The RESPA Respite Is Over

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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.

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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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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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