Homeowners are claiming in a federal class action lawsuit that Fidelity National Title Insurance and other major title insurers paid millions of dollars in illegal kickbacks and referral fees to  “hundreds, if not thousands” of real estate agents and brokers. As a result, homebuyers paid inflated costs for settlement services, they say.

The class action lawsuit claims the title insurers violated the Real Estate Settlement Procedures Act (RESPA), which protects homebuyers by prohibiting kickbacks and fees for real estate settlement services in federal-backed mortgage loans.

The scheme was allegedly accomplished by using a web-based platform called TransactionPoint, which “allowed kickbacks and referral fees to be disguised as ‘sublicense fees’ or ‘access fees,’” the class action lawsuit says.

"Through TransactionPoint, agents or brokers selected real estate settlement service providers for real estate transactions and, in turn, real estate brokers and agents entered into standard form sublicensing agreements with vendors, including defendants, to enable the vendors to be listed and selected through TransactionPoint as service providers for the transaction," the class action lawsuit states.

"In short, the scheme allowed defendants and participating real estate agents and brokers to camouflage illegal kickbacks and referral fees as sub-license payments.”

The class action lawsuit claims Fidelity evaded federal and state regulators for years, until the U.S. government investigated Fidelity’s RESPA violations in 2009. Fidelity settled the investigation by promising to pay a $4.5 million settlement and terminating TransactionPoint fee payments.

Also named as Defendants in the class action lawsuit are Commonwealth Land Title Co., Chicago Title Co., Ticor Title Co. of California, Lawyers Title Co., Fidelity National Disclosure Source LLC, Fidelity National Financial, Inc., Lawyers Title Co., and Fidelity National Home Warranty Co.

The Fidelity RESPA Class Action Lawsuit is seeking restitution and treble damages for RESPA violations.

The case is Matthias Hildebrandt, et al. Fidelity National Financial, et al., Case No. 12-cv-00874, U.S. District Court, California Central Court.