A federal agency has agreed to examine whether marketing agreements between at least three Colorado real-estate firms and several banks violate consumer-protection laws.
Wells Fargo Home Mortgage, Countrywide Home Loans Inc. and JPMorgan Chase were among the mortgage lenders involved in the agreements.
The real-estate companies are among nine subpoenaed in April by the state Division of Real Estate in connection with a probe of possible violations of the Real Estate Settlement Procedures Act (RESPA).
The banks and real-estate companies say no violations occurred because the payments by banks to the companies are for renting office space and marketing services, not for the referral of business.
“These are national agreements,” said Erin Toll, director of the Division of Real Estate.
Toll met last week with U.S. Department of Housing and Urban Development officials to get the agency’s help because she doesn’t have jurisdiction over banks and mortgage lenders, and the federal agency does. HUD oversees compliance with RESPA.
“RESPA says very clearly that thou shalt not give or take anything of value in exchange for the referral of business,” said Brian Sullivan, a HUD spokesman.
The act is designed to help consumers become better shoppers for settlement services, such as mortgage loans or title insurance, and to eliminate kickbacks and referral fees that unnecessarily increase the costs of such services.
Toll said HUD plans to review all the materials she gets from subpoenas.
Under terms of one agreement, Wells Fargo Home Mortgage pays Re/Max Properties Inc. of Colorado Springs $12,000 a month. In return, Re/Max promotes the mortgage company at four offices, provides access to its customers and agents and has all new agents trained on the mortgage company’s programs and products.
The agreement is a way to streamline customers’ access to financial products and services, said Debora Blume, a spokeswoman for Wells Fargo Home Mortgage in Des Moines, Iowa.
“Marketing-agreement payments are based on the reasonable value of marketing services and rental space and never on loan productivity or the referral of a loan,” she said. “Consumers are never required to use the loan officers at the real- estate office.
“Wells Fargo’s marketing agreements are compliant with all applicable laws and regulations, including the requirements of the Real Estate Settlement Procedures Act.”
Joe Clement, the brokerage’s leader, said the agreement meets RESPA standards and that his company is not violating any laws.
“There are tons of these around the country,” Clement said.
Under terms of another marketing agreement, Littleton- based Keller Williams Real Estate receives $7,000 a month from W.R. Starkey Mortgage LLC. In exchange, Keller Williams provides Starkey with marketing services, office space and equipment. Starkey is the only mortgage company allowed to provide training to Keller Williams brokers.
“Any time an agreement is tied to per-unit production, there certainly will be issues,” said Gary Lacefield, executive vice president and director of compliance at Starkey. “Ours is based on true market rent based on the space we rent and the cost of marketing services in the area.”
No one from Keller Williams was available for comment.
Toll also subpoenaed Slifer, Smith & Frampton Real Estate, based in Vail, which said it does not have any marketing agreements. The real-estate firm is a subsidiary of Vail Resorts, and one of that company’s other subsidiaries has marketing agreements with Countrywide and JPMorgan Chase.
“Chase had a marketing agreement with Vail Resort Management Services, where Chase paid them for their marketing services,” Chase spokesman Tom Kelly said. “The agreement is no longer in effect.”
Neither Countrywide nor Slifer, Smith & Frampton returned calls for comment.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
A big job
What Colorado Division of Real Estate Director Erin Toll oversees:
50,000 licensed real-estate brokers
5,000 licensed real-estate appraisers
10,000 licensed mortgage brokers
Toll’s background
Before taking over the Division of Real Estate in September 2006, Toll was the deputy commissioner of compliance and market regulation for the Colorado Division of Insurance, where she took the lead in uncovering real-estate kickback schemes. Her investigations into captive title-reinsurance arrangements in 2005 led to multimillion-dollar national settlements with insurers.
Margaret Jackson