The U.S. Consumer Financial Protection Bureau ripped into the largest real estate firm in Alabama on Wednesday amid allegations that the company gave illegal kickbacks to a sister business.
The CFPB fined RealtySouth $500,000 under a consent order for what it termed "inadequate disclosures" to homebuyers across the state, steering customers toward TitleSouth, an affiliated company owned by the same holding company that owns RealtySouth, according to a news release.
RealtySouth is held by Berkshire Hathaway, the investment firm owned by billionaire Warren Buffett.
"Disclosures give consumers the power to make informed financial decisions, and buying a house is among the biggest financial decisions most people ever make," said Richard Cordray, director of the CFPB. "The Consumer Bureau will continue to take action against companies that attempt to modify disclosures and keep consumers in the dark."
Homebuyers have the right to choose service providers during the homebuying process, the CFPB said, and companies are required to disclose this fact. Not doing so can violate the Real Estate Settlement and Practices Act.
While the law allows real estate companies to refer their customers to affiliated businesses, they must provide consumers an “affiliated business arrangement” disclosure that clearly states that the customer has the right to shop around for a better price, and that they are not required to use the affiliated company.
RealtySouth changed its disclosure forms immediately after being contacted by the CFPB.
Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...