All in RESPA

On May 17, 2024, the FDIC announced that a settlement was reached with Bank of England, England, Arkansas, for violations of Section 5 of the Federal Trade Commission Act, the Real Estate Settlement Procedures Act (RESPA), the Fair Credit Reporting Act (FCRA), and the Home Mortgage Disclosure Act (HMDA). Nine former employees of the Bank of England have also stipulated to individual enforcement actions.

 On August 17, 2023, the CFPB took action against Freedom Mortgage Corporation (Freedom) for providing illegal incentives to real estate brokers and agents in exchange for mortgage loan referrals.  According to the CFPB, Freedom provided real estate agents and brokers with numerous incentives, including cash payments, paid subscription services, and catered parties, with the understanding they would refer prospective homebuyers to Freedom for mortgage loans. 

On February 7, 2023, the CFPB issued an advisory opinion to protect Americans from double dealing on digital mortgage comparison-shopping platforms. According to the CFPB, companies operating these digital platforms appear to shoppers as if they provide objective lender comparisons, but may illegally refer people to only those lenders paying referral fees. The advisory opinion outlines how companies violate RESPA when they steer shoppers to lenders by using pay-to-play tactics rather than providing shoppers with comprehensive and objective information.

VIDEO: Provisions of RESPA Section 8

In this Compliance Clip, Adam gives a quick overview of the four provisions of Section 8 of the Real Estate Settlement Procedures Act (RESPA). To better explain how the provisions are incorporated in the regulations, Adam gives a quick visual of the actual law and Regulation X, where the RESPA Section 8 provisions are embedded.

VIDEO: RESPA Section 8 Gifts & Promotions

In this Compliance Clip (video), Adam explains the answer to the question on whether or not gifts and promotions are allowed under RESPA Section 8. While having kickbacks and unearned fees is definitely prohibited, Adam gives some examples on how it may happen to mortgage lenders.

On 9/30/2021, the CFPB published an article reminding servicers of newer rule that help protect potentially vulnerable borrowers exiting forbearance. In their article, the CFPB reminds loan services that not all borrowers are similarly situated and many borrowers may be vulnerable to a greater risk of harm due to a variety of pandemic-related and nonrelated circumstances, including poor health, mental decline, disability, caregiving for a child or loved one, having limited English proficiency, inadequate access to technology, or being a first-time homeowner.

VIDEO: RESPA Section 8 Violation Example

In this Compliance Clip (video), Adam discusses a recent hot topic pointed out by the FDIC: RESPA Section 8. This discussion provides a background on why Adam believes that RESPA Section 8 is once again, a hot topic. This video would be great to share with your compliance team who may have responsibilities for monitoring for RESPA Section 8 risk.

VIDEO: RESPA Concerns for Gifts and Promotions

In this Compliance Clip (video), Adam tells the story of a lender who basically bought her way into the hearts of the Realtors in her area. And the CFPB answers the question of whether gifts and promotions are appropriate for federally related mortgage loans. This is a must see video for lending teams.