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May 17, 2013 · RESPA prohibits giving and receiving kickbacks for services involving federally related mortgages. Kickbacks can hurt competition when customers are redirected from law-abiding businesses and can raise prices for consumers by inflating the costs of real estate settlement. The CFPB has the authority to enforce RESPA.
- The CFPB continues to try to guide industry on RESPA compliance through settled enforcement cases, rather than by issuing clear guidelines or rules, thereby promoting uncertainty and causing confusion for settlement service providers.
- The CFPB finally gives us a glimpse of how it views lead sales agreements under RESPA, and implementation is key. Although the CFPB previously has scrutinized online lead generation (such as consumer privacy issues or practices falling under the CFPB’s authority to prohibit unfair, deceptive, or abusive acts or practices), to our knowledge, this is the agency’s first public settlement of RESPA allegations based on lead sales.
- The CFPB still does not ban MSAs under RESPA, but we have new information about practices that the CFPB may use to deem a given MSA to be illegal. Last year, Mortgage Bankers Association CEO David Stevens spoke for many others when he said, regarding MSAs, “I just want the CFPB to tell us whether they’re legal or not.”
- Desk and office rental agreements, too, may be vulnerable to CFPB scrutiny depending on how they are carried out. The CFPB also alleged that the lender’s hundreds of desk licensing agreements, through which the lender would pay a rental fee for one of its loan officers to have a workspace at a broker’s place of business, amounted to illegal payments for referrals.
The CFPB isn’t a set of regulations, but a regulatory agency that enforces a wide range of laws. Here's what real estate pros need to know to get started.
- A. Background
- B. Scope of Coverage
- C. Legal Analysis
1. RESPA Section 8
The Real Estate Settlement Procedures Act (RESPA) provides a series of protections for consumers who are engaged in the process of buying a home, applying for or closing on a mortgage, making escrow payments, or purchasing other services associated with most residential real estate transactions. RESPA section 8(a) provides that no person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwis...
2. Digital Mortgage Comparison-Shopping Platforms
RESPA section 8 applies broadly, and in many circumstances covers conduct by persons who connect settlement service providers to consumers who may be interested in purchasing a home, applying for a mortgage, or otherwise using a settlement service provider in a RESPA-covered transaction. This may include selling the consumer's contact information ( i.e.,leads) to settlement service providers. Leads are increasingly sold through a variety of digital platforms and related business agreements. I...
3. HUD CLO Policy Statement
The HUD CLO Policy Statement defined a CLO as “a computer system that is used by or on behalf of a consumer to facilitate a consumer's choice among alternative products or settlement service providers in connection with a particular RESPA-covered real estate transaction” and gave seven examples of CLO system functions. The description of CLOs in the HUD CLO Policy Statement was “not meant to be restrictive or exhaustive” and “merely attempt[ed] to describe existing practices of service pr...
This Advisory Opinion applies to any “person” to which RESPA section 8's prohibitions apply. RESPA defines “person” to include individuals, corporations, associations, partnerships, and trusts. RESPA does not apply to extensions of credit to government or governmental agencies or instrumentalities. It also does not apply to extensions of credit pri...
1. Interpretation of RESPA Section 8
An operator of a Digital Mortgage Comparison-Shopping Platform receives a prohibited referral fee in violation of RESPA section 8 when: (1) the Digital Mortgage Comparison-Shopping Platform non-neutrally uses or presents information about one or more settlement service providers participating on the platform; (2) that non-neutral use or presentation of information has the effect of steering the consumer to use, or otherwise Start Printed Page 9165 affirmatively influences the selection of, th...
a. RESPA Section 8
When a Digital Mortgage Comparison-Shopping Platform Operator non-neutrally uses or presents information and that has the effect of steering the consumer to use, or otherwise affirmatively influences the selection of, a settlement service provider, the Operator is making a referral. Under Regulation X, the term “referral” is defined as “any oral or written action directed to a person which has the effect of affirmatively influencing the selection by any person of a provider of a settlement se...
b. RESPA Section 8
RESPA section 8(c)(2) provides that section 8 of RESPA does not prohibit “the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.” Regulation X further clarifies RESPA section 8(c)(2). It provides that “[i]f the payment of a thing of value bears no reasonable relationship to the market value of the goods or services provided, then the excess is not for services or goods actually perfor...
Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA ) integration effort by the Bureau of Consumer Financial Protection (CFPB), known as “Know Before You Owe.”
About Us. Samco Properties was founded in 1982 and is a privately held commercial real estate company which acquires and manages commercial real estate. The company specializes in the ownership, operation, acquisition and improvement of neighborhood and community shopping centers, office buildings, and single tenant commercial properties.
They were knowledgeable, prepared, responsive, and willing to work on all the small tasks behind the scenes. Great team! Peter & Patti-Ann Farrar (Osterville & Sandwich, MA) Kelly and Joe are truly amazing to work with. They make a complicated process simple and are always available to answer questions or offer advice.
