Connecticut bank and consumer regulators say they are warning mortgage debt negotiators and real estate agents against colluding to overcharge financially strapped homeowners.
The Connecticut Department of Banking and the Department of Consumer Protection say they are working together to inform and remind debt negotiators and real estate agents to avoid certain illegal practices involving fees paid to debt negotiators.
Banking Commissioner Howard Pitkin and Consumer Protection Commissioner William Rubenstein say they have sent out letters and email to all debt negotiators and real estate agents licensed in the state, reminding them of their obligations and duties to consumers.
They also vowed to monitor transactions in search of abuses.
“We’ve received complaints that some debt negotiators may be violating Connecticut law by entering into arrangements with consumers in which the negotiators are paid substantial fees for their loan modification services at real estate closings and, at times, from amounts previously earmarked as real estate broker commissions,” Pitkin said in a statement.
Pitkin said state law does not bar negotiators from charging fees. However, those fees must be disclosed up front and there is a $500 cap on the fee that can be imposed only after successful completion of the debt workout, he said.
State law also bans anyone but licensed real estate agents from sharing in real commissions, Rubenstein said in the same statement.
