HUD & Coldwell Banker in the News
On August 14, 2008, the US Department of Housing and Urban Development (HUD) publicized it settled the federal lawsuit with Property ID Corporation, Realogy Corporation, Cendant Corporation, and Coldwell Banker, under the Real Estate Settlement Procedures Act.
The settlement will necessitate all companies to treat hazard disclosure reports as settlement services and not continue operations of a hazard report company assumed to be frauds by HUD.
This settlement gives HUD the authority to ask for a permanent injunction and disgorgement of illegally profiting of the companies under the Real Estate Settlement Procedures Act.
Another settlement in a federal class action lawsuit involves the companies must pay a total combined of $35 million in which most will be given to California consumers that purchased the hazard disclosure reports back to the year 1996.
The entire lawsuit boils down to the fact that HUD alleged that the Property ID Corporation of Los Angeles made payments to real estate brokers in the state of California in the way of referrals made by consumers. These are considered kickbacks and are against the rules set forth under Section 8 of the Real Estate Settlement Procedures Act.
HUD learned that year Property ID had created a scam with real estate brokers. The scams were created to funnel money instead of produce hazard disclosure reports which is required by California state law. The law states that home sellers or their agents have to provide information if a property is located in fire, earthquake, or flooding area.
The brokers had a few methods to get their agents and franchises to refer their customers to Property I. D. In most cases, they were given a pre-printed contract with Property I.D. as the provider of the hazard disclosure report, however, other methods were also used. The brokers were paid $25 quarterly for each report they conned consumers into purchasing with the other $75 going to Property I.D.