Is TransactionPoint a Broker’s Worst Nightmare: Part II

We just learned that Terry Tucker, an executive with Keller Williams Realty in Danville, CA sent an email to potential vendors alerting that the vendors would need to pay or their services may not be used. His office is transitioning to TransactionPoint and the only vendors that will be named as preferred providers are those vendors that agree to pay a fee for orders placed through TransactionPoint.

He writes, “Please be aware that our agents will be highly motivated to order within Transaction Point, as the only other option would be for them to pay for it out of their own pockets.”

Despite numerous calls to Mr. Tucker we haven’t received a call back. Please read the entire email here.

At a time when many federal agencies and every state attorney general are looking into the misconduct of companies in their foreclosure processes, we want to ask if the action by Keller Williams Realty described in Mr. Tucker’s e-mail would be permissible under RESPA. We wonder what HUD would think of this program if implemented at Mr. Tucker’s office?

In PART III, our next post, we’ll examine HUD’s latest ruling on illegal kickbacks under RESPA from Home Warranty Companies to real estate brokers or agents.

We are grateful for your insights and suggestions.

Reader Mail

Thanks for all the comments! We got some really good responses. Here is a sample of a few:

RB said (In reference to FATCO):

Oh yes, and they closed our office completely with one days notice. Eight employees and families on the street. They acted like no big deal, sorry! Well now I take time everyday and educate realtors and others that these companies outsource jobs. We should stop giving business to those who don’t give us jobs period…..Please pass this on and on or were doomed!

ksonti said:

Hi:
Regarding out-sourcing jobs to India – keep real estate jobs in California

I agree we should keep California jobs in California – What will happen to our economy and people who depend on these jobs. I use American Home Shield for my Home Warranty Yes Stewart Title – & Of course Property I.D.

What do people in India know about California Real Estate?

We have outsourced jobs to Bangalore, India – Who will take care of us if we don’t take care of our own Californians? We should hold on to our jobs – No more outsourcing –

I Would like to have a Merry Christmas & Happy New Year – be able to feed my family and keep my home – for which I‘ve worked all my life. Keep California Working…… This goes to the reset of my fellow Californians. Love you all.

Alex Villa said:

Provident Title is holding the line for CA jobs!

Larry Wims said:

Please give Realtors information on all companies in our industry sending jobs offshore.

Keep sending them in, we love to hear your thoughts!

Where Have all the Home Buyers Gone?

It’s been a rotten fall season for home sales in California. Where have all the home buyers gone? Where have all your clients gone?

Yes, the pundits seem to offer loads of reasons why sales are down. But no one is talking about the obvious. People without jobs can’t buy homes.

Have you asked yourself, what are you doing to help keep jobs and home buyers in California? No real estate professional probably thinks of themselves as part of the problem. No one says,”I’m the guy who sent jobs to India.” But maybe you are sending your business to companies that are sending the jobs overseas? Companies like First American which proudly boasts that they have moved more than 4,000 jobs to India alone?

Fidelity expects to create and hire 1,800 jobs in India next year according to Inman News.

Are you aware which companies are controlled and/or related to First American and Fidelity? Here’s a few:

• First American Title
• First American Home Warranty
• FANHD
• JCP
• LGS
• PDS

• Fidelity National Title
• Fidelity Home Warranty
• disclosureSource

Next time you buy a real estate product; why not invest with companies whose workforce and products are made entirely here in the U.S.? Companies like American Home Shield, Stewart Title. Home Warranty of America, Property I.D. or Hearst Disclosures come to mind.

Do you have an American company to suggest? We’d like to hear from you.

U.S. Looks Deeper Into Foreclosures

It’s about time somebody starts looking into more of these seemingly shady practices.

From the Wall Street Journal
November 26, 2010
By EVAN PEREZ And DAMIAN PALETTA

WASHINGTON — The Justice Department and other federal agencies have intensified their review of the banking industry’s foreclosure documentation problems, using their powers over bankruptcy proceedings to scrutinize the treatment of troubled mortgages.

A key part of the effort is the Justice Department Trustee Program, the federal watchdog overseeing bankruptcies, which has launched a broad review of Chapter 13 bankruptcy filings by homeowners trying to halt foreclosure proceedings.

A U.S. official said Wednesday that 17 federal Trustee offices around the nation have recently stepped up efforts to scrub Chapter 13 filing documents, looking for documentation errors or improper practices such as inflated fees. Under Chapter 13 bankruptcy, a borrower seeks to halt foreclosure and comes up with a plan to catch up with their mortgage debt within five years.

Leading the federal response is Associate Attorney General Thomas Perrelli, the Justice Department’s No. 3 official, who has been tapped to coordinate the efforts of multiple federal agencies, including the Treasury Department and the Securities and Exchange Commission, and also share information with state attorneys general.

The increased federal scrutiny puts more pressure on the banking industry, which is already dealing with probes by 50 state attorneys general into allegations of the improper use of “robo-signers” to foreclose on homes. The industry is also bracing for the results of a separate probe by the Federal Housing Administration, which is scrutinizing the way banks process mortgage payments.

The reviews could lead to the government requiring banks to overhaul the way they modify mortgages and handle foreclosures, according to government officials involved in the discussions. Under agreements with the states, banks could also have to establish settlement funds to compensate homeowners who have been hurt by foreclosure errors, these people said.

No decisions have been made and the reviews are still in their early stages, the officials familiar with the matter said.

The new effort comes after criticism from homeowner-rights groups and others who have said the federal government wasn’t doing enough to address the document problems.

There have been varying assessments of the foreclosure-documentation problems. Many in the banking industry acknowledge paperwork mistakes, but say they mostly concerned homeowners who were in default on their loans and would have lost their homes anyway. Critics say the errors show how the banking industry hasn’t given homeowners a chance to rework the terms of their loan.

Federal officials hold weekly conference calls to discuss new developments and are beginning to challenge arguments from the banking industry that an intrusive investigation could damage the housing market’s recovery.

Treasury Department Assistant Secretary Michael Barr said Tuesday the federal review of foreclosures found “widespread” and “inexcusable” breakdowns in the process. “These problems must be fixed,” he told the Financial Stability Oversight Council, a consortium of regulators.

Scrutiny by federal Trustees is focusing on two common problems found in Chapter 13 filings, according to the U.S. official. In Chapter 13 filings, mortgage servicers are required to file a “proof of claim” to show how much they are owed by borrowers.

Trustees officials are scrutinizing documents for signs that lenders aren’t inflating their claim or aren’t improperly trying to resume foreclosure proceedings against borrowers. Homeowners are required to continue to make mortgage payments as the bankruptcy court considers the filing.

Similar problems were at the root of a Trustees settlement with the former Countrywide Financial Corp., announced in June. The agreement was part of a $108 million settlement between Countrywide and the Federal Trade Commission. The FTC and the Trustees alleged that Countrywide collected excessive fees from borrowers who were using Chapter 13 to try to keep their homes.

Where does your work go?

Program uses job-loss coverage to lure home buyers

By Jacob Adelman
Associated Press
November 13, 2010

The California Association of Realtors program allows home sellers to fund insurance plans that pay buyers up to $1,500 a month toward their mortgages for six months if they’re laid off from their jobs.

The so-called Home Payment Protection Program is a nod toward the role job concerns are playing in the housing market, especially in high-unemployment states such as California, where 12.4 percent of the population remains without work.

“Most people out today wanting to buy houses have a fear: What happens if I lose my job?” said CAR president Beth L. Peerce. “This takes some of that stress away.”

Mortgage payment protection programs are nothing new, but what distinguishes the California scheme is that the protection is being pitched as a selling point for reluctant buyers, which sellers advertise as part of their home listings.

Under the program, which covers buyers who lose their jobs within 12 months of escrow closing, a seller can choose to pay $200 for six mortgage payments of up to $1,000 each, or $275 for six mortgage payments of up to $1,500 each.

CAR began offering the service last month but doesn’t plan to begin advertising it widely until January, Peerce said.

National Association of Realtors spokesman Walter Molony said he knows of no other states that are offering similar incentives for job-fearing home-seekers.

The focus on consumers wary of making big purchases in a shaky economy recalls Hyundai Motor Hyundai Motor America’s offer to buy back cars from people who lose their jobs.

Analysts have credited that program with helping boost Hyundai sales since its introduction in January 2009, despite the ongoing economic doldrums.

University of Southern California business professor Lars Perner, who specializes in consumer behavior, thinks the realtors’ program could embolden those who have been putting off buying a home because of job insecurities.

“Taking away some of that fear of getting into big trouble is something that could easily tip the balance,” he said.

But Howard Wial, who directs the Brookings Institution’s Metropolitan Economy Initiative, said the plan would help only a limited number of borrowers with middling mortgage payments and relatively short amounts of time spent without work.

Indeed, nearly half of the state’s unemployed had been out of work for an average of more than six months, according to state statistics based on the year ending in September.

Meanwhile, although the state’s average mortgage payment was $1,055 in September, according to tracking firm MDA DataQuick, the insurance payouts wouldn’t cover mortgages in higher priced counties where sales have been most sluggish.

Average monthly mortgage payments in San Francisco and Orange County were $2,469 and $1,772 in September, DataQuick said.

“It could have some impact on home sales, but I wouldn’t overstate it,” Wial said of the CAR plan. “I think it’s a small step.”

Are Asset Management Companies Next on the List of Government Investigations for Mortgage Fraud?

Finally the government has announced what we in the industry have suspected for a long time – highly questionable and likely illegal conduct in foreclosures.

The Treasury Department, HUD, the Justice Department and other federal agencies and state attorney generals are aggressively investigating these problems. Asset management companies are an integral part of the foreclosure process. It’s likely that asset management companies will soon be part of these investigations.

As one example of irregular behavior, we know of an asset management firm that has communicated to all agents that they are restricted to the use of one single service provider, sending correspondence warning agents that if they do not to use their preferred service provider, agents would have to pay for the services out of their own pockets.

While attorney generals in all 50 states are conducting a joint investigation into how lenders managed the foreclosure process, RE Insider is asking the same AG’s and government agencies to look into Asset Management companies and their single sourcing procedures.

Federal Reserve Chairman Bernard Bernanke said, “We take violations of proper procedures seriously.”

And frankly, so do we at RE Insider. Do you know something that can shed more light on these practices? Let us know.