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RESPA was enacted because Congress felt
that consumers needed protection from
"... unnecessarily high settlement
charges caused by certain abusive
practices that have developed in some
areas of the country." Some of the
practices Congress was concerned about
are discussed below. Most professionals
in the settlement business provide good
service and do not engage in these
practices.
Prohibited Fees. It is
illegal under RESPA for anyone to pay or
receive a fee, kickback or anything
of value because they agree to refer
settlement service business to a
particular person or organization. For
example, your mortgage lender may not
pay your real estate broker $250 for
referring you to the lender. It is also
illegal for anyone to accept a fee or
part of a fee for services if that
person has not actually performed
settlement services for the fee. For
example, a lender may not add to a third
party's fee, such as an appraisal fee,
and keep the difference.
Permitted Payments.
RESPA does not prevent title companies,
mortgage brokers, appraisers, attorneys,
settlement/closing agents and others,
who actually perform a service in
connection with the mortgage loan or the
settlement, from being paid for the
reasonable value of their work. If a
participant in your settlement appears
to be taking a fee without having done
any work, you should advise that person
or company of the RESPA referral fee
prohibitions. You may also speak with
your attorney or complain to a regulator
listed in the Appendix to this Booklet.
Penalties. It is a
crime for someone to pay or receive an
illegal referral fee. The penalty can be
a fine, imprisonment or both. You may be
entitled to recover three times the
amount of the charge for any settlement
service by bringing a private lawsuit.
If you are successful, the court may
also award you court costs and your
attorney's fees.
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Equal Housing Opportunity