Real estate police protect buyers' rights
When home builders behave badly, some of their customers may have an unexpected resource: The federal government's RESPA police, who have become increasingly active in resolving consumers' complaints through nonpublic interventions with builders...The RESPA police are investigators at the Department of Housing and Urban Development. They are best known for their splashy public settlement agreements with realty, title insurance and mortgage industry firms, sometimes involving hundreds of thousands of dollars.

KENNETH HARNEY: Real estate police protect buyers' rights

November 19, 2006

WASHINGTON -- When home builders behave badly, some of their customers may have an unexpected resource: The federal government's RESPA police, who have become increasingly active in resolving consumers' complaints through nonpublic interventions with builders.

RESPA stands for the Real Estate Settlement Procedures Act, a consumer-protection statute that targets kickbacks and other settlement-related abuses. The RESPA police are investigators at the Department of Housing and Urban Development. They are best known for their splashy public settlement agreements with realty, title insurance and mortgage industry firms, sometimes involving hundreds of thousands of dollars.

But with no public fanfare, the RESPA police have begun intervening in complaints brought by individual consumers who say builders are unfairly forcing them to use their affiliated mortgage companies. The affiliates' loan deals, the complaints say, typically are more costly than those from independent lenders.

In one case outlined by HUD officials, a builder canceled a sales contract and seized an $11,845 good-faith deposit when a buyer refused to use the builder's affiliated mortgage company. Under RESPA, builders and others generally are prohibited from requiring the use of a specific lender or title company.

After RESPA investigators contacted the builder and gave the firm 15 days to resolve the dispute, the builder not only allowed the buyer to proceed with independent financing, but paid the buyer's lender to lower the interest rate.

In another recent nonpublic intervention, a consumer complained that a builder seized her $10,000 deposit when she refused to accept the loan deal offered by the builder's mortgage affiliate.

The affiliate's loan officer "fraudulently altered financial documents," HUD said.

In other words, the builder's loan officer allegedly was willing to approve her for a mortgage amount and monthly payments that ultimately would cause her to lose the home to foreclosure.

After investigators intervened on her behalf, the buyer was refunded the $10,000.

If you have been coerced into using a builder's affiliate, call the RESPA enforcement staff at 202-708-0502 or e-mail This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . For background on RESPA, visit www.hud.gov. KENNETH HARNEY, based in Washington, writes on national housing issues. His e-mail address is This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .