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Real Estate Firm Fined $500k Over RESPA Violations

On May 28, 2014, the Consumer Finance Protection Bureau (“CFPB”) ordered the largest real estate company in Alabama to pay a $500,000 civil penalty to settle claims that the company provided inadequate disclosures regarding a relationship with an affiliated title insurance company. CFPB alleged that the real estate company failed to comply with the disclosure provisions of RESPA. CFPB claimed that the disclosure used by the real estate company did not use capital letters or highlight the fact that consumers could obtain services from other providers. This disclosure language was “hidden” within other statements. CFPB also raised concerns that the disclosures include marketing statements that benefitted the affiliated entities.

If real estate companies are affiliated with another real estate service provider, appropriate affiliated business disclosures must be used. RESPA’s Regulation X includes a format on Appendix D, which is acceptable to the CFPB.

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