Referral app sends agent clients to co-founder’s mortgage company

A new app designed to help real estate brokers build customer loyalty is also referring customers to a mortgage company linked to the app that has been accused of steering borrowers into higher-rate loans and failing to protect their personal information.

Realfinity’s “HomeDashboard for Homeowners” app helps consumers track their home’s value, calculate their buying power, and uncover refinancing opportunities to pay for home improvement projects or consolidate debt. Realtors and their agents can offer the app to clients as a co-branded lead generation tool.

Erwin “Rob” shirt

Realfinity co-founder Erwin Robert Hirt was the CEO and one of two shareholders of RPM Mortgage Inc. when the company agreed to pay $19 million to settle allegations that it distributed illegal bonuses to loan originators who directed consumers to mortgages at higher rates. Hirt also agreed to pay an additional civil penalty of $1 million as part of the settlement with the Consumer Financial Protection Bureau (CFPB).

Hirt did not respond to requests for comment for this story. Realfinity co-founder and chief executive Luca Dahlhausen issued a statement to Inman about the settlement noting that, “In entering into the consent order, RPM [Mortgage] did not admit any of the alleged violations of the law. Further, the CFPB complaint does not allege any consumer harm associated with the behavior in question.

The mortgage company that Hirt runs today, Alamo, Calif.-based LendUS LLC, was sued last month over an alleged data breach that the company says could have exposed Social Security and ID numbers. other personal information of more than 12,000 of its customers.

A Feb. 4 lawsuit, which seeks class-action status to represent all affected LendUS customers, claims the company “failed to use reasonable industry standard security measures that would have prevented this type of attack”.

Asked about the data breach, Dahlhausen pointed to a Feb. 8 press release, in which LendUS said that last year an unauthorized person could have accessed Social Security numbers, driver’s license numbers, financial and payment card account information, passport numbers, tax identification numbers, medical and health insurance information, and online account identifiers.

While it’s unclear whether this personal information was actually stolen, LendUS said it has “implemented additional technical safeguards and security measures to further enhance the security of its computer systems and provide additional awareness training.” safety for its staff”.

Three brands, one lender

Realfinity announced last year on LinkedIn that its first “clients” were LendUS, American Eagle Mortgage and RPM Mortgage. According to the National Multi-State Licensing System, American Eagle Mortgage and RPM Mortgage are trade names of LendUS LLC, which sponsors 381 mortgage originators who work at 96 branches in the United States.

Last month, Realfinity announced partnerships with two California-based real estate brokers, Atria Real Estate and Engel & Völkers LA South Bay.

Kevin Swartz, the founder of Atria Real Estate, based in Mountain View, Calif., said that as an affiliate of Side Inc., “I’ve always been drawn to the white-label approach.”

Swartz said he was introduced to Realfinity by a LendUS loan officer he had worked with for 10 years and liked that the platform generated rates specific to his market.

“What I get out of it is a way to bring value to my past clients and stay on top with them,” Swartz said. “It can take 5 to 10 years between a sale and a move into a house before they want to contact me again. When they are considering buying or selling, I look for ways to stay ahead of the game with them, so they contact me. »

Nick Peters, president and CEO of Engel & Völkers LA South Bay, did not immediately respond to requests for comment.

Realfinity Says It’s RESPA Compliant

Any service that helps realtors refer clients to mortgage lenders should be careful to avoid triggering prohibitions on bribes for business referrals under the federal Real Estate Settlement Procedures Act (RESPA). Under RESPA and similar regulations in many states, it is illegal for a real estate agent or broker to give or receive not just money, but “anything of value” in exchange for referrals. ‘business.

A “thing of value” can include services of any kind at special or free rates, payment for another person’s expenses, or educational seminars, programs and training sessions.

Zillow’s co-marketing program for agents and lenders, for example, has come to the attention of the Consumer Financial Protection Bureau, which enforces RESPA, because allowing Zillow Premier agents to invite “Premier Lenders” to share advertising costs constituted a commercial inducement. The CFPB concluded its investigation in 2018 without taking action, although a shareholder lawsuit over Zillow’s alleged failure to disclose the issue in a timely manner is still pending.

On its website, Realfinity promises a “fully digital, end-to-end transaction for real estate agent and client”, providing “monetization of past client database through RESPA-compliant repeat activity”.

Swartz said he hadn’t heard of the litigation that RPM Mortgage and LendUS were involved in, but he believes Realfinity brings value to its clients. And RESPA’s problems aren’t a problem, he said, because he isn’t compensated for referring clients through Realfinity, and has always recommended clients compare rates offered by other lenders.

In an initial phone interview to discuss the company’s business model and growth plans, Dahlhausen told Inman that the platform currently has 130,000 users, who he says are former clients of the brokers. real estate partners of LendUS and Realfinity.

Mark A. McLaughlin

After conducting further research on the company and its founders – and discovering that they had been involved in lawsuits that might be relevant to Realfinity customers – Inman asked Dahlhausen, Hirt and the former chairman of Compass California, Mark A. McLaughlin, who is listed as an advisor to Realfinity on the company’s website, for additional comment.

In a Feb. 3 email inviting Inman to write about the company, McLaughlin said, “This customer-centric application is co-branded between loan officer LendUS and the real estate professional who represented the buyer”, suggesting that LendUS is the only lender available to borrowers using Realfinity.

Asked about the practices Realfinity has in place to ensure consumers are not directed to more expensive mortgages, how Realfinity ensures consumer data protection, and the app’s compliance with RESPA, Dahlhausen said. provided written statements about the litigation against RPM Mortgage and LendUS.

In an email, Dahlhausen also said Realfinity’s only source of revenue is software-as-a-service (SaaS) fees that lenders pay for each user. Realtors and Realfinity do not receive referral fees on lender-related closing services, he wrote.

“The end user is typically an existing customer of LendUS or its divisions, or the real estate broker,” Dahlhausen wrote.

Hirt and McLaughlin did not immediately respond to requests for comment.

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Email Matt Carter