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CFPB Orders Realty Company to Pay $500,000 RESPA Fine

The Consumer Financial Protection Bureau has ordered RealtySouth, the largest real estate firm in Alabama, to pay a civil monetary penalty of $500,000 for mortgage disclosure violations. The CFPB has charged the company with illegally steering purchasers to use its affiliated company, TitleSouth LLC, for title and closing services. The penalty, along with other injunctive relief, are contained in a consent order under which RealtySouth neither admits nor denies the CFPB’s allegations.

The CFPB says the company violated the Real Estate Settlement Procedures Act, when it encouraged its agents and in some cases required them to use TitleSouth in real estate transactions. From March 2011 until May 2012, RealtySouth used a preprinted contract that charged buyers a fee for title and closing services performed by TitleSouth. In 2012, the company changed the contract to allow buyers to check either “TitleSouth” or “Other.”

© Volkan Taner - Fotolia.comRealtySouth also provided buyers with an Affiliated Business Arrangement Disclosure Statement as required by law, but the statement did not comply with RESPA. According to the CFPB’s complaint, the disclosure “did not use the format of Appendix D. It did not use capital letters or another means of highlighting the fact that consumers could obtain similar settlement services from other providers and that they were free to shop around for those services…” Further, the language was not set apart but was “incorporated into the end of a list of descriptions of seven affiliated businesses, and was hidden…”

The disclosure also included marketing statements about the benefits and value of RealtySouth’s affiliates, another violation of RESPA.

The company changed its disclosure when notified by the CFPB of its concerns.

The CFPB also ordered RealtySouth to update its training procedures and materials to ensure that agents may not require the use of its affiliated companies in real estate transactions.

The case was referred to the CFPB by the Department of Housing and Urban Development.

The consent order is available here.

June 5 Webinar to Examine Latest Regulatory Actions

There’s still time to sign up for our webinar on June 5, which will analyze the CFPB’s May 22 Supervisory Highlights Report. The report summarizes the CFPB’s first two years of supervision of nonbank entities, particularly debt buyers and debt collectors and reveals new areas of concern to the bureau. For more about the report, click here.

The webinar will provide an in-depth examination of the topics covered by the report and offer suggestions on other issues that may now be a focus of the bureau’s concern. The program is accredited for 1.5 hours of DBA International Continuing Education. Application is pending for 1.5 hours of attorney CLE for California, Delaware, New Jersey, Pennsylvania and Virginia. New York attorneys have reciprocity with Virginia CLE.

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as outside counsel to RMA International, on the governing Board of Regents of the American College of Consumer Financial Services Lawyers, and on the New York City Bar Association's Consumer Affairs Committee. From 2014 to 2017, he chaired the ABA's Bankruptcy and Debt Collection Subcommittee. For more information, see

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