Matthew Blake with HousingWire “One challenge to Rocket Homes’ ambitions may come from the federal government. As Inman News flagged, the company spends a couple of pages of its recent annual report noting that the Consumer Financial Protection Bureau may change enforcement of the Real Estate Settlement Procedures Act, or #RESPA
“That 48-year-old law, in part, bans kickbacks and referral fees between real estate agents and mortgage lenders.”
“We are cooperating fully with the Consumer Financial Protection Bureau in this investigation and are confident in the compliance processes that Rocket Homes has in place,” Rocket’s annual report reads.
The problem for Rocket Homes is not as much RESPA, as the fact that it allocates consumers toward a network of brokers. The Sherman Antitrust Act prohibits brokers from forming networks. Rocket Homes is also a “shell” entity. RESPA does not protect “Sham Controlled Business Arrangements.”
Rocket Homes, of course, is only one of many #kickbacks products that operate in the housing sector by means of #consumer #allocation between licensed brokers
The full list firmly extends into the bulk of the industry that includes: Zillow Flex, Realtor.com ReadyConnect Program (DBA Opcity, Inc., a News Corp subsidiary) Redfin Partner Program (operated by Redfin Corporation) HomeLight.com (DBA HomeLight, Inc.) Opendoor Brokerage (a subsidiary of Opendoor) Xome Inc. (a subsidiary of Mr. Cooper) Blend Brokerage, Inc. (Blend, Inc. subsidiary) mellohome (DBA mello Home Services, LLC a loanDepot subsidiary) Better Real Estate, LLC (a subsidiary of Better.com) OJO Labs (operates Movoto.com) and others.
The Internet can be used to promote competition in the real estate sector, or it can be used to promote collusion between real estate brokers.
Rocket Homes not only promotes collusion with a network of 15,000 independent brokers, it further collects hundreds of millions in kickbacks prohibited by #RESPA as a “shell” subsidiary of Rocket Mortgage.
Rocket Homes and Rocket Mortgage has lost all credibility the day they decided to secretly take hundreds of millions in kickbacks from broker commissions. They cannot admit it, but they are done.
The #realestate industry is undergoing a full #transformation.
This transformation is not a product of billions USD dumped by #VC funds into #ibuyers and #mortgage companies (most of which operate by secretly collecting kickbacks) but a product of a small #startup of four people at the helm with a seemingly impossible idea — to build an Open Marketplace™ for the housing sector.