the Real Estate Settlment Procedures Act, or RESPA. RESPA prohibits a brokerage firm from charging consumers a fee when the brokerage does not perform any actual services for that fee.
I touched on this subject a few weeks ago with Dave Coy, managing broker for Century 21 Lois Lauer Realty in Redlands.
"We don't produce our own reports anymore," Coy said. "We used to have a private-label arrangement, but now our agents use various companies, including Property ID, and I think Fidelity has a report that they produce."
Coy said Century 21 Lois Lauer used to use First American, but stopped because First American no longer produces private-label NHD reports for Lois Lauer.
I queried Lois Lauer agent Freda England about that this week, however, and the conversation went like this:
"Does your agency have its own Natural Hazard Disclosure reports?" I asked.
"Yes, we have our own," she said. "We use the one primarily, but if it's negotiated between a buyer and seller to use another company ... they can use another one."
Well, correct me if I'm wrong, but it sounds like Century 21 Lois Lauer is still affiliated primarily with one NHD provider. And I get the sense that the company's agents are strongly encouraged to defer to that provider.
Moreover, the services listed on the Century 21 Lois Lauer website includes "Century 21 Lois Lauer Realty Hazard Reports." Sounds like private-label to me.
I ran all of this by Coy again this week and he still maintains that his agency no longer has a private-label arangement for NHD reports. The practice, he said, had become a headache for all involved.
"First American was constantly being challenged for RESPA compliance, so they finally decided they were spending too much and it wasn't worth it," he said.
A big argument against the practice of white labeling is that consumers don't know where the reports are coming from - or if they're accurate and thorough, for that matter.
And there are issues of liability. If the brokerage is not the company that actually prepared the report, does the brokerage take legal responsibility for the report if it's incorrect? Does the errors and omissions insurance of the brokerage cover the consumer who received an incorrect report?
These are questions I hope Lois Lauer Realty customers never have to ask.
This is my last planned blog article for Century 21 Lois Lauer white labeling. However, if anyone has something more to add, please contact me. I will be happy to keep your name confidential.
White labeling, for those of you who don't know, is when a title company wholesales its Natural Hazard Disclosure (NHD) reports or data at a discount to real estate brokerage firms. Then the brokerage firms slap their own name on the reports, often selling them at an inflated price to unsuspecting consumers.
The practice is both unethical in direct violation of the Real Estate Settlment Procedures Act, or RESPA. RESPA prohibits a brokerage firm from charging consumers a fee when the brokerage does not perform any actual services for that fee.
I touched on this subject a few weeks ago with Dave Coy, managing broker for Century 21 Lois Lauer Realty in Redlands.
"We don't produce our own reports anymore," Coy said. "We used to have a private-label arrangement, but now our agents use various companies, including Property ID, and I think Fidelity has a report that they produce."
Coy said Century 21 Lois Lauer used to use First American, but stopped because First American no longer produces private-label NHD reports for Lois Lauer.
I queried Lois Lauer agent Freda England about that this week, however, and the conversation went like this:
"Does your agency have its own Natural Hazard Disclosure reports?" I asked.
"Yes, we have our own," she said. "We use the one primarily, but if it's negotiated between a buyer and seller to use another company ... they can use another one."
Well, correct me if I'm wrong, but it sounds like Century 21 Lois Lauer is still affiliated primarily with one NHD provider. And I get the sense that the company's agents are strongly encouraged to defer to that provider.
Moreover, the services listed on the Century 21 Lois Lauer website includes "Century 21 Lois Lauer Realty Hazard Reports." Sounds like private-label to me.
I ran all of this by Coy again this week and he still maintains that his agency no longer has a private-label arangement for NHD reports. The practice, he said, had become a headache for all involved.
"First American was constantly being challenged for RESPA compliance, so they finally decided they were spending too much and it wasn't worth it," he said.
A big argument against the practice of white labeling is that consumers don't know where the reports are coming from - or if they're accurate and thorough, for that matter.
And there are issues of liability. If the brokerage is not the company that actually prepared the report, does the brokerage take legal responsibility for the report if it's incorrect? Does the errors and omissions insurance of the brokerage cover the consumer who received an incorrect report?
These are questions I hope Lois Lauer Realty customers never have to ask.
This is my last planned blog article for Century 21 Lois Lauer white labeling. However, if anyone has something more to add, please contact me. I will be happy to keep your name confidential.
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