All in RESPA

CFPB RESPA FAQs Released

Adam Witmer
Regulatory Update, RESPA

On 10/7/2020, the CFPB released fourteen new frequently asked Questions (FAQs) on their website. These FAQ are divided into four main categories including sections on general information, section 8(a), gifts and promotional activity, and marketing services agreements. In conjunction with the release of these FAQs, the CFPB also explained - in a blog post - that it is rescinding Compliance Bulletin 2015-05, RESPA Compliance and Marketing Services Agreements. In the blog post, the CFPB explained that the compliance bulletin does not provide the regulatory clarity needed on how to comply with RESPA and Reg X so, therefore, this guidance is being rescinded.

CFPB Releases Settlement with Mortgage Lender

Adam Witmer
RESPA, Regulatory Update

On May 11, 2020, the CFPB issued a consent order with Specialized Loan Servicing, LLC. The consent order requires Specialized Loan Servicing, a mortgage-loan servicer in Colorado, to pay $1.275 million in monetary relief to consumers, pay a $250,000 civil money penalty, and implement procedures to ensure compliance with RESPA.

In their release, the CFPB explains that their investigation found that Specialized “violated RESPA and Regulation X by taking prohibited foreclosure actions against mortgage borrowers who were entitled to protection from foreclosure, and by failing to send or to timely send evaluation notices to mortgage borrowers who were entitled to them.” In addition, the CFPB explained that in some cases, Specialized’s violations of Regulation X short-circuited the protections against foreclosure for consumers whose homes were ultimately foreclosed upon.

Under the settlement, the CFPB states that Specialized must implement policies and procedures that will ensure that borrowers receive the protections from foreclosure to which they are entitled under RESPA and Regulation X, including preventing Specialized from improperly making first filings, from improperly moving for foreclosure judgments or orders of sale, and from conducting foreclosure sales against borrowers who have submitted timely and facially complete or complete loss-mitigation applications. The CFPB also explained that Specialized must also monitor its foreclosure activity to ensure that it complies with the policies and procedures that it must implement.

FDIC Issues CMP For RESPA Section 8 Violation

Adam Witmer
RESPA

On 11/6/19, the FDIC issued a CMP in the amount of $1,350,000 to HomeStreet Bank.  In their release, the FDIC explained that they determined that HomeStreet Bank, through its now discontinued Home Loan Center-based mortgage banking business line, entered into certain co-marketing arrangements in which the bank and real estate brokers agreed to market their services together using online platforms. The FDIC also determined that the bank entered into desk rental agreements whereby…

RESPA Section 8 Joint Advertising

Adam Witmer
RESPA

The rules surrounding RESPA Section 8 prohibitions against kickbacks and unearned fees have been around for decades.  These rules, however, seem to be easily forgotten and overlooked by lenders and Realtors alike. In fact, the regulators often tend to go through dry spells where they don’t issue any public enforcement actions relating to Section 8 violations, though it is doubtful that such violations don’t continue to occur.  The reality is that the RESPA Section 8 prohibitions still exist and the we have even seen some recent…

RESPA Section 8 & Hosting Lending Events

RESPA Section 8 & Hosting Lending Events

Adam Witmer
RESPA

In this Compliance Clip (video), Adam discusses the compliance challenges when a lender wants to host a lending event and invite Realtors, title companies, or other settlement service providers. Networking, of course, is essential to the lending function of any creditor, but RESPA Section 8 provides some strict prohibitions that every lender should be aware of as significant fines can be assessed when the rules are ignored or not followed.