One Year Statute of Limitations Harms Consumers – Sign Our Petition
The consumer protection statute called RESPA (Real Estate Settlement and Procedures Act) is fatally flawed with a one-year statute of limitation. Businesses bent on violating RESPA need only escape detection for one year in order to avoid prosecution and payment of damages. After one year, consumers are prohibited from suing because of a flaw in this federal law.
If we are to stop corrupt business practices that prey on real estate consumers, then we need laws that deter bad conduct. Last week in Pennsylvania, another case has failed because plaintiffs did not file their case within one year of their closing. That case was against Citibank and Fifth Third Bank (click here to read that story). Given that most fraudulent real estate schemes are so complex and secretive that they are typically undiscoverable at all, let alone within one year, we think a change is in order.
Consider these cases from the culpable firm’s perspective. A large firm like Citibank or Fifth Third Bank intent on violating RESPA could profit an extra $10,000,000 if they get away with breaking the law. The only downside? If they are caught before they get past the one-year statute of limitation expires. Every year that goes by after the one-year statute of limitation has expired, translates into illegal profits for which they cannot be prosecuted.
When firms like Paul Taylor Homes can haul in potentially tens of millions of dollars for operating an illegal sham mortgage firm for over a decade, but only get fined $118,000 for one year’s worth of violations in a slow year, the decision to violate the law becomes an easy cost/benefit analysis (click here to see our story on that case). The law does not discourage illegal behavior, rather it encourages firms to make their illegal conduct more and more complex and difficult to uncover. They only need get past the one-year limit to get their free pass and illicit profits.
Today, we have re-opened our petition to increase RESPA’s statute of limitation to 6 years. We already have the support of 176 signors and two national trade associations (National Association of Independent Housing Professionals and National Association of Independent Land Title Agents). We need help getting this petition some “legs” so please sign today and help spread the word.