RESPA Section 8 enforcement is back. It was in abeyance during the transition of RESPA enforcement from HUD to the CFPB over the last few years. In fact, the last announced HUD Section 8 settlement dates from almost three years ago. But the CFPB is picking up where HUD left off, and then some. The latest in the Bureau’s flurry of Section 8 activity is a consent order against a New Jersey title services company. That is the third recent consent order dealing with allegations of a relatively basic Section 8 violation. The Bureau is going after harder to hook fish too, though, pursuing creative (some would say discredited) theories in contested actions.
NUTS AND BOLTS -
Section 8(a) of the Real Estate Settlement Procedures Act (RESPA) prohibits paying a referral fee in connection with a residential mortgage transaction. That can include mortgage insurance and title services transactions. Specifically, Section 8(a), as promulgated by Regulation X, prohibits “accept[ing] any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise” in exchange for the referral of any real estate settlement business. A Section 8 violation may result in civil and/or criminal liability, including a fine of up to $10,000, imprisonment of up to one year, and civil liability of up to three times the amount paid for the settlement service at issue.
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