Title companies and mortgage brokers aren’t supposed to do anything to incent real estate agents to send business their way. This is a big time violation under RESPA (Real Estate Settlement Procedures Act). For example, Title Companies used to give agents a gift when a escrow closed such as a free car wash or gift basket. This is a No No but no one was reporting them. The RESPA rules say that you can’t give anything that an agent would pay for themselves. If you go into a real estate office you’re going to find things like piles of notepads with a mortgage brokers name on it. This is ok since they are using this to promote their business but they can’t give an agent a notepad with the agent’s name on it as that is something that an agent would normally pay for.
It was in the news today that Remax in Colorado is suing First American Title because First American canceled a marketing agreement where Remax was getting paid over $600,000 a year by First American for exclusive advertising to Remax agents. This lawsuit caught the attention of investigators and now they are looking to see if a violation occured.
“The Colorado Division of Real Estate has subpoenaed RE/MAX franchisees and staff members, and is investigating whether RE/MAX agents were provided with incentives such as vacation time or company-generated leads to steer consumers into purchasing title insurance from First American.”