HUD says Znet Financial has agreed to pay the Treasury Department $15,000 and the agents have agreed to refund $400 to each customer referred to Znet for a total $9,200. The individual agents were not named in the statement which was released to the media.
HUD says the defendants allegedly violated the Real Estate Settlement Procedures Act (RESPA) which HUD Secretary Mel Martinez vowed last year to reform. The statement says the defendants agreed to settle "after HUD determined all violated the anti-kickback and unearned fee provisions of RESPA."
The statement says HUD's investigation found that Znet represented the ReMax of Atlanta agents as "employees," paying them $400 each for each consumer referred to Znet.
"The real estate agents are actually 'sham employees' after investigators found the agents performed little or no origination work, other than filling out loan application forms," HUD's statement says.
John C. Weicher, HUD Assistant Secretary for Housing and federal Housing Commissioner, says in the same statement, "RESPA is very clear that creating the illusion of employment to mask otherwise illegal referral fees is not permitted. Real estate agents, brokers and lenders should know that they will be held accountable for kickbacks and unearned fees."
Under terms of the settlement, the defendants "agreed to stop this bogus employee compensation," the HUD statement says.
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