Bank Insurance Agency Management
Community Banks and Insurance
Compliance and Risk Management
Wealth Management
Insurance Product Marketing

Tuesday, January 14, 2014

What are the Requirements of RESPA’s Affiliated Business Arrangements Safe Harbor?

By: ABIA Outside Counsel Chrys D. Lemon and Adam D. Maarec, McIntyre & Lemon, PLLC

The Real Estate Settlement Procedures Act (RESPA) prohibits the payment of referral fees for mortgage settlement services, including title insurance. However, the law permits referrals to affiliates provided three elements of a safe harbor are met. The Department of Housing and Urban Development (HUD) issued a policy statement expanding on the safe harbor in 1996, and a class action lawsuit was recently brought against a group of companies for failing to comply with that policy. The United States Court of Appeals for the Sixth Circuit refused to apply HUD’s policy statement as law, dismissing the class action complaint and solidifying the requirements of the affiliate business arrangement exception to the prohibition on referral fees. This case provides insight on the enforceability of policy statements issued by other federal regulatory agencies, including the Consumer Financial Protection Bureau.

Click here for a members-only review of the RESPA requirements. If you are having trouble logging on or you are with a member that in not a bank, please contact us and we will email you a copy.