Todd Ewing the founder of Federal Title and Escrow Company, the largest independently owned title company in Washington, D.C, warns realtors and the home buying public about a prevalent practice that now could signal trouble: Preprinted Real Estate Contracts.
The Consumer Financial Protection Bureau is working to protect new homebuyers by cracking down on realtors steering homebuyers toward specific lenders or title companies.
“Preprinting the names of third-party service providers onto your real estate contracts when your brokerage has a professional affiliation with that provider is a surefire way to attract the attention of the Consumer Financial Protection Bureau (CFPB). And when it shines a spotlight, the revelations can be costly.
“Brokerages that maintain marketing service agreements (MSAs) and affiliated business arrangements (AfBAs) with title companies are particularly at risk. These revenue-sharing relationships are quite common, but they attract regulatory scrutiny and require strict compliance to ensure the homebuyer receives the proper disclosures.’
Homebuyers find the paperwork they sign can be lengthy and realtors try their best to explain everything you are asked to sign. However, if the document has prefilled the name of the title company in the real estate contract, be wary. That will be viewed by the CPFB as a violation against a homebuyer’s ability to shop for and choose their own service providers during the home buying process.
Many state real estate commissions are adding language to their laws to discourage licensees from steering their homebuyers toward specific lenders or title companies. In Maryland, for example, they’re revoking real estate licenses, handing out jail time and
The practice that is now out-lawed, is thought to restrict the homebuyer’s choices and inflate costs. You as a consumer want to know that the service providers are the best and your broker has no conflicts of interest.
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