Tuesday, December 11, 2007

Law Firm, Lender & Broker Settle Kickback Allegations

Reiner & Bendett, P.C., a Farmington, Connecticut law firm, Absolute Mortgage Solutions, LLC, an East Hartford, Connecticut lender, and Access America, LCC, DBA Century 21 Access America, a Wethersfield, Connecticut broker, will pay $700,000 in fines, forfeitures and restitution to settle allegations they engaged in illegal kickback and inducement schemes. Of the money, $125,000 will pay restitution to about 500 Absolute consumers who overpaid for certain mortgage-related services as a result of one of the schemes.

In an October 2007 lawsuit filed on behalf of the Department of Consumer Protection (DCP) Commissioner and the Insurance Department, it was alleged that Reiner, which also sells title insurance, used sham service, rental and other agreements to conceal $142,200 in kickbacks and unlawful inducements between 2002 and 2005. In exchange, Absolute and Access allegedly steered title insurance business to the law firm. Connecticut law prohibits title insurance agents from paying for referrals.

“This law firm used service and other sham contracts to camouflage kickbacks and sidetrack state law,” Attorney General Richard Blumenthal said. “Consumers were overcharged because of this underhanded scheme. Reiner and Absolute conspired to conceal illegal payments as fake fees, secretly forcing consumers to cover the cost of kickbacks. The law firm hid illicit payments to Access in phony ‘marketing’ and ‘rental’ agreements. These steering schemes increased consumers’ costs and denied choice, while unjustly enriching the lawbreakers.”

“Each of about 500 consumers will receive $200 early in the New Year. These firms will rightly give back their ill-gotten gains to compensate consumers and help the state fight similar schemes. I will fight to enforce state laws banning kickbacks and other anticompetitive practices that increase costs to consumers,” Blumenthal added.

Insurance Commissioner Thomas R. Sullivan said, “This type of practice is not only harmful, but it puts yet another burden on homebuyers by adding unnecessary expense to real estate transactions involving title insurance.”

DCP Commissioner Jerry Farrell, Jr., said, “Today’s settlement should serve as a very strong message to the real estate community that behavior of this sort is clearly against the law and will be prosecuted. It is of particular concern to me as the licensor of real estate salespeople and brokers to hear that this has occurred, and if we find other examples they will be equally and vigorously investigated.”

Reiner agreed to pay mortgage broker Absolute $200 per customer to perform certain closing services, including ordering a title search, assembling closing documents, assuring insurance was in place and coordinating the closing. Reiner paid Absolute $76,200 in 2004 under the agreement.

Consumers, however, had already paid Absolute for the same and other services. Blumenthal and Sullivan charged that the arrangement was a ruse to conceal illegal payments to Absolute for steering customers to Reiner for their title insurance.

Under the settlement announced today, about 500 Absolute customers are eligible to receive $200, returning unnecessary fees charged them to underwrite the kickback scheme. Consumers will be notified by mail how to apply for the refund.

Reiner used two other bogus agreements to conceal $66,000 in kickbacks to Access between 2002 and 2005. One contract called for Reiner to pay Access for nonexistent “marketing” services. Under a second oral agreement, Reiner paid Access to “rent” space in Access offices for closings and other business.

Of the $700,000, $125,000 will compensate Absolute consumers, $425,000 will be deposited into the state’s General Fund and the remainder used for consumer education by the Attorney General’s Office, DCP and the Insurance Department.

The agreement caps a two-year joint investigation by the Insurance Department and the Attorney General’s Office. The investigation was prompted by unusual market activity reported to the Insurance Department. DCP and the Banking Department also participated.

mortgage fraud

1. Situations like these can be avoided if there is a direct and continuous contact between the seller and the buyer, especially if both parties are given enough time to scrutinize details of the estate. If people could only realize the perks of their mobile’s network service, they might be saved from these kinds of fraud. For the buyers, try to ask your network. For the agents, you still have to ask your network

   Posted by  on  12/11  at  08:44 AM

2. Good. This helps the parties to transactions that are acting honestly. One sad note for the borrowers that paid too much at closing, AND included those fees in the loan amount: they will be paying finance charges on those fees for the life of the loan. That adds up!

   Posted by  on  12/13  at  04:08 AM