Randy Gilbert, J.D.
Chief Happiness Officer
Florida’s Title Insurance Company
(954) 500-Title (8485)
Why RESPA was enacted. In the 1970’s the title and mortgage industry asked Congress to step in to stop real estate agent from demanding that they be paid kickbacks in exchange for referring homebuyers. Real estate agents reasoned that referral fees should be permissible because after-all, the customer was only procured through the real estate agent’s hard work and marketing efforts, and it is not generally forbidden in other businesses. However, title companies and mortgage companies made a more compelling argument, arguing that kickbacks necessarily result in raising prices, which ultimately are passed on to the consumer. So, in 1974, Congress passed RESPA (The Real Estate Settlement Procedures Act).
Who Regulates RESPA. The CFPB is the primary regulator with direct authority over RESPA.
Who does RESPA apply to? Generally it applies to prohibit conduct by Title Agents, Attorneys; Real Estate Agents, Mortgage Brokers; Banks, Developers, Builders, and Sellers of Real Estate when a Buyer is obtaining a Federal Mortgage.
What does RESPA Prohibit. As it relates to title and mortgage services, RESPA generally prohibits kickbacks, referral fees, unearned fees, splitting fees, and sellers from requiring borrowers to purchase title insurance from companies chosen by Seller. Of course for every rule however, there are numerous exceptions.
Why should I care (RESPA Penalties)? (1) Joint and several liability; (2) Up to $10,000 fine; (2) Imprisonment up to 1 year; (3) Treble (3x) damages; (4) Subject to private causes of action; (5) Reasonable attorney fees awarded to the prevailing party; (6) Injunctions to enjoin the violations; and (7) Good likelihood of leading to State investigation and loss of licensure and other penalties.
Statute of Limitations. One (1) year from the date of … Read the rest of this article in full at https://ftic.net/articles/. FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.”