Banking Commissioner Announces Joint Efforts to Enforce Against Improper Lending Kickbacks
This news release was issued jointly by Representative John Harkins, the Department of Banking and the Department of Consumer Protection.
July 6, 2007
State Representative John Harkins (R-Stratford) today joined Commissioner Howard F. Pitkin of the State Department of Banking and Commissioner Jerry Farrell, Jr., the State Department of Consumer Protection in announcing joint efforts to crack down on the illegal practice of real estate agents getting kickbacks or compensation from mortgage lenders for referring business to them. Current law prohibits a mortgage lender from awarding any fee or thing of value to real estate agents in exchange for sending customers their way.
“Such practices are illegal, unfair, not in good faith, and certainly not in the interest of the homebuyer,” said Representative Harkins. “The purpose of this combined enforcement is to prevent the unprincipled practice of a real estate agent referring one of their clients to a mortgage lender and receiving some kind of monetary compensation for the referral from a mortgage broker” said Harkins, who serves on the Banks Committee.
“Kickbacks and referral fees are unlawful and what is more than that is they increase unnecessarily the costs to the borrower”, commented Commissioner Pitkin. “Mortgage business should go to the companies providing the best products, services and prices, rather than to companies that pay the biggest referral fees to real estate brokers and salespersons who may be in a position to influence the consumer's selection.” Commissioner Pitkin concluded by stating that the Department will continue to expose violators of the law and attempt to make strides toward curbing unlawful payments for the referral of business and providing a competitive environment.
“Every real estate agent needs to be clear about the fact that state and federal law strictly prohibits agents from receiving a kickback from a mortgage lender or broker,” Commissioner Farrell said. “I strongly urge anyone who is committing such a practice to cease doing so immediately, as my office is investigating such practices and will vigorously prosecute those who violate our laws.” The Department of Consumer Protection is the licensing agency for real estate brokers and salespersons.
“This effort will protect the consumer and maintain the integrity of the practice of mortgage lending,” added Harkins. “The purchase of a new home is one of the most important purchases a person makes in their life. We need to make sure that this process is as above-board as it can be, and that individuals looking to buy a new home are not manipulated or taken advantage of by those who work in the field of real estate or lending.”