Court Decisions Cause RESPA Compliance Confusion

More tips on RESPA law, guidelines and violations for real estate agents and loan originators from former HUD investigator and RESPA expert, Dr. Gary Lacefield.

Three U.S. Appeals Court found mark-ups do not violate the fee-splitting prohibitions of RESPA while three other Circuit Courts affirmed the department’s position that markups can violate the fee-splitting prohibitions of RESPA. How to you know what to do to protect yourself from the RESPA Police? Watch the video or read this RESPA Update below.

View the RESPANewsUpdate.com video here. This educational video and the RESPANewsUpdate.com website were created by WebCasting.com, based in Dallas, Texas. This video is provided for free, compliments of Premier Mortgage Funding, Inc.

For more about Dr. Lacefield, visit RiskMitigation.net or GoGetRealEstate.com/Get/GLacefield.

Conflicting Court Decisions Cause Compliance Confusion

Overcharges or Markups: HUD to step-up oversight on markups

In March of this year HUD indicated that they had plans to look closely at markups of third-party charges in settlement service transactions, according to Peter Race, HUD’s assistant general counsel.



HUD is targeting mortgage lenders who they believe routinely mark-up the costs of appraisals and other third-party services such as credit reports and courier fees. Mr. Race indicated that the department will take action in situations where little or no work is done to justify a markup of charges.




However, three U.S. Appeals Court rulings have found that mark-ups do not violate the fee-splitting prohibitions of RESPA while three other Circuit Court decisions have affirmed the department’s position that markups can violate the fee-splitting prohibitions of the Real Estate Settlement Procedures Act. 




Remember “can” violate does not mean “will” violate RESPA. If the six Circuit Courts can not agree on the interpretation of RESPA, how can you possibly take a chance that the RESPA investigator that r
eviews your case will agree with your compliance of the law, the answer is that you can’t. 

Therefore, to ensure compliance with all six Circuit Court decisions, and comply with HUD guidance, if you are not charging the customer “exactly” what the third party provider has charged you; then you may be put in a position to justify your add-ons or overcharges for those particular services. 




Justification will need to include “the value” you have “added” to the process that would allow you to charge for the service you have provided.