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RESPA Protection Against Illegal Referral Fees
The Real Estate Settlement
Procedures Act was enacted due to the increasing instances of unfair business
practices involved in the settlement process of real estate transactions. For the most part, most individuals involved
in the settlement process do not engage in these unfair practices. However, through RESPA, those individuals
who are currently involved in the real estate settlement stage are given peace
of mind knowing that there is protection against hidden expenditures, such as
illegal referral fees.
Through RESPA protection against
illegal referral fees, it is illegal for any individual to pay or receive a fee
or anything of value for referring settlement service business to a particular
organization or person. Additionally,
it is prohibited for an individual or organization to accept a fee for services
that they actually do not perform. For
example, a loan source cannot add an appraisal fee, which is performed by a
third party, and keep the difference.
In addition to this, RESPA
protection against illegal referral fees prohibits title companies, mortgage
brokers, appraisers, attorneys, settlement agents, and others from charging a
fee for work that they did not actually perform. In instances where you suspect that this is occurring, it is
recommended that you advise that person or company of the RESPA referral fee
prohibitions.
In cases where illegal
referral fees have been known to occur, the penalties are steep. Under the RESPA protection against illegal
referral fees, it is considered a crime for someone to pay or receive an
illegal referral fee. Penalties usually
take the form of either a fine or imprisonment. However, in some cases the penalty can involve both a fine and
imprisonment. If you are a victim of
illegal referral fees, you may be able to retrieve the charged money through
the use of a private lawsuit. In many
instances, a private lawsuit has yielded three times the amount of the illegal
referral charge for a settlement service that you had been billed for. Additionally, if your case has been
successful, often a court will also award your court costs as well as your
attorney’s fees.
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