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HUD And FDIC Settle Case Against New England Mortgage Company For Accepting Kickbacks For Business Referrals


East-West Mortgage Co. received kickbacks from closing attorneys, appraisers, title companies

WASHINGTON – The Department of Housing and Urban Development and the Federal Deposit Insurance Corporation today announced a $150,000 settlement with one of the largest mortgage companies in New England for violations of the Real Estate Settlement Procedures Act (RESPA). HUD and FDIC found that 1-800-East-West Mortgage Company solicited and received tickets from certain settlement service providers to Boston Red Sox and New England Patriots events as well as music concerts and restaurant gift certificates in exchange for the referral of business.

The Real Estate Settlement Procedures Act was enacted in 1974 to provide consumers advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the homebuying process. Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.

“RESPA can’t be any more clear when it comes to the giving or receiving of ‘things of value’ in exchange for the referral of business—it’s illegal,” said Brian Montgomery, HUD’s Assistant Secretary for Housing-Federal Housing Commissioner. “The message to the rest of the industry should be equally clear—we will not only investigate those who give, but those who receive kickbacks.”

“RESPA provides important protections for home buyers. We fully support enforcement of this important consumer protection legislation,” said Chris Spoth, Acting Director of the FDIC Division of Supervision and Consumer Protection.

East-West is a wholly owned subsidiary of Commerce Bank and Trust Company of Worcester, Massachusetts, which is a state non-member bank supervised by the FDIC. Through a joint investigation conducted over the past year, HUD and FDIC determined that East-West instituted a “give-to-get policy.” East-West pressured certain closing attorneys, appraisers and title companies for gifts totaling tens of thousands of dollars that East-West used as employee incentives.

To maintain their status as East-West’s top settlement service providers, East-West expected certain attorneys and appraisers to pay for luxury seating at Boston Red Sox games and concert events at Fenway Park. In addition, East-West induced attorneys and appraisers to pay for semi-private barbeques and charitable galas with Patriot players. East-West also regularly requested gift certificates to numerous upscale restaurants in the Boston area.

East-West agreed to pay $150,000 to the U.S. Treasury, to stop accepting kickbacks from settlement service providers, and to cooperate with the agencies’ ongoing investigation of the closing attorneys, appraisers, title companies and other settlement service providers who provided kickbacks to East-West. To read the settlement agreement announced today, visit HUD’s website.

HUD is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at and


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