Colorado Regulator opposes limits to percentage cap referrals
|April 11, 2007|
WASHINGTON, /USNewswire/ -- Colorado regulator Erin Toll says affiliated business associations often well serve the public while urging an industry trade group to better educate consumers over the benefits of streamlined settlement services.
The Director of the Colorado Division of Real Estate told 240 members of the Real Estate Services Providers Council, Inc. (RESPRO) conference at the Mandarin Oriental Hotel on April 10 that media attention over affiliated business associations has sometimes proven confusing to legislators and the public.
"One of your biggest challenges with consumers and state legislatures is [affiliated businesses] are not inherently bad," Toll said. "As long as the ownership interests are not tied to the referrals, affiliated business arrangements are good for the consumer."
The association of real estate broker-owners, real estate franchisers, mortgage lenders/brokers, title insurers/agents, home builders, home warranty companies and other settlement service providers throughout North America heard the one-time Colorado Deputy Insurance Commissioner who closed 12 affiliated title businesses last year also oppose a percentage cap of referrals to companies from one source.
How are you going to pick your number?" Toll said. "If you say affiliated business arrangements are ok, they're ok. RESPA does protect the consumer by ensuring a competitive marketplace."
Toll became one of the national leaders over real estate settlement practices following her 2005 investigation into real estate kickback schemes in Colorado involving captive title reinsurance arrangements that led to multi-million dollar national settlements. Toll later testified before the House Financial Services Committee in 2006. As Director of the Colorado Division of Real Estate, she now oversees 45,000 real estate brokers and 3,500 real estate appraisers in Colorado while recently adding 5,000 mortgage brokers to her jurisdiction.
Toll said Colorado's reforms and enforcements are part of a growing national trend with lawmakers from other states now consulting her. Toll is currently reviewing industry marketing agreements that "seem not quite right" and kickbacks between appraisers and realtors. She's also taking RESPA oversight to the state level rather than relying solely on Housing and Urban Development (HUD).
"Bottom line -- states are paying attention now," Toll said. "We don't need a lot of new laws. We need enforcement of the existing laws. When's the last time you read about a huge enforcement action from HUD when they went after all these sham affiliated business arrangements? It just doesn't happen."
RESPRO chairman Arthur Sterbcow, who is president of Latter & Blum Inc. REALTORS in New Orleans, La., backed Toll's goal of more comprehensive enforcement.
"I wish there were 500 Erin Tolls in the United States," Sterbcow said. "She has done more to bring focus and illumination on the problem than anybody. Most regulators don't have the resources. The big trophy mounts --the $500 million fine is fine -- but in Poughkeepsie [N.Y.] that little local guy playing under the radar is too small for the regulators to focus all those resources.
Source: Real Estate Services Providers Council, Inc.