QUESTION
I am involved in updating our
policies for RESPA Section 8. I came on board in 2019 as the Compliance
Manager. The old policy goes back almost ten years to when there was a
different Compliance Manager here.
I want to provide the basic information about Section 8, but I want it to be an overview rather than an extensive part of the RESPA policy. Since Section 8 is so vast, I wonder if it is even possible to reduce it to mere basics.
With that in mind, and having followed your articles for years, I know you have a knack for putting complex information into a more understandable explanation. I hope you will choose my question among the many your receive.
I am particularly interested in the meaning of “settlement services,” “thing of value,” “agreement (or understanding),” and “referral.”
What do these terms mean under RESPA Section 8?
ANSWER
You are quite correct: Section 8
is vast. It is the subject of so many commentaries, litigations, webinars,
panels, criticisms, descriptions, explanations, remarks, Best Practices,
reviews, regulatory interpretations, administrative actions, rules, citations,
obiter dicta, and precipitous frustration that it often seems to pose a
puzzlingly reticulated intricacy beyond the reach of most mortals.
But, despite its capacious expansiveness, you can begin to build up your Section 8 policy from these essential terms:
(1) settlement service;
(2) thing of value;
(3) agreement (or understanding); and
(4) referral.
Section 8 of RESPA[i] (Real Estate Settlement Procedures Act) is one of its most important provisions because it attempts to achieve one of the primary congressional purposes for the statute, specifically, “the elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services.”[ii]
Many aspects of mortgage lending have Section 8 implications. Every mortgage lending professional should become familiar with the general requirements of Section 8. Unlike violations of the other RESPA provisions, Section 8 violations may result in criminal penalties as well as substantial civil penalties.[iii] Section 8(d) provides for fines of up to $10,000 and imprisonment for up to one year, in addition to civil liability equal to three times the amount of the settlement charge that is the subject of the violation.[iv]
In the years preceding the transfer of RESPA authority to the Consumer Financial Protection Bureau, in 2011, the Department of Housing and Urban Development (HUD) left no doubt about the importance of compliance with Section 8. It was often a central facet of HUD’s enforcement initiatives. The transition from HUD to the CFPB does not diminish the importance of Section 8 in RESPA enforcement.
Section 8(a) specifies three elements for a section 8(a) violation:[v]
· The payment or receipt of a thing of value. Section 8(a) is not violated if a referral occurs without any thing of value passing to the referror or elsewhere in return for the referral.[vi]
· An agreement or understanding.
· A referral of settlement service business.
Thus, the foregoing three definitions are essential to an understanding of the scope of Section 8(a) vis-à-vis “thing of value,” “agreement,” and “referral.”
So, let’s take a tour of these the essential terms.
(1) Settlement Service
Both subsections (a) and (b) of Section 8 use the term “settlement service.”
A violation of either section must somehow involve a settlement service. Thus, a mortgage broker may be compensated for referring business to a lender that is unrelated to a real estate transaction, such as automobile loans. So long as the compensation is exclusively related to the automobile loan and does not represent, in whole or in part, compensation for the referral of real estate business, and no lien is placed on a residence to secure the auto loan, the referral would not violate RESPA.
Under RESPA, “settlement service” has a broad meaning and includes “any service provided in connection with a prospective or actual settlement.”[vii] Section 3 of RESPA defines the term “settlement services” to include:
“Any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement.”[viii]
Regulation X lists the following examples of settlement services:[ix]
· The origination of a federally related mortgage loan (including but not limited to the taking of loan applications, loan processing, and the underwriting and funding of loans);[x]
· The rendering of services by a mortgage broker (including counseling, taking of applications, obtaining verifications and appraisals, and other loan processing and origination services, and communicating with the borrower and lender);[xi]
· The provision of any services related to the origination, processing, or funding of a federally related mortgage loan;
· The provision of title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies;[xii]
· The rendering of services by an
attorney;
· Rendering of credit reports and appraisals;
· Rendering of inspections, including inspections required by applicable law or any inspections required by the sales contract or mortgage documents before transfer of title;
· Conducting of settlement by a settlement agent and any related services;
· Provision of services involving mortgage insurance;
· Provision of services involving hazard, flood, or other casualty insurance or homeowners’ warranties;[xv]
· Provision of services involving mortgage life, disability, or similar insurance designed to pay a mortgage loan upon disability or death of a borrower, but only if the lender requires the insurance as a condition of the loan;
· Provision of services involving real property taxes or any other assessments or charges on the real property;
· Rendering of services by a real estate agent or real estate broker;
· Provision of any other services for which a settlement service provider requires a borrower or seller to pay.
Discount points have been the subject of litigation with respect to Section 8. For instance, in 2010, the U.S. Court of Appeals for the 11th Circuit held that the charging of a loan discount payment (i.e., points or discount points) to provide a specific, below-market interest rate does not constitute the “rendering of a real estate settlement service” within the meaning of Section 8(b).[xvi]
Two sets of borrowers had filed a class action against the defendant, alleging that it had violated Section 8(b) by charging discount points without lowering interest rates below the market rate. For example, the plaintiffs alleged that the defendant charged the Wootens a loan discount fee of $5,951, an amount equal to 4.5% of their loan amount, but that the Wootens did not negotiate for a buy-down of the interest rate, nor did they receive a lower interest rate in return for paying points. The bottom line: the allegation was that the plaintiffs had paid the defendant for a discounted interest rate but did not receive anything else in return. The district court dismissed the claim, holding that points were not a “settlement service” within the meaning of RESPA but rather part of the interest rate. The 11th Circuit affirmed.
The common thread running among the services listed by RESPA is that each is an ancillary or peripheral service not directly related to the closing of a real estate loan covered by RESPA. The definition of “settlement service” does not include the act of negotiating advance interest terms such as points. After citing and then dispensing any comparison to United States v. Graham Mortgage Corp,[xvii] which held that the making of a mortgage loan was not a “settlement service,” the court found nothing in legislative amendments succeeding Graham to suggest a broader definition.
Contrary to the Wootens’ allegations, they had “offered nothing to explain away the obvious fact that they willingly paid points in order to close the mortgage transaction in accordance with their terms. The inescapable inference is that the borrowers obtained the specific below-market interest rates they bargained for—and that their claim to the contrary is manifestly implausible.”[xviii]
I offer the preceding examples to show that a service rendered in connection with an application or potential application for a federally related mortgage loan may likely be considered a “settlement service.”[xix]
The term potentially encompasses all services occurring along a timeline beginning when obtaining a mortgage loan is perhaps no more than an incipient interest of a consumer[xx] and ending soon after loan closing. Section 8(a) prohibits any payment or other form of compensation pursuant to an understanding that influences the selection of who will perform services along the timeline. Section 8(b) requires all payments and other forms of compensation related to services occurring along this timeline to be reasonable for the service performed.
The “timeline” is important to take into consideration. A service is not a settlement service if obtained after settlement or totally apart from settlement or activities that lead to settlement.
For example, the provision of life insurance is a settlement service if the lender requires it as a condition of the loan.[xxi] But if the insurance is obtained after settlement or totally apart from the settlement, it is not a settlement service.[xxii] Likewise, a lender’s solicitation for hazard insurance in the years following settlement is not a settlement service.[xxiii]
Another scenario is where a fee is imposed after settlement when a borrower substitutes another hazard insurance carrier would not involve a settlement service and therefore would not be subject to Section 8.[xxiv]
HUD held that the sale of solar energy equipment through a mortgage lender's solicitation is not a settlement service unless payment for the equipment occurs at closing.[xxv]
And, payment of interest on escrow accounts is not a settlement service.[xxvi]
In 2002, in Thomas v. Ocwen Federal Bank FSB, a federal district court in Illinois held that allegedly improper payoff fees imposed when the plaintiff attempted to refinance her loan were not settlement services and therefore not subject to challenge under Section 8.[xxvii]
So, how are payments treated beyond the timeline?
A payment for a referral is not exempt from Section 8 coverage merely because it is received outside the timeline. For instance, lenders may not offer brokers or other persons who refer business 25 basis points for every year a given loan stays on the lender’s books.[xxviii] Likewise, a servicer may not select contractors such as appraisers or listing agents for foreclosed properties based on past or anticipated referrals to the servicer or its affiliates.
Similarly, as evidenced by HUD’s enforcement actions of 2001:
· A lender may not fund a manufactured home dealer’s floor plan inventory at reduced interest rates in exchange for the future referral of retail homebuyers who purchase the manufactured homes and the land on which they are placed.
· A settlement service provider may not provide a reduced fee or no-cost flood determination services or tax services to a lender on its existing loan portfolio in exchange for exclusive servicing of new home loans or in exchange for the future referral of flood certifications or tax services.
Section 8 clearly encompasses payments for referrals, whatever means might be used to divorce the time of the payment from the actual referral. Section 8 would not, however, prohibit the payment to the seller of a loan on the secondary market of 25 basis points for each year the loan stays on the loan purchaser’s books.
The terms of a secondary market transaction are exempt from Section 8 coverage unless the terms are related in some fashion to referral activities.[xxix] That said, one could imagine terms of a secondary market transaction that would be related to referral activities and therefore violate Section 8. For example, the purchaser of a loan might agree to pay an annual servicing release premium to the seller that varies depending on how much settlement service business the seller refers to the purchaser each year.
(2) Thing of Value
RESPA uses another very broad term, “thing of
value,” to include all imaginable forms of compensation for a referral in its
prohibition.[xxx] Section 3 of RESPA
defines “thing of value” to include “any payment, advance, funds, loan,
service, or other consideration.”[xxxi]
Regulation X further explains the term as follows:
This term is broadly defined in Section 3(2) of RESPA 12 USC 2602(2).
It includes, without limitation,
monies, things, discounts, salaries, commissions, fees, duplicate payments of a
charge, stock, dividends, distributions of partnership profits, franchise
royalties, credits representing monies that may be paid at a future date, the
opportunity to participate in a money-making program, retained or increased
earnings, increased equity in a parent or subsidiary entity, special bank
deposits or accounts, special or unusual banking terms, services of all types
at special or free rates, sales or rentals at special prices or rates, lease or
rental payments based in whole or in part on the amount of business referred,
trips and payment of another person’s expense, or reduction in credit against
an existing obligation. The term “payment” is used throughout Secs. 3500.14 and
3500.15 as synonymous with the giving or receiving of any “thing of value” and
does not require transfer of money.[xxxii]
Many things have been found to be
prohibited “things of value” received in violation of Section 8. I make no claim
that the following list of “things of value” is comprehensive. Given how broad
the term is applied, the possibilities seem limitless.
· The opportunity to win a prize.[xxxiii] For instance, a lender may not set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Disney World. The trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.
Note, however, that a lender may give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender because RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing his or her own business with it as long as the incentive is not based on the borrower referring business to the lender. I call this the “toaster” analogy, where a person gets a toaster for opening up a checking account.
The CFPB’s FAQs, updated October 7, 2020, offer as an example of a “thing of value” the opportunity to win any other “thing of value,” including items listed below such as tickets to sporting events, trips, restaurant meals, or sponsorship of events.
· A referral.[xxxiv] For example, when a mortgage broker refers business to a real estate broker in anticipation of the referral of closing business to an employee of the mortgage broker, the referral back is a thing of value.[xxxv] Likewise, when an attorney refers their clients to a bank, and, in return, the bank has agreed to require the use of that attorney, the referral back is a thing of value.[xxxvi] Or when, in return for referral to a lender by a home improvement contractor, the home improvement contractor is paid in advance for services.[xxxvii]
· Free or reduced portfolio reviews. For instance, a flood zone
certification company may not examine a lender’s existing loan portfolio for
free or at a reduced rate in exchange for the lender sending the company future
business. Providing this service in exchange for future flood insurance
business referrals would violate Section 8(a).
· A reduced rental payment or a rental payment when market practice
is not to charge rent. The CFPB examines the facts to determine whether the rental
payment bears a reasonable relationship to the market value of the rental space
provided or is a disguised referral fee.[xxxviii]
· A lock-out situation. This occurs where a
settlement service provider prevents other providers from marketing their
services within a setting under that provider’s control, given in exchange for
referrals.[xxxix]
· A dividend payment.[xl] A settlement service provider may
not pay dividends to stockholders based on the relative amount of business each
shareholder refers to the provider.[xli]
· A reduced price for shares of stock in a company.[xlii]
· Other
“minefields”:
o
An adjusted level of franchise payment.[xliii]
o
A waived or reduced fee.[xliv]
o
A waived origination fee.[xlv]
o
A reduced trustee’s fee.[xlvi]
o
The required maintenance of a
noninterest-bearing deposit account.[xlvii]
o
Free loan processing services.[xlviii]
o
A ticket to a sporting event.[xlix]
o
Computer software or hardware.[l] HUD indicated that the provision
of hardware could be acceptable if the hardware is “dedicated,” in the sense
that it can be used only to facilitate the services offered by the provider and
not for general office use.[li]
o
A telecopying machine.[lii] HUD’s Industry FAQs About RESPA
clarified that a credit agency can provide a lender with a dedicated printer to
expedite communication between the credit agency and the lender, provided the
printer can only be used for communication with the lender and not for general
use. If the printer were for general use, it could be considered payment for
the referral of business.
o
A vacation trip.[liii]
o
A restaurant meal.
o
Sponsorship of events.
o
A gift or other incentive.[liv]
o
A penalty fee paid by a lender who fails to
meet its promise to process and close a loan within 30 days from the date of
loan application.[lv]
o
The price paid by the purchaser of a
mortgage company, when the price structure includes continuing payments of 50
basis points for each loan closed by the company.[lvi]
o
A free credit card.[lvii]
o Virtual home tours. As part of a 2003 enforcement action, HUD alleged that real estate agents for Coldwell Banker United and Coldwell Banker Richard Smith Realtors accepted free Internet-based virtual home tours from title companies in Austin, Texas area. HUD said the real estate agents accepted virtual tours in exchange for business referrals, in violation of Section 8(a) of RESPA. HUD asserted that by accepting virtual tours, CB Smith and CB United accepted a “thing of value” in exchange for the referral of settlement services in violation of Section 8(a).
The CFPB has warned about gifts or promotions thus:
“[T]here is no exception to RESPA Section 8 solely based on the value of the gift or promotion. Accordingly, settlement service providers should carefully analyze whether providing gifts or opportunities to win prizes to referral sources could violate the prohibitions under RESPA Section 8. However, in certain circumstances, gifts or promotions directed at a referral source are not prohibited if they are a ‘normal promotional or educational activity’ meeting the conditions in Regulation X.”
(3) Agreement or Understanding
You might be surprised to know that the RESPA statute and Regulation X do not define “agreement” or “understanding,” but the regulation does explain:
An agreement or understanding for the referral of business incident to or part of a settlement service need not be written or verbalized but may be established by a practice, pattern or course of conduct. When a thing of value is received repeatedly and is connected in any way with the volume or value of the business referred, the receipt of the thing of value is evidence that it is made pursuant to an agreement or understanding for the referral of business.[lviii]
For instance, an agreement or understanding may exist when an abstract company customarily gives money to the executives of a title insurance company in appreciation for the referral of business.[lix] HUD stated, however, that customary or repeated conduct is not necessary to show a violation of Section 8.[lx] According to HUD, it is enough to show that a single payment was made as compensation for referrals of past business or for the purpose of securing future referrals. For example, a violation would occur if an attorney waives their fee in connection with the purchase of a personal residence by a real estate agent where the agent has referred or is expected to refer loan business to a client of the attorney.[lxi]
(4) Referral
You may also be surprised that the RESPA statute does not define the term “referral.”
Regulation X affords the following explanation:[lxii]
· A referral includes any oral or written action directed to a person which has the effect of affirmatively influencing the selection by any person[lxiii] of a provider of a settlement service or business incident to or part of a settlement service when such person will pay for such settlement service or business incident thereto or pay a charge attributable in whole or in part to such settlement service or business.
· A referral also occurs whenever a person paying for a settlement service or business incident thereto is required to use a particular provider of a settlement service or business incident thereto.
As with the other essential definitions, the definition of “referral” is exceedingly broad. It focuses on whether someone has been influenced in selecting a settlement service provider.
Alleged Section 8(a) violations must include an understood referral.
Jonathan Foxx, Ph.D., MBA[i] 12 USC § 2607, implemented by Regulation X, 12 CFR §§ 1024.14 and 1024.15
[ii] 12 USC § 2601(b)(2)
[iii] 12 USC § 2607(d)
[iv] Idem
[v] Withdrawn HUD Rulings May 15, 1980 (Worthy); April 14, 1987 (Mitchell)
[vi] Withdrawn HUD Ruling October 30, 1989 (Mitchell)
[vii] Regulation X, 12 CFR § 1024.2(b). Regulation X defines settlement as the process of executing legally binding documents regarding a lien on property that is subject to a federally related mortgage loan (in other words, a loan closing or escrow).
[viii] 12 USC § 2602(3)
[ix] 12 CFR § 1024.2(b), definition of settlement service.
[x] Before the promulgation of the current Regulation X in 1992 and adoption of the Housing and Community Development Act of 1992, Section 908, controversy raged over whether the making of a mortgage loan was a “settlement service.” HUD had considered the answer clear—that it was a settlement service—ever since the original statute was enacted, but had not formally adopted its position in a regulation or otherwise. The decision in the case of United States v. Graham Mortgage Corp., 740 F.2d 414 (6th Cir. 1984), rev’g 564 F. Supp. 1239 (E.D. Mich. 1983), reversed a criminal conviction because RESPA and Regulation X did not clearly state that the making of a mortgage loan was a settlement service. The court applied the rule of lenity, which provides that when a reasonable doubt persists about a criminal statute’s intended scope, a court should narrowly construe the statute. However, the rule of lenity no longer applies after a regulation cures the statutory ambiguity. See Eisenberg v. Comfed Mortgage Co., 629 F. Supp. 1157 (D. Mass. 1986), which followed United States v. Graham Mortgage Corp. in the context of a civil action. Contra, United States v. Gannon, 684 F.2d 433 (7th Cir. 1981), cert. denied, 454 U.S. 940. Section 908 of the Housing and Community Development Act of 1992 provides that the delineation of the making of a mortgage loan as a settlement service “shall not apply retroactively.”
[xi] McCarrick v. Polonia Federal S&L Ass’n, 502 F. Supp. 654 (E.D. Pa. 1980) (viz., real estate agent performing loan brokerage services)
[xii] Moll v. U.S. Life Title Ins. Co., 700 F. Supp. 1284 (SDNY 1988); Aiea Lani Corp. v. Hawaii Escrow & Title, Inc., 64 Haw. 638, 647 P.2d 257 (1982).
[xiii] Henson v. Fidelity National Financial, Inc., 2014 U.S. Dist. (C.D. Cal. Mar. 21, 2014) (viz., overnight delivery service)
[xiv] Durr v. Intercounty Title Co., 826 F. Supp. 259 (N.D. Ill. 1993)
[xv] 12 CFR § 1024.2(b). Before HUD revised Regulation X in 1992, it issued several rulings finding these services not to be settlement services unless required by the lender. Withdrawn HUD Rulings July 15, 1983 (Maher); August 12, 1987 (Mitchell).
[xvi] Wooten v. Quicken Loans, Inc., 626 F.3d 1187 (11th Cir. 2010).
[xvii] United States v. Graham Mortgage Corp, 740 F.2d 414 (6th Cir 1984)
[xviii] Op. Cit. xiv
[xix] It is important to note that on June 7, 1996, HUD specifically exempted from Section 8 prohibitions payments by employers to their own employees who do not perform settlement services. HUD excluded from “settlement services” in that category only: “The marketing of a settlement service or product of an affiliated entity, including the collection and conveyance of information or the taking of an application or order for an affiliated entity.” However, HUD indicated it intended to explore a broader exemption for payments to anyone who does not perform a settlement service. 61 Federal Register 29,327, 29,247 (6/6/96).
[xx] HUD did not consider advertising services to be settlement services unless compensation was tied to loan production. See HUD Rulings March 24, 1994 (Mitchell); November 16, 1993 (Mitchell); September 1, 1993 (Mitchell); and Withdrawn HUD Rulings December 15, 1987 (Mitchell); December 11, 1986 (Mitchell).
[xxi] Regulation X, 12 CFR § 1024.2(b), (viz., definition of settlement service)
[xxii] Idem. See Withdrawn HUD Ruling June 5, 1981 (Anderson)
[xxiii] Idem
[xxiv] HUD Ruling August 2, 1995 (Diaz)
[xxv] Withdrawn HUD Ruling October 4, 1983 (Maher)
[xxvi] Greenwald v. First Federal S&L Ass’n, 446 F. Supp. 620 (D. Mass. 1978)
[xxvii] Thomas v. Ocwen Federal Bank FSB, 2002 US Dist. (ND Ill. Jan. 25, 2002)
[xxviii] See, i.e., Withdrawn HUD Ruling December 28, 1988-2 (Mitchell)
[xxix] Regulation X, 12 CFR § 1024.5(b)(7)
[xxx] RESPA does not include a requirement that the cost of the thing of value be passed along to the ultimate consumer (the borrower) in order for a violation of Section 8 to occur. See United States v. Gannon, 684 F.2d 433, 440 (7th Cir. 1981), cert. denied, 454 U.S. 940.
[xxxi] 12 USC § 2602(2)
[xxxii] Regulation X, 12 CFR § 1024.14(d)
[xxxiii] Withdrawn HUD Rulings April 14, 1987 (Mitchell); September 30, 1987 (Mitchell)
[xxxiv] Withdrawn HUD Rulings September 7, 1983 (Maher); May 13, 1981 (Mitchell)
[xxxv] Withdrawn HUD Ruling April [no date], 1990 (Mitchell)
[xxxvi] Withdrawn HUD Ruling May 13, 1981 (Anderson)
[xxxvii] Walter v. Clarion Mortgage Capital, Inc., 2009 U.S. Dist. (W.D. Mo. July 30, 2009)
[xxxviii] Regulation X, 12 CFR § Part 1024 Appendix B, Fact/Comment 6; Statement of Policy 1996-3 (6/7/96). See HUD Ruling May 21, 1993 (Mitchell); and Withdrawn HUD Ruling October 3, 1990 (Coyle).
[xxxix] HUD Statement of Policy 1996-3 (6/7/96)
[xl] Regulation X, 12 CFR § Part 1024 Appendix B, Fact/Comment 7. See Withdrawn HUD Rulings January 16, 1980 (Worthy); November 16, 1980 (Worthy); May 15, 1980 (Worthy).
[xli] Idem
[xlii] Regulation X, 12 CFR § Part 1024 Appendix B, Fact/Comment 7. See Withdrawn HUD Ruling August 23, 1985-2 (Chappelle) (viz., mortgage company entitled to repurchase stock if owner makes insufficient referrals held violative of Section 8)
[xliii] Regulation X, 12 CFR § Part 1024 Appendix B, Fact/Comment 9
[xliv] Regulation X, 12 CFR § Part 1024 Appendix B, Fact/Comments 1 and 2. See Withdrawn HUD Rulings November 9, 1979 (Sauerbrunn) (viz., attorney fee); June 20, 1980 (Worthy) (viz., closing agent fee); May 13, 1981 (Anderson) (viz., attorney fee). Also see United States v. Graham Mortgage Corp., 740 F.2d 414 (6th Cir. 1984), rev’g 564 F. Supp. 1239 (E.D. Pa. 1983) (viz., fewer points charged in return for promised referrals]; Aiea Lani Corp. v. Hawaii Escrow & Title, Inc., 64 Haw. 638, 647 P.2d 257 (1982) (viz., discounted title insurance premium)
[xlv] Withdrawn HUD Ruling November 9, 1979 (Sauerbrunn)
[xlvi] Withdrawn HUD Ruling May 22, 1984 (Mitchell)
[xlvii] Withdrawn HUD Ruling February 28, 1983 (Maher)
[xlviii] Withdrawn HUD Rulings March 14, 1983 (Maher); July 2, 1990 (Mitchell)
[xlix] Withdrawn HUD Ruling July 24, 1986 (Kappeler)
[l] Withdrawn HUD Rulings April 14, 1987 (Mitchell); June 1, 1988 (Mitchell); April 19, 1990 (Mitchell)
[li] Withdrawn HUD Ruling June 5, 1992 (Keating)
[lii] Regulation X, 12 CFR § Part 1024 Appendix B, Fact/Comment 6. See Withdrawn HUD Rulings August 4, 1988 (Mitchell); May 18, 1990 (Mitchell)
[liii] Withdrawn HUD Ruling December 28, 1988-2 (Mitchell)
[liv] HUD Ruling February 8, 1994
[lv] Withdrawn HUD Ruling August 25, 1987-2 (Mitchell). In a 1987 ruling, HUD disapproved such a penalty payable to the real estate agent handling the home sale but approved the penalty if it were payable to the seller and/or borrower.
[lvi] Withdrawn HUD Ruling July 29, 1988 (Mitchell)
[lvii] Withdrawn HUD Ruling October 13, 1988 (Mitchell)
[lviii] Regulation X, 12 CFR § 1024.14(e). See Shah v. Chicago Title & Trust Co., 102 Ill. App. 3d 787, 430 N.E.2d 342 (1981), which analyzed an arrangement between a condominium developer and a title insurance company and found no evidence of an agreement or understanding in violation of Section 8.
[lix] Withdrawn HUD Ruling April 10, 1979 (Lewis)
[lx] Withdrawn HUD Ruling November 9, 1979 (Sauerbrunn)
[lxi] Also see June 20, 1980 (Worthy) (viz., attorney with a client who is a developer may not provide the developer with a reduced closing fee in return for his agreement to refer closings to the attorney)
[lxii] Regulation X, 12 CFR § 1024.14(f)
[lxiii] Referrals are not limited to those directed to consumers. They might be directed to a number of sources, such as appraisers, real estate agents, title companies and agents, lenders, mortgage brokers, or companies that provide information in connection with settlements, such as credit reports and flood determinations.
[lxiv] According to the U.S. Supreme Court, to establish a Section 8(b) violation, a plaintiff must demonstrate that a charge for settlement services was divided between two or more persons, that is, Section 8(b) governs only a “portion, split or percentage” of the fee. See Freeman v. Quicken Loans, Inc., 2012 U.S. (May 24, 2012)
