FAQs: HUD Issues Rule on Home Warranty Fees

Summary: On June 25 2010, HUD published an interpretative rule indicating its position on the payment of a fee to brokers or agents for the sale of home warranties under RESPA. HUD will be accepting comments for 30 days on this rule. In the rule, HUD clarifies that while nothing in RESPA prohibits brokers or agents from referring business to a home warranty company, it does prohibit the agent or broker receiving a fee for such a referral. To evaluate when a payment from a home warranty company (HWC) is an illegal referral. See article on what HUD indicates it’s looking for…

FAQs: RESPA rule provides ‘good faith estimate’ revision

Summary: In 1974, the Real Estate Settlement and Procedures Act (RESPA) was enacted to simplify the mortgage settlement process and prevent abusive practices by settlement service providers that unnecessarily increased settlement costs. It is RESPA that requires use of the Good Faith Estimate and HUD-1 Settlement Statement. It is also the federal law that prohibits referral fees between settlement service providers.

FAQs: Controlled Business Arrangements

Summary: FAQs: A CBA is an arrangement in which an individual/entity has more than a 1 percent ownership interest in more than one settlement service provider and directly or indirectly refers business to that provider. Learn more…

FAQs: Computerized Loan Origination Systems

Summary: FAQs: A CLO is a computerized loan origination system. A CLO provides a list of lenders and their loan rates to consumers. Learn how to deal with CLOs.

FAQs: General Information

Summary: FAQs: Dealing with referral fees and renting/leasing space with a lender.