Is Xome a scam?
In the United States, RESPA Section 8 and CFPB Regulation X maintain firm prohibitions against kickbacks and unearned fees, with particular statutory exemptions, with regards to settlement services involving most federally related mortgage loans. This includes services provided by all real estate brokers, real estate agents, and Realtors to homebuyers and home sellers.
'No person shall give, and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.' 12 U.S.C. 2607(a). 'Any person or persons who violate the provisions of this section shall be fined not more than $10,000 or imprisoned for not more than one year, or both.' 12 U.S.C. 2607(d)(1).
There is a narrow exemption to this law, for any: 'payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers.' 12 U.S.C. 2607(c)(3). Service provided by a 'real estate broker' is codified under RESPA as a 'settlement service' that is 'provided in connection with a prospective or actual settlement.' 24 C.F.R 3500.2. A mere possession of a 'shell' real estate license does not meet this designation. Xome is not genuine brokerage acting in a brokerage capacity, but it attempts to meet this exemption as a 'shell' real estate entity.
When Xome acts as an 'agent-matching service' or a 'referral platform' it may, of course, easily sell customer leads and advertising to real estate brokers. However, under RESPA such sales must never be tied to the outcome of the successful transaction or based on a percentage of brokerages' commissions. The US-CFPB Advisory Opinion issued on February 7, 2023, further confirms that any operator of a 'settlement services' digital comparison-shopping platform receives a prohibited referral fee in violation of RESPA Section 8 when the operator receives a 'thing of value' for referral activity.
Because Xome does not provide 'service provided in connection with a prospective or actual settlement' when making a referral, the referral is not a bona fide 'settlement service,' and it does not act as a bona fide 'real estate broker,' and it does not meet an exemption for 'payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers.' The scheme cardinally, collects RESPA-prohibited 'fee, kickback, or thing of value' codified under 12 U.S.C. 2607(a), subject to $10,000 fine and a year in federal prison - for each violation. There is no such thing as a 'partner agent' under law, anywhere in the United Satates, and 'shell' brokerages making referrals covered by RESPA do not meet 12 U.S.C. 2607(c)(3) exemption. Both, consumers and honest real estate professionals, should avoid Xome because it is an illegal scam, that integrally degrades value of real estate services and inflates real estate commissions with exigent kickbacks.
FAQ for Xome
What is Xome?
Xome is a referral fee network designed to collect fees by matching consumers with local real estate agents willing to participate. When consumers submit information to Xome, this information is simply sold to real estate agents who are willing to pay for it with a 25%-40% share of their commission.
Is Xome legitimate?
No. Xome is a consumer allocation scheme between licensed real estate brokers that increases broker commissions and limits consumer choices. Xome revenue comes from undisclosed referral fees. Brokers are accepted into the Xome referral program at no upfront cost, where all fees are back-loaded into the agent's commission, and result in a much higher cost to consumers. Xome is a consumer brokering scheme that works to receive a cut of agent's commissions with the use of illicit blanket referral fee agreements.