HUD called, and They Want You To Call Them Back

Well, maybe someone from HUD didn't actually call . . . but they did do a press release and they do want to hear from you. The press release calls for feedback on RESPA's prohibition against the "required use" of affiliated settlement service providers.

The press release goes onto say that "It is a violation of RESPA when a consumer is required to use a particular mortgage lender, title company, or other settlement service provider that is affiliated with another business in their mortgage transaction. However, whether a consumer is 'required to use' a particular affiliated service provider when they are offered a discount or some other incentive is less obvious."

The issue that is plaguing HUD and the public who is trying to strictly follow the rule is where the line is supposed to be drawn between what is and what isn't "required use."

HUD reminded the public of its purpose, to "prevent kickbacks for referrals that increase costs of settlement services and to encourage shopping for settlement services. They are still comitted to the cause, but they are seeking insight from both the public and industry as to where to draw the line.

Current statute reads: "Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process."

You can email in your comments and view the entire press release by visiting HUD's website. Get involved!