RealtySouth, the largest real estate firm in Alabama, will pay $500,000 in civil penalties to the Consumer Financial Protection Bureau (CFPB) for failing to adequately disclose to home buyers that they had the right to choose their own title company at closing.
According to the CFPB, the company used preprinted purchase contracts that included language directing home buyers to use title and closing services offered by RealtySouth's affiliate, TitleSouth. While that, in and of itself, was not illegal, the company failed to include plain language alerting home buyers that they had the option of using a different title company for settlement services, the bureau says.
As a result, RealtySouth violated the Real Estate Settlement and Practices Act, which protects consumers during the home buying process by prohibiting kickbacks for referrals of real estate settlement services, the CFPB says in a release.
‘Disclosures give consumers the power to make informed financial decisions, and buying a house is among the biggest financial decisions most people ever make,’ says Richard Cordray, director of the CFPB, in the release. ‘The bureau will continue to take action against companies that attempt to modify disclosures and keep consumers in the dark.’
The case was referred to the CFPB by the U.S. Department of Housing and Urban Development.
The CFPB reports that RealtySouth changed its disclosure forms immediately after the violations were discovered.