A copy of the request filed with the DOJ, CFPB, and the FTC asking to review practices of Xome Concierge on the subject of consumer allocation practices, kickbacks, and price fixing.
Copy of author’s official request that asks the United States Federal Trade Commission, the United States Department of Justice, and the United States Consumer Financial Protection Bureau to investigate Xome on the grounds of an alleged violation of the Federal Trade Commission Act of 1914 (15 U.S.C. Section 45) an alleged violation of the Sherman Antitrust Act of 1890 (15 U.S.C. Section 1) alleged violation of RESPA Section 8 (12 U.S.C. 2607) as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with possible consumer allocation, unlawful kickbacks, and market allocation practices.
Attn: Citizen Complaint Center, Antitrust Division
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530
Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. NW Room CC-5422
Washington, DC 20580
Attn: CFPB Regulatory Implementation
Consumer Financial Protection Bureau
1700 G St., NW
Washington, DC 20552
Please find the information below with regards to possible antitrust violations.
750 Highway 121 BYP, Suite 100
Lewisville, Texas 75067
TX real estate license #9002330
Further, a partner network of an unknown number of real estate agents who choose to execute blanket broker-to-broker referral agreements in an alleged price fixing scheme with Xome, Inc.
Xome operates under a number of brokerage licenses, primarily a TX real estate license #9002330. In addition to offering services that are typically offered by real estate agents to represent consumers when buying or selling real estate across a number of states, Xome Concierge acts as a broker collusion scheme with competing independent brokerages.
In exchange for matching consumers with a Partner Agent, Xome is compensated by the Partner Agent with a blanket percentage of their commission, agreed in advance. Xome Real Estate Rewards is a price fixing mechanism that Xome paper brokerage uses to lure consumers with a promise of perceived savings. However, in actuality this price fixing scheme costs thousands in hidden costs and inflated commissions compared to those available on the open market.
According to Xome: “Xome Real Estate Rewards saves buyers and sellers on real estate commissions and closing costs … Seller's savings based on a total commission of 3.99% vs. a traditional 6% … Buyer Bonus Credit based on rebate equal to 15% of a buyer's agent commission.”
For consumers, Xome Concierge promises real estate assistance, supposedly, offers a match with highly rated agents where “Xome customers save on average $6,300 with our money-saving program for home buyers and sellers. A money-saving real estate program for both home sellers and buyers.”
For real estate professionals, Xome Concierge is a “paper” real estate brokerage that does not engage in actual real estate broker services. Xome systematically applies pay-to-play bias towards all matching results, meaning, only real estate agents that have agreed to pay a referral fee are matched with consumers.
In reality, Xome Concierge is a broker-to-broker collusion scheme that utilizes price fixing as an incentive to lure consumers into the scheme. A referral agreement between Xome Concierge and a Partner Agent for a random transaction that may or may not happen sometime in the future is executed in advance.
By setting listing rates (3.99% vs. a traditional 6%) and buyer refunds (rebate equal to 15% of a buyer's agent commission) Xome brokerage establishes a set of pre-established price fixing agreements with competing brokerages for the sole purpose to earn massive hidden referral fees from consumers’ real estate transactions without performing any legitimate work of a real estate broker.
Xome Concierge engages in consumer allocation, price fixing, and market allocation schemes with Partner Agents’ brokerages, because it is a broker itself. Instead of representing consumers to help buy and sell homes, the company actively disengages from its licensed activities so that every Partner Agent knows that Xome brokerage will not compete with them for the referred consumer. According to the company message to brokers, “Never pay for a buyer upfront, only pay Xome a referral fee for each closed deal.”
RESPA (12 U.S.C. 2607) Section 8 narrowly allows payments under cooperative brokerage and referral arrangements between real estate agents and real estate brokers. This limited exemption on kickbacks only applies to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity.
Xome Concierge does not act in a real estate brokerage capacity, instead, their real estate license is used to collect a blanket referral fee from the largest number of brokers possible. Sherman Antitrust Act (15 U.S.C. Chapter 1, 2), effectively, requires all active real estate brokers to proactively compete for consumers without entering into agreements that restrain free trade. An agreement or an understanding between brokers not to compete for a mutual profit is a "per se" violation of antitrust regulations in the United States.
It is a per se violation of the Sherman Act for real estate brokers to agree on a “standard” referral fee that will be paid for producing a client. Real estate professionals are not allowed to enter into “standard” referral agreements because such agreements always restrict free trade.
To comply in good faith with RESPA (12 U.S.C. 2607) Section 8 exception for cooperative brokerage and referral arrangements, real estate agents must render referral agreements in a particular instance for a particular transaction.
Xome Concierge owes absolutely no duty of care to consumers and takes no responsibility for the transaction, despite receiving a direct financial benefit from the home sale or purchase completed by a referred brokerage.
Actions of Xome directly increase the costs of owning homes in the United States due to added referral fees, consumer allocation practices, and reverse completion between brokers. Partner Agents in the scheme have no incentive to compete for consumers with lower fees, instead, they have an incentive to compete for Xome’ attention. In this scheme, both colluding parties benefit from offering consumers higher commissions. Xome promotes Partner Agents as a way to limit competition with those agents outside of the network, thus limiting free-market competitive forces and steering consumers in self-interest.
The perceived “savings” from the price-fixed rates set at 3.99% vs. a traditional 6% and buyer refunds rebates equal to 15% of a buyer's agent commission are systematically uncompetitive when compared to legitimate offers made by legitimate brokers on the open market.
For example, some highly competitive agents offer consumers flat fees and as much as 50% in buyer commission rebates, compared to a price-fixed rate of 15% rebate via Xome scheme. The numerical difference between a price-fixed 15% rebate and an alternative open market rebate of 50% for a hypothetical home transaction valued at $1M equals to about $10,500 in lost savings. Incidentally, a “standard” referral fee of 35% adds up to that exact same amount of $10,500. In effect, Xome pockets this difference $10,500 as a hidden fee for orchestrating the price fixing scheme, and a buyer merely receives $4,500 in refunds, instead of $15,000 in legitimate refunds that may be available otherwise on the open market.
Obviously, subjected to hidden referral fees offered via Xome paper brokerage scheme, consumers lose thousands from improper steering and unlawful price fixing practices between real estate brokers.
Broker compensation fees must never be fixed via agreements between two or more brokers anywhere in the United States. All commissions and rebates must be set by each real estate agent individually and may only be negotiable between the consumer and the real estate agent.
Genuine quality and honest real estate professionals establish pricing for their services independently, and without any kickbacks. The truth is, every single agent is different, and every single agent has an individual commission structure. If an agent is unwilling to negotiate competitive buyer rebate terms in compliance with the law, there is no reason for homebuyers to assume that they will be willing to negotiate competitively when it comes to their home purchase.
More importantly, in the United States price-fixing is an illegal uncompetitive practice, a felony, outlawed by the virtue of Section 1 of the Sherman Antitrust Act.
Xome rakes in hidden junk fees while consumers are fighting their way through a housing affordability crisis.
As long as referring schemes, such as Xome, are allowed to operate, uncompetitive brokers looking to represent consumers are naturally encouraged to participate in the scheme. “There are no upfront costs, only pay us once the transaction closes,” is an attractive proposition to a broker who acts on this proposition by simply increasing a quoted commission to any consumer who comes as a referral. Any broker who chooses not to participate in such schemes risks losing “free business.” Such an environment is highly poisonous to a healthy real estate representation market.
Xome' referral-only collusion scheme secretly harms real estate consumers and diminishes the efforts of competitive independent agents to provide a tangible service at an independently set competitive price.
As a matter of fair real estate transactions across the United States, there is no excuse to maintain these blanket broker-to-broker collusion schemes established by a handful of “paper” brokers, such as Xome.
The government must treat Xome as a broker because it is paid as a broker and is licensed as a broker. Xome is not a technology company, as it claims since technology companies do not cut into the fees associated with buying and selling real estate. Licensed brokers are not allowed to promote the services of competitors for profit. A broker must promote their individual services directly to consumers and exist to actually help consumers buy, rent, and sell real estate.
Xome further facilitates unearned kickbacks between Partner Agents and independent settlement services where “Xome Inc. or its subsidiary Xome CT LLC is referring consumers to purchase settlement services and may receive a financial or other benefit as the result of these referrals,” according to the brokerage website.
A direct admission to taking unearned fees and kickbacks from independent settlement services is available on the company’s website that reads: “Affiliated Business Arrangement Disclosure Statement. This is to give you notice that Xome Inc. and its subsidiary Xome CT LLC have a business relationship with each of the following affiliates: Nationstar Mortgage LLC dba Mr. Cooper ("Mr. Cooper"); Title365 Company; Title365 Company of Alabama LLC. Title365 Company and Title365 Company of Alabama LLC are collectively referred to herein as "Title365." Except for Mr. Cooper, each of the above-named entities is a subsidiary of Xome Holdings LLC, and Xome Holdings LLC is a wholly-owned indirect subsidiary of Mr. Cooper. Because of these relationships, these referrals may provide Xome Inc. or Xome CT LLC with a financial or other benefit.”
Xome Concierge may seem like a clever by-pass of RESPA’s prohibition against kickbacks between Mr. Cooper Title365 and independent Partner Agents, but this loophole is built entirely on blanket referral agreements between licensed brokers prohibited by the Sherman Act.
RESPA further requires brokers to act in brokerage capacity in order to pay and/or accept kickbacks. Xome Concierge must offer consumers a tangible service as a licensed broker, but instead, it acts as a “blanket” referral fee intermediary between a large number of random real estate agents and an affiliate mortgage company. Xome offers “a thing of value” to Mr. Cooper as a digital channel, while collecting kickbacks from real estate professionals.
All real estate brokers must compete with one another; there are no exceptions. In the event brokers organize their operations into referral networks, this basic rule of free competition fails – a broker who organizes the scheme, in one way or another, refuses to compete with participants of the scheme. In the event one broker sets or recommends prices for other brokers in exchange for a cut of their commissions, Section 1 of the Sherman Act must be actively enforced by the federal government in order to restore open competition between independent professionals.
I currently serve as a CEO HomeOpenly. HomeOpenly is an Open Real Estate Marketplace™ designed and built to improve the homeownership experience in the United States.
HomeOpenly is a technology company that designs, builds, and maintains a series of online marketplace solutions with a focus on a home search, automated valuation modeling (AVM), home buyer's and seller's representation services, mortgage origination, refinance, home insurance, renovation, design, staging, home inspections, home security, moving, home maintenance, title, escrow, cash offer stand-in programs, home warranty, and other real estate products and services.
HomeOpenly operates subject to a 0% rake as our primary competitive advantage to establish a competitive fee schedule for service providers with the use of network effects. HomeOpenly is not a broker and all service providers on our network compete for consumers individually. Our efforts are actively hampered by anticompetitive practices of Xome
As long as brokers can trade consumers as “leads” between independent service providers in exchange for blanket referral fees, Open Marketplace™ continues to operate at a competitive disadvantage.
If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice
If you have a question or comment about federal consumer protection financial laws, including RESPA, you may submit it to the Office of Enforcement of the United States Consumer Financial Protection Bureau
Your comments have been successfully received. Please allow 24 hours for your comments to become available.
Feel free to contact us if you need further assistance. At HomeOpenly we aim to make the opportunity of homeownership transparent, affordable and an open experience.