If you’ve ever heard me train on RESPA, I always mention Section 8 and warn lenders not to play games with this deadly snake. HUD takes kickbacks & referral fees very seriously, as evidenced by two recent settlements:
Fidelity National Financial – a title company – paid a $4.5 million fine on July 11, 2011, for illegally paying kickbacks to brokers for the referral of home loan services.
Two days later, HUD fined Prospect Mortgage, LLC – a California based mortgage lender – $3.1 million for paying improper kickbacks or referral fees to affiliates.
At the end of each press releases is the following statement:
RESPA was enacted in 1974 to provide consumers advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the homebuying process. Section 8(a) of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business and Section 8(b) prohibits unearned fees.
Don’t play games with Section 8 of RESPA. The consequences are too great!