HUD Issues New RESPA Guidance

August 18, 2008

On August 6, the HUD's General Counsel responded to questions from the National Association of Realtors about compensation under RESPA. HUD's letter stresses the answers provided do not represent a rule, regulation or interpretation by HUD but serve as informal guidance.

Read the letter from HUD here

In particular, HUD indicated compensation to a settlement service provider may not occur sooner than would otherwise occur nor payment to a settlement service provider's charity of choice for referral of business because both payments would be considered a "thing of value."

The letter also indicated HUD will consider responding to some questions posed by issuing statements of policy, rules or other formal guidance in the future. These questions include:

  • What is HUD's view about paying closing agents at the closing table if they use the real estate broker's affiliated title company? Would their view change if the real estate broker offered to pay all his agents at the closing table regardless of the title company they used to settle the transaction?
  • Would HUD revisit its position from the Statement of Policy 1996-4 that a title company could not outsource core title services to unrelated third parties on a regular basis and still be entitled to the exemption under Section 8(c)(1)(B), particularly in light of the technological advancements which have led to the development of outsourcing both domestically and internationally?
  • Members would like a simple explanation of how to compensate an employee such as management of the real estate office (We realize we cannot compensate an independent agent) on escrow services and other services.
  • When an association solicits title companies, lenders, surveyors, attorneys and others to sponsor or underwrite association events which are open to all members of the association and one or more of them agree to make a payment to the association to sponsor or underwrite the event under what circumstances, if any, is there any application of RESPA to the situation? Does it make a difference if the event is educational, social or Mandatory Continuing Education? What can or should be done by an association for parties who underwrite or sponsor association events?
  • What is HUD's view about real estate brokers entering into marketing agreements or similar arrangements (licensing or selling advertising space in offices, on websites, in publications, etc.) with settlement service providers? Are exclusive marketing relationships permitted?
  • May the broker enter into "approved vendor" or "preferred provider" agreements with settlement service providers who compensate the broker for such designation? What compensable services may be provided by a real estate broker or real estate agent under these relationships? Is access to the broker's sales force or other personnel a compensable service? May the broker be compensated for services rendered by its independent contractor sales agents?
  • Members would like to see a Q&A/Dos and Don’ts from HUD similar to what NAR has put out as examples of what is allowed and not allowed. Also, members would like to see HUD address changing technology and its impact on operational considerations that affect RESPA compliance, particularly with regard to AfBAs.

  • Contact ALTA at 202-296-3671 or

    North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.