Civil Suit Filed Following HUD Settlement
More tips on RESPA law, guidelines and violations for real estate agents and loan originators from former HUD investigator and RESPA expert, Dr. Gary Lacefield.
A civil lawsuit in Tulsa, Oklahoma, is the subject of this week’s video. After several companies were fined by HUD, homebuyers felt they were owed money for inflated and excessive fees charged at closing and are seeking restitution through a court action.
View the RESPANewsUpdate.com video here. This educational video and the RESPANewsUpdate.com website were created by WebCasting.com, based in Dallas, Texas. This video is provided for free, compliments of Premier Mortgage Funding, Inc.
For more about Dr. Lacefield, visit RiskMitigation.net or GoGetRealEstate.com/Get/GLacefield.
Tulsa Investigation Leads to Class Action Suit
HUD reached a $450,000 settlement with Tulsa, Okla., companies McGraw Davisson Stewart Realtors, Closings of Tulsa, Builders Title and several of their affiliates. Now, those companies are finding themselves targeted again, this time by homebuyers who feel that they were shafted by the AfBAs.
The plaintiff who filed the suit is Eric M. Bohne, vice chairman of Security Bank, who purchased a home through McGraw Davisson Stewart and Closings of Tulsa. The suit is seeking class action status and states that those eligible for inclusion in the class are “all persons who purchased real estate and paid closing fees through the defendants, which were in violation of RESPA.”
The suit names as defendants Closings of Tulsa, Closing and Escrow Co. of Tulsa, McGraw Davisson Stewart, Residential Sales Associates, Builders Services, Builders Title and Escrow, Robert Dailey, Helen Dailey, John Woolman, Joseph McGraw, Peter McGraw, Darrell Jenkins, and other parties not yet named.
The plaintiff’s attorney, Gary Richardson, of Richardson Stoops Richardson & Ward, is a prominent tort and criminal lawyer who has in the past made several runs for governor. Other attorneys representing Bohne include E. Diane Hinkle and Fred Stoops, also of Richardson Stoops Richardson & Ward. One of their opponents in this case is Clark Brewster, a well-known Tulsa trial attorney who is representing Closings of Tulsa.
The suit bases its claims on HUD’s investigation and subsequent settlement agreement, and asserts that “the plaintiffs and all class members had no knowledge, either actual or constructive, of the wrongs committed against them until after the defendants were forced to ‘come clean’ as a result of HUD’s investigation.”
The first count in the suit alleges RESPA violations, specifically citing disclosure requirements, the Section 8 anti-kickback prohibition and RESPA’s anti-steering provisions. The suit states in part that, “Upon information and belief, Plaintiff was charged inflated and excessive closing fees by Closings of Tulsa, which included unearned fees for services not performed.” The suit seeks treble damages on those fees for both the plaintiff and plaintiff class members.
The second count alleges deceit and common law fraud, stating, “Defendants actions and/or inactions are a violation of Oklahoma law regarding deceit. Defendants suppressed facts which they were bound to disclose, and misrepresented other facts in a deliberate attempt to mislead buyers.”
In addition, the suit alleges that the defendants’ actions constitute constructive fraud and states that the plaintiffs are entitled to both actual and punitive damages flowing from the “wrongful conduct” of the defendants.
The suit also charges the defendants with unfair trade practices in violation of the Oklahoma Consumer Protection Act, stating, “Defendants’ participation in kickbacks, fee-splitting, and charging of unearned fees, and defendants’ conduct in restricting, limiting and controlling settlement providers was immoral, unethical, oppressive, unscrupulous and substantially injurious to consumers.”
The fourth count of the suit alleges unjust enrichment, and charges that “plaintiff and the plaintiff class members have suffered an injustice which can only be remedied by a disgorgement of unearned profits retained by defendants’ unjustly, and at the expense of plaintiff and plaintiff class members.” While the fifth count asserts fraudulent conspiracy and claims that “defendants conspired to charge excessive fees and control settlements and closings of real estate for the purpose of splitting fees and paying kickbacks for their own financial gain.”
The suit seeks actual and punitive damages for the defendants’ “unlawful and unscrupulous” conduct on this count. The suit was filed in the U.S. District Court for the Northern District of Oklahoma.
Plaintiff’s attorneys are reportedly speculating at this juncture that the number of plaintiffs in the class could exceed 10,000 and that the case could affect other businesses that have been adversely impacted by unfair trade practices.
Bohne has reportedly said that the case is not an issue of money, but rather of righting a wrong. John Woolman, president of McGraw Davisson Stewart and one of the defendants named in the suit, has reportedly denied the allegations and said that the companies will fight the lawsuit.