Tag Archives: fair housing

Justice Withdraws from Settlement with National Association of Realtors

 

Settlement will not adequately protect the department’s rights to further investigate Realtors

 

Realtors settlement with justice stalled

National Association of Realtors (NAR) policies affect millions of real estate agents and real estate consumers. Data shows consumers paid over $85 billion in real estate commissions last year. The Justice Department

previously filed a complaint and proposed settlement alleging that the National Association of Realtors established and enforced policies that illegally restrained competition in real estate services

. The settlement sought to remedy those alleged practices and encourage competition among Realtors®. However, it also prevented the department from pursuing other antitrust claims against NAR. The justice department settlement is now being withdrawn.

On July 1, 2021, the Justice Department’s Antitrust Division filed to withdraw the proposed settlement with NAR. In addition, the department is voluntarily dismissing its complaint without prejudice. It was determined that the settlement will not protect the department’s rights to investigate other conduct by NAR that could potentially affect competition and harm consumers. The justice department wants to allow for a broader investigation of NAR’s rules and conduct.

“The proposed settlement will not sufficiently protect the Antitrust Division’s ability to pursue future claims against NAR,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “Real estate is central to the American economy, and consumers pay billions of dollars in real estate commissions every year. We cannot be bound by a settlement that prevents our ability to protect competition in a market that profoundly affects Americans’ financial well-being.”

Under a stipulation entered by the court and signed by the parties, the department has sole discretion to withdraw its consent to the proposed settlement. The proposed settlement may also be modified with consent from the department and from NAR. The department sought NAR’s agreement to modify the settlement to adequately protect and preserve the department’s rights to investigate and challenge other conduct by NAR. Still, the department and NAR could not reach an agreement.

According to the complaint, NAR’s anti-competitive rules, policies, and practices include prohibiting MLSs that are affiliated with NAR from disclosing to prospective buyers the commission that the buyer broker will earn; allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free; enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered; and limiting access to the lockboxes that provide licensed brokers with access to homes for sale to brokers who work for a NAR-affiliated MLS. These NAR rules, policies, practices have been widely adopted by NAR-affiliated MLSs resulting in decreased competition among real estate brokers.

The National Association of Realtors is a trade association of more than 1.4 million-member REALTORS® in real estate brokerages across the United States. There arRealtor key box accesse over 1,400 local REALTOR® associations (called “Member Boards”) organized as Multiple Listing Services through which REALTORS® share information about homes for sale in their areas. Among other activities, the National Association of Realtors establishes and enforces rules, policies, and practices for its Realtor Member Boards and their affiliated Multiple Listing Services.

The Justice Department hopes to increase competition to benefit consumers and allow for more innovation in markets by having the National Association of Realtors repeal and modify its rules for greater transparency to homebuyers about the commissions when representing homebuyers, cease misrepresenting that buyer broker services are free, eliminate rules that prohibit filtering multiple listing services listings based on buyer broker commissions, and change rules limiting access to lockboxes to only REALTOR-affiliated real estate brokers.

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For more information about OnlineEd and their education or learning management systems for real estate brokers, principal brokers, property managers, and mortgage brokers, please visit www.OnlineEd.com.

HUD Makes $37 Million Available to Fight Housing Discrimination

HUD money is available to organizations that advocate against discriminatory acts in housing

By Jeff Sorg, OnlineEd Blog

(May 10, 2016) – HUD has announced that it is making $37.3 million available to fight housing discrimination under HUD’s 2016 Fair Housing Initiatives Program (FHIP) Notice of Funding Availability (NOFA). This year’s three funding notices support fair housing activities, including fair housing testing in the rental and sales market, public education efforts, capacity building, and education and outreach activities.

The categories of grants are:

  • Education and Outreach Initiative grants (EOI) – $7,450,000 available. HUD awards these to groups that educate the public and housing providers about their rights and responsibilities under federal law or state and local fair housing laws that are equivalent to the Fair Housing Act. This year’s funds include $1,250,000 toward a national media campaign; $250,000 toward tester coordinator training; and the rest for general regional, local and community-based programs.
  • Fair Housing Organizations Initiative (FHOI) – $500,000 available. HUD awards these to help build the capacity and effectiveness of non-profit fair housing organizations, particularly organizations that focus on the rights and needs of underserved groups, such as rural and immigrant populations.

Additional information can be found on HUD’s website at www.hud.gov.

Applications must be received by June 23, 2016.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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OnlineEd Risk Management Series: Liability Based on Violation of Law

risk management 1(Jeff Sorg, OnlineEd) – Managing risk requires a basic understanding of the legal theories upon which legal liability is based. Statutes, regulations, and court cases define the relationships between a licensee (real estate or mortgage) and a seller, buyer or borrower. These laws are constantly evolving. As a result, licensees must continually keep up-to-date on changes that may influence their real estate practice.

The focus of this article is on liability based upon the violation of law.

Licensees can be held liable for the violation of various laws. Depending on the law violated and the nature of the violation, the penalties can range from the governing regulatory agency disciplinary action, to civil penalties and criminal action. A brief discussion of the more important areas of law violation follows:

  • Agency law – A real estate licensee representing a client is necessarily involved in an agency relationship. The majority of licensee exposure to violations of agency law occurs in three areas:
    • Entering into an unintentional undisclosed dual agency relationship
    • Non-compliance with agency disclosure and documentation requirements
    • Breach of an agent’s fiduciary duties.

The details of agency law violations will be explored in a subsequent article.

  • Fair housing law – Fair housing law prohibits discriminatory conduct with respect to certain classes of individuals in certain situations. The issues relating to potential housing law violations will be discussed in more detail in a subsequent article
  • Antitrust law – Antitrust law violations relate to conduct that restrains trade. The majority of the violations relating to the practice of real estate may be classified as conduct in restraint of trade, boycotts and tying arrangements (tying one agreement to another). The issues relating to antitrust law liability will be discussed in more detail in a subsequent article
  • RESPA – RESPA stands for the Real Estate Settlement Procedures Act. The purpose of the act was consumer-oriented, in that it requires numerous consumer disclosures and prohibits certain abusive settlement practices. The act applies to all transactions involving federally related loans, including those insured by the FDIC. Most oftheRESPA requirements are the responsibility of the lender and those engaged in mortgage lending. However,certainRESPA rules also affect real estate licensee practice. The two main issues relating to real estate licensees where potential liability may exist for violation of the law are:
    • Prohibited Settlement Practices – Kickbacks, Fee-Splitting, Unearned Fees – RESPA banned a number of practices that involved kickbacks, fee-splitting, and unearned fees by parties involved or related to a real estate transaction. These unearned fees and kickbacks were often adding to the cost of settlement services. It was therefore deemed in the best interest of the consumer to ban, or at the very least, reign in these types of practices. The ban on these practices may be found in RESPA, Section 8.

RESPA prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed. Examples of such prohibited fee arrangements are lenders giving a referral fee to a real estate agent referring a purchaser, title companies giving kickbacks to lenders who refer their loans to a title company in exchange for something of value or appraisers sharing the appraisal fee with the lender who ordered the appraisal for a borrower.

However, nothing in the law prohibits agents from identifying and recommending service providers who will perform quality services for the client. Recent consumer research suggests that homebuyers want real estate agent recommendations for providers of homebuyer related services. These services may include inspection, title, escrow, loan, pest control, land survey, home insulation, home warranty, lead-based paint and radon inspections, and many others. A recent study conducted by the National Association of Realtors® relating to the profile of homebuyers and sellers offered no theories as to why agents don’t make a wider range of service provider recommendations to their clients. Many industry analysts have identified a trend where real estate agents are offering clients more formalized and extensive service provider recommendations. This trend will fulfill the need of buyers who want recommendations from agents whose judgment they trust. The real estate agent also benefits from providing these recommendations, as they become a valuable part of the package of professional services offered to the client.

Violations of RESPA’s anti-kickback, referral fees and unearned fees provisions are subject to criminal and civil penalties. If brokers or agents are to receive fees from lenders or other service providers involving the settlement process, legal counsel should be engaged to determine whether the fee arrangement meets the requirements of RESPA. For example, a lender may be able to provide a fee to a real estate agent if the agent prepares collects the original borrower information from the purchaser and provides this package of information to the lender. However, the rules and regulations regarding this type of activity are very specific and must be followed. Criminal penalties may result in fines of up to $10,000 and imprisonment for up to one year. In civil litigation, the borrower may recover up to three times the amount of the charge paid for any violation of the anti kickback, fee splitting or unearned fee provisions.

  • RESPA Section 9 – Seller Required Title Insurance – RESPA Section 9 prohibits a seller from requiring the homebuyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount that is equal to three times all charges made for the title insurance.

It has long been the practice for listing agents in many areas of the country to indirectly (through the seller) require that a particular title company be used as a condition of the sale. This practice is prohibited under RESPA, Section 9. It should be noted that title services are not the same as escrow services. The listing agent and/or seller may try to require use of a specific escrow company. However, the seller and/or listing agent cannot require that the title insurance policy be obtained from a specific company. The title companies make the majority of their profits off title the issuance of title policies, not by providing escrow services. Therefore, it would be unusual for escrow services to be provided by one company, with another company issuing the title policy.

  • Violation of predatory lending laws – Predatory lending is any lending practice that intentionally places consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the loan originator and with little or no regard to the costs to the consumer. The following are examples of common predatory lending practices:
    • Refinancing with a “cash-out” that provides little or no equity in the property
    • Sub prime lending is offered without proper disclosures.
    • The borrower obtains a HELOC (Home Equity Line of Credit), which is a line of credit, as opposed to a loan for a specified sum, and which is always an adjustable rate. The problem with HELOCs is they have no limit on the size of the interest rate adjustment.
    • Refinancing from to an adjustable rate mortgage (ARM) in order to lower the payment required under an in place fixed rate mortgage.

Lenders, mortgage brokers and real estate licensees should assist their clients to avoid entering into loan transactions that are predatory in nature. All proper RESPA loan disclosures must be made within the time parameters prescribed by law. These disclosures will provide the prospective borrower with information relating to the financial details of the quoted loan transaction.

  • Real estate law and mortgage license law – Real estate and mortgage laws and requirements for licensing are derived from a state’s exercise of its police power to enact laws for the protection of the public’s health, safety and welfare. Each state has enacted laws and implementing regulations that further amplify and expand upon the basic statutory language of the enacted laws. These two bodies of law are the main rules regulating the practice of real estate and mortgage brokerage. Violations of the real estate law or mortgage laws are subject to disciplinary action by the governing regulatory agency. Penalties may range from a letter of reprimand, to license suspension or revocation. Fines are also a possible penalty. A referral to the appropriate authority for criminal prosecution is also possible. It is beyond the scope of this course to enumerate or discuss that many violations of law which may expose a licensee to disciplinary actions or penalties. However, as a part of any risk management program, a licensee should be familiar with the real estate law and regulations or mortgage law and regulations as applicable.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on March 26, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

HUD Awards $38 Million To Fight Housing Discrimination

stop discrimination (Jeff Sorg, OnlineEd) – Funded through HUD’s Fair Housing Initiatives Program (FHIP), the US Department of Housing and Urban Development (HUD) has awarded $38.3 million to over 100 fair housing organizations and other non-profit agencies to address housing discrimination.

“Ending housing discrimination is at the core of HUD’s mission and it takes dedicated people on the ground to address it,” said HUD Secretary Julián Castro. “These funds support community-based organizations that do great work every day on the front lines in the fight for fairness and equality in our nation’s housing market.”

HUD’s Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez added, “The Fair Housing Initiatives Program provides the only federal grant support to private fair housing enforcement and education. Dispersed throughout the country, these grants enable our partner agencies to stand beside us in the fight against housing discrimination, and we couldn’t do it without them.”

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For more information about OnlineEd and its Fair Housing and other education for real estate and mortgage brokers, visit www.OnlineEd.com.

This article was published on October 16, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

FirstBank Mortgage Partners to Pay $ 35,000 – Allegedly Denied Home Loan to Applicant on Maternity Leave

stressed woman with child(Jeff Sorg, OnlineEd) – The U.S. Department of Housing and Urban Development (HUD) announced that Jackson, TN-based mortgage lender FirstBank Mortgage Partners will pay $35,000 to settle allegations that it violated the Fair Housing Act when it denied a mortgage loan to a couple because one applicant was on maternity leave. The Fair Housing Act makes it unlawful to discriminate in the terms, conditions, or privileges associated with the sale or rental of a dwelling on the basis of sex or familial status, including denying a mortgage loan or mortgage insurance because an applicant is pregnant or on maternity leave.

The agreement resolves a complaint filed with HUD by a married couple who alleged that after FirstBank had approved their application and scheduled its closing, FirstBank learned that the wife was on maternity leave and notified the couple within 24 hours of the scheduled closing that the loan was denied. The couple alleged that they then lost the opportunity to buy a home in Virginia. The couple allegedly also lost their current housing, requiring the wife and infant twins to move in with her parents while the husband moved to an apartment with their three-year old. According to the complaint, FirstBank did not consider the couple’s ability to make loan payments during the wife’s maternity leave, ignoring the husband’s salary and the wife’s short-term disability insurance payments.

Under the terms of the agreement, FirstBank Mortgage Partners will pay $35,000 to the couple that filed the complaint. The company will also adopt a national paternal leave policy and receive annual fair housing and fair lending training.

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  This article was published on September 12, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

For more information about OnlineEd and their education for real estate and mortgage brokers, visit www.OnlineEd.com.

Mortgage Lender to Pay $104,000 for Income Discrimination

canstockphoto15349787sack of money resized (Jeff Sorg, OnlineEd) – The US Department of Housing and Urban Development (HUD) announced that Freedom Mortgage Corporation will pay $104,000 to settle allegations that it discriminated against mortgage loan applicants with disabilities by requiring them to provide medical or other documentation regarding their disability.

Under the terms of the settlement agreement, Freedom will set up a three-tiered system of relief. Aggrieved applicants will receive $1,000, $2,000, or $5,000 in damages; Freedom will amend its underwriting guidelines to abolish disability-related income verification; and require employees to attend Fair Housing training.

“Applicants who are otherwise qualified for a home loan may not have additional requirements placed on them because of a disability,” said Gustavo Velasquez, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “We are pleased that this national mortgage lender, through the agreement, is making a commitment to comply with its obligation to treat persons with disabilities the same way they treat those who are no disabled.”

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This article was published on August 15, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

For more information about OnlineEd and their education for real estate and mortgage brokers, visit www.OnlineEd.com.

For more information about HUD, visit http://www.hud.gov/.