A group of plaintiffs filed a class action suit against Wells Fargo and Long & Foster, alleging violations of RESPA. Wells Fargo and Long & Foster won at the trial level, but the plaintiffs argued that a new trial was necessary because of an alleged admission during the closing arguments. The lower court disagreed and the plaintiffs appealed to the U.S. 4th Circuit Court of Appeals.
Plaintiffs Denise Minter, Jason and Rachel Alborough and Lizbeth Binks brought a class action suit in the U.S. District Court for the District of Maryland, against Wells Fargo and Long & Foster Real Estate, alleging violations of RESPA Sections 8(a) and 8(c).
Specifically, the plaintiffs claimed that the defendant created a joint venture, Prosperity Mortgage Co., to circumvent RESPA’s prohibition against kickbacks in exchange for the referrals of settlement service business. The plaintiffs alleged that Prosperity was a sham affiliated business arrangement (AfBA). In addition, the plaintiffs alleged that the defendants failed to disclose the arrangement to their customers.
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