HUD settles cases involving illegal mortgage fees

Lenders will pay more than $2 million in settlements with the U.S. Department of Housing and Urban Development in cases involving illegal kickbacks and referrals.

According to a HUD news release, Secretary Mel Martinez announced that the settlements came as part of the Department's initiative on enforcement of the Real Estate Settlement Procedures Act.

"These cases demonstrate HUD's de-termination to enforce RESPA and to stop illegal referral fees and unearned fees that may ultimately raise the price that unsuspecting families pay for their homes," Martinez said.

The settlements total more than $2,250,000 for consumer housing counseling and education, refunds to homebuyers and payments to the government. The settlements include agreements with The First American Corp. and Trans-america Corp., providers of flood determination and tax settlement services to hundreds of lenders throughout the country; Conseco Finance Corp., one of the nation's largest lenders; ARVIDA/JMB Partners, a large Florida builder; and Central Pacific Mortgage Corp., a na-tional home lender.

The companies cooperated in HUD's investigations and entered into the settlements to resolve the findings of HUD's investigations.

RESPA requires disclosures to homebuyers of settlement costs and provides protections to home buyers during the process of settlement of a mortgage loan.

RESPA Section 8(a) prohibits kickbacks and referral fees among settlement service providers and section 8(b) prohibits the charging of unearned fees for settlement services. Section 9 prohibits requiring the use of a particular title company.

So far this year, HUD has entered into 38 settlements with lenders for violations of the anti-kickback provisions of Section 8 of RESPA.