Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
While the recent National Association of REALTORS®’ (NAR) settlement continues to make headlines and spark conversations across the industry, the legal system waits for no man as cases continue to appear and evolve.
New lawsuit filed against United Mortgage
United Wholesale Mortgage (UWM) is facing a proposed consumer class-action lawsuit, as reported recently by Reuters.
The lawsuit alleges that UWM “schemed” with brokers to “push homebuyers into expensive mortgages, costing them billions of dollars in excess fees.”
To be more concise, the lawsuit alleges that UWM conspired with mortgage brokers to steer homebuyers toward loans with them, violating federal racketeering laws and other provisions. As the filing states, UWM “corrupted a large swath of ‘independent’ brokers,” and “misrepresented and concealed the relationship between itself and brokers.”
Reuters reported that UWM’s statement to the press referred to the lawsuit as a “sham,” and said the company will “defend these allegations to the fullest extent permitted by law.”
NAR member files reconsideration for Burnett settlement
A member of NAR has filed a motion for reconsideration in the Burnett case regarding NAR’s settlement.
NAR member Art Gonzalez explains in his filing that there is a lot of misinformation surrounding commission systems in real estate and how they have historically worked. As the documents states: “Real estate insiders recognize that the Adversary Commission Rule leads to a marketplace where there is ‘a lot of confusion around how commissions work.’”
Gonzalez continues to break down the different models of commission and how the system reportedly functioned well; “In this current system, the commission for both buyers and sellers is built into the structure as it is financed, and in this manner, it makes the system consumer-friendly.” Essentially, he alleges that sellers are not a damaged party in this system, because ultimately, buyers have always paid the commissions since the funds come from their purchasing money.
Gonzalez goes on to conclude that better information needs to be presented to sellers and buyers for them to understand the commission structure and that no one is “suffering” under it.
He also concludes that another solution is to “get rid of the buyer’s agent compensation and sellers can wait to see what negotiation the buyer proposes in regard to commissions, as ultimately, the buyer finances the commission cost.”
Spring Way Center vs. West Penn Multi-List files a stay
Joining the list of several other cases either proposing or seeing stays, the MLS-based case of Spring Way Center vs. West Penn Multi-List has filed an unopposed motion to stay based on the possible consolidation of cases and the pending settlement in Burnett.
The filing states that JPML heard oral arguments on the motion to transfer and consolidate certain cases back on March 28, and this pending action prevents this case from moving forward. In addition, the pending Burnett settlement could affect defendants in this case as well, preventing litigation from continuing.
The judge has yet to rule on the motion, but given the other cases with recent stays, the chances of an approval are very high.
