High Closing Fees? Maybe Kickbacks are to Blame

Advice to homebuyers from CAARE

• Always shop for title insurance and settlement service alternatives to the in-house deals you’re offered.

• Ask your realty agent to help you shop beyond the affiliation network. Agents have a duty to help you get the best deals and best service, and they often know where they are. If you find better prices from unaffiliated vendors, don’t let anybody pressure you to go with the in-house, preferred provider. It’s your legal right to choose.

A settlement between the federal Consumer Financial Protection Bureau and a Texas homebuilder is drawing renewed attention to a controversial issue that was prominent during the years preceding the housing bubble: kickbacks in home real estate transactions.

Have questions about the appraisal process?  Contact the appraisers at www.scappraisals.com

Put another way, do you know where your money is really going when you pay thousands of dollars in loan fees and closing charges? Is your realty broker or builder getting an extra piece of the action through side deals with lenders or title agencies — all at your expense through higher charges?

The CFPB’s allegations in its case against Dallas-based Paul Taylor Homes illustrate how these arrangements can work: According to the settlement, the builder created partnerships with two lenders — one a bank, the other a mortgage company. In reality, however, according to the CFPB, “both entities were shams” designed to funnel kickbacks to Taylor for referrals of home purchasers needing mortgages.

Though the partnership entities had names — Stratford Mortgage Services and PTH Mortgage — and appeared to be the funding sources for the loans, they in fact were shells with no separate employees, office space or real substance, the CFPB alleged. They did not advertise their mortgage businesses to the general public, instead servicing only Taylor purchasers.

Read more at: http://www.utsandiego.com/news/2013/Jun/01/tp-high-closing-fees-maybe-kickbacks-are-to-blame/1/

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