Real Estate Settlement Procedures Act – Consumer Financial Services Watch

Back from the Dead: The D.C. Circuit Breaths Life Into RESPA Section 8 Safe Harbor

Feb 05 2018

By Brian M. Forbes, David D. Christensen and Matthew N. Lowe

Through its recent en banc decision in PHH Corp. v. Consumer Financial Protection Bureau, the D.C. Circuit reinstated the holding of the three-judge panel regarding the safe harbor provision in Section 8(c) of the Real Estate Settlement Procedures Act (RESPA). Specifically, the court reaffirmed that under Section 8(c), payments made by one settlement service provider to another do not violate Section 8(a), even if made in connection with a captive relationship or a referral, when the payments are reasonably related to the market value of the goods, services, or facilities provided. Although potentially overshadowed by the portion of the en banc court’s holding that the leadership structure of the Consumer Financial Protection Bureau (CFPB) is constitutional, the panel court’s reinstated holding regarding RESPA’s Section 8(c) safe harbor is notable and important for the simple confirmation that the safe harbor “is what it is.”

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CFPB to Section 8 of RESPA: Will You Be My Valentine?

Feb 16 2015

By: Holly Spencer Bunting, Phillip L. Schulman

The love affair continues between the Consumer Financial Protection Bureau (“CFPB”) and enforcement under Section 8 of the Real Estate Settlement Procedures Act (“RESPA”). On February 10, 2015, the CFPB announced a consent order with NewDay Financial, LLC (“NewDay” or the “Company”) involving alleged violations of the referral fee prohibitions under Section 8 of RESPA and deceptive marketing practices. Specifically, the CFPB alleges that NewDay paid “lead generation” fees to an unnamed veterans’ organization and a third-party company for the endorsement of the Company and referral of the organization’s veteran members to NewDay for mortgage financing. While the Company neither admitted nor denied the CFPB’s findings, the CFPB assessed a $2 million civil money penalty under the consent order. The facts as described in the consent order do not involve a typical marketing services agreement or lead generation agreement, but the consent order makes clear that endorsements of a company expressed through direct mail and email advertisements are considered to be referrals by the CFPB.

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Tweaks to TRID – CFPB Issues Final Rule Amending Integrated RESPA/TILA Disclosure

Feb 04 2015

By: Kristie D. Kully

The Consumer Financial Protection Bureau recently issued a final rule amending certain aspects of its integrated disclosure requirements under the Real Estate Settlement Procedures Act and the Truth in Lending Act. The CFPB gave the mortgage lending and settlement industries over 18 months—until August 1, 2015—to prepare for the comprehensive overhaul of the disclosures provided to consumers upon application for and settlement of most residential mortgage loans. (Some have called that overhaul effort “TRID”—the TILA/RESPA Integrated Disclosures.) During that preparation time, the CFPB has learned of the need for corrections or improvements to those complex requirements. In its latest rulemaking, the CFPB attempts to fix certain issues related to providing a revised Loan Estimate disclosure (the first part of TRID) when a creditor and consumer decide to lock in the interest rate or other charges, and when the creditor expects a long construction period prior to settlement. The new rule also requires loan originators to include their names and identification numbers on the Loan Estimate and the Closing Disclosure (the second part of TRID), and clarifies how creditors must disclose per diem interest. Below, is a description of the changes that the CFPB’s most recent rulemaking makes to the disclosure requirements under the original TRID rule.

K&L Gates Legal Insight: The CFPB Weighs in on Marketing Services Agreements

Oct 03 2014

By: Phillip L. Schulman, Holly Spencer Bunting

The Consumer Financial Protection Bureau (“CFPB”) has, for the first time, publicly expressed views on marketing services agreements (“MSAs”) under Section 8 of the Real Estate Settlement Procedures Act. After months of rumors regarding the CFPB’s investigation, it issued a consent order against Lighthouse Title, Inc., a Michigan title insurance agency that had entered into a series of MSAs with various settlement service providers (“Consent Order”). Although the Consent Order fails to describe the nature of the services performed under the agreements, it clarifies the CFPB’s concerns regarding methods used in determining the payments under such agreements. The Consent Order also raises troubling questions about how the CFPB interprets Section 8 of the Act, since many of those interpretations seem to be at odds with guidance previously offered by the U.S. Department of Housing and Urban Development. This alert provides a brief background regarding MSAs, highlights issues raised by the CFPB Consent Order and discusses lessons learned for structuring new and existing MSAs.

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CFPB’s RESPA Radar Pointed at Affiliated Business Arrangements

By: Holly Spencer Bunting

Have you been wondering whether the Consumer Financial Protection Bureau (“CFPB”) is focusing its enforcement efforts on the Real Estate Settlement Procedures Act (“RESPA” or “Act”)? After the public announcement of two RESPA-related consent orders, the answer is yes. And, given the alleged facts of the most-recent settlement, that focus is on a familiar topic – affiliated business arrangements.

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CFPB Legislates Loss Mitigation Through Proposed Servicing Regulations

Aug 13 2012

By: Laurence E. Platt

For those who wondered how the Consumer Financial Protection Bureau (the “Bureau”) would seek to convert portions of the global foreclosure settlement into federal law, last Friday’s proposed servicing rules provide an answer. The Dodd-Frank Act (“DFA”) amended the Real Estate Settlement Procedures Act (“RESPA”) in several ways to address discrete loan servicing issues, such as escrow accounts, flood insurance, and qualified written requests. What it did not do, however, is address loss mitigation or foreclosure. Many thought that the Bureau would use its general authority to issue regulations prohibiting unfair, deceptive or abusive acts and practices to craft loss mitigation requirements, but that authority would not afford consumers with a federal private right of action. Read More

Tag:Real Estate Settlement Procedures Act