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.

RESPA Protection

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.