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Questions RESPA Laws

The Real Estate Settlement Procedures Act (RESPA) was passed in 1974 by the United States Congress. It was created to fight such malpractice as undisclosed kickbacks and inflated transaction costs that many companies that bought and sold real estate engaged in. If you have a property related question and would like to know more about how RESPA works, Real Estate Lawyers on JustAnswer can help.

Listed below are a few questions they have answered on issues that deal with RESPA.

What does RESPA mean? How does it benefit a home owner?

The Real Estate Settlement Procedures Act (RESPA) came into being to ensure consumers all over the country were given information about mortgage settlement costs and were kept safe from high charges of settlement brought about by abusive practices. Basically, RESPA ensures that all disclosures made to the debtor are legal and lenders or parties who do not comply with processes can be sued for damages and fined for illegal and unethical business practices.

According to the U.S. Department of Housing and Urban Development (HUD),

”The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purposes of RESPA are:
  1. 1. to help consumers become better shoppers for settlement services and
  2. 2. to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.”
Learn more on the HUD website:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/respamor

If a loan officer donates half his commission to a non-profit organization for every loan referred to him by the non-profit members, can it be considered a RESPA violation?

According to RESPA rules, lenders or settlement providers are not prohibited from offering a borrower an incentive for doing business with them.

However, if a lender offers something of value for a business referral, it is likely to be considered illegal. With the details mentioned in your case, donating to the non-profit organization in exchange for referrals from that organization might fall into this category and be considered a violation of RESPA.

For a private lender, how does RESPA affect investor non-owner occupied loans?

A lender who is making more than $100,000 in loans annually secured by “residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families,” is subject to the entirety of RESPA provisions. For more information, see 12 U.S.C. 2602(1)(B)(iv):
http://www.law.cornell.edu/uscode/text/12/2602

To put it differently, whether the loan is for investment purposes or not is irrelevant. What really counts is if the property loan is secured by a one to four family residential property.

When the bank tries to reduce your commission during negotiations on a short sale, does it count as a RESPA violation?

RESPA does not prohibit the bank from reducing a commission charged for negotiating a short-sale. You can get more information on this by visiting the links below:
http://www.hud.gov/offices/hsg/sfh/res/respa_st.cfm
http://www4.law.cornell.edu/uscode/html/uscode12/usc_sup_01_12_10_27.html

Does RESPA require a lead provider to be licensed as a “lead provider” in order to purchase leads from that company?

RESPA should not interfere with the purchasing of leads.

For a consumer, property settlements have become easier to settle thanks to RESPA rules. Apart from kickbacks, even reciprocal referrals can be construed as violation of the law. If you have questions regarding RESPA, Real Estate Lawyers on JustAnswer can help to answer them both quickly and affordably.
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Recent RESPA Questions

  • I am a Real Estate agent in California. I created a vendor

    I am a Real Estate agent in California. I created a vendor advertising program where various business people, lenders, termite, etc pay a subscription fee each month to be a part of our marketing endeavors. No guarantees of business of any kind are given and this is documented in our contract. No referrals fees or kickbacks of any kind are given. I am opening a marketing firm under a C-Corp and all checks are made out to this company. I am about to get my Brokers license as we'll and incorporate my Real Estate Business as well. I asked CAR legal and a few other places and it seems fine but I just wanted to get your opinion as well. Some vendors such as escrow are scared to participate in fear of Respa issues but if they are paying to a third party entity for their own marketing with no guarantee of business is this an issue? I know many top agents who do this and this is where I got this idea....any advice is appreciated!
  • On 4-12-14 I sent via certified mail a letter “Qualified Written

    On 4-12-14 I sent via certified mail a letter “Qualified Written Request” pursuant to the Real Estate Settlement Procedure Act (“RESPA”) at 12 U.S.C. as amended (“RESPA”).
    I filed chapter 7, May 22, 2014 and requested a hearing because the bankruptcy 7 cannot proceed without requested information in which the lender failed to comply. I filed and was granted a hearing on July 25, 2014 in Bankruptcy Court for possible sanctions for failing to comply.
    I did not receive the information from the lender about the real party in interest, original note and mortgage or Certified copy Affidavit of Lost Note, unbroken chain of assignments, securities number , current and former investors, trust pool numbers etc.
    The Chief Justice of the Supreme Court (IN)has step down from his post as of last week. He had disposed this case May 15, 2012, changed this case from open to close but the trial court has proceeded anyway. I had two counsels representing me at the time. It looks like everyone is involved in this ponzi-scheme cover-up involving Fannie Mae (60% of U.S. Home mortgages). This home matured and was paid off 12-1-2002 with a “0” balance (Mortgage Backed Securities). The lender (US largest bank)never held the note or mortgage as stated in their original complaint. The lender claimed they were the successor in interest and assigned from WAMU, owned and held note and mortgage since 12-17-2003 now claims they purchased the home from Fannie Mae 8/13, but Fannie Mae over telephone and in a email sent to me states they sold the home to unknown investors on October 2, 2002. The amended documents filed 13 years after they claimed was defaulted (we were never in default) were filed past the 10 years statute of limitations and were obviously forged (same documents submitted to me 5-2010).
    I forwarded the file and contacted an attorney but he has not informed me if he would represent me during the hearing. Apparently, his wife is in the hospital and he has not made himself available for a telephone conference. The lender's forged “ Affidavit of Lost Note” dated December 17, 2003 is blank in multiple places, it was not registered in the Recorder's Office my wife’s the co-borrower, name is ***** ***** the document, my name is ***** ***** contains the wrong loan number and it was redacted in places, contains a known robo signature.
    Question: How should I prepare for the hearing? ( Hearing on July 25, 2014 in Bankruptcy Court for possible sanctions for failing to comply “Qualified Written Request” ).
  • I am an owner of a house in Mesquite Texas which is in Dallas

    I am an owner of a house in Mesquite Texas which is in Dallas County. In August of 2011 I went into a Lease Purchase agreement with a lady who signed a lease purchase agreement with me. The terms were cut and dry. I was going to keep the financing with Wells Fargo Home Mortgage in my name and continue to make mortgage payments while she made the Lease payment to me each month. The term was for 3 years. She gave me $500 Earnest money and $9,500 deposit. The Lease agreement specifically stated that if she could not get financing in her name by August 2014 then the agreement would be cancelled, all monies paid would be not be refunded and I would take back possession of the house. This agreement was notarized. I gave her a disclosure on the house however I failed to make a copy of it for my records. I gave her a survey of the house and a copy of the Warranty Deed. I paid for a Home Warranty in her name that covered the first 2 years. I have given her receipts each month she has paid and also provided to her a print screen from my computer where I made the house payment to Wells Fargo each month. She has never given me any trouble up until January of this year. In January I asked her how the Financing process was coming along for her and she acted shocked. She stated she was under the impression that I was going to keep the financing in my name until she paid off the house. I told her no that was not what the agreement was that I needed her to get financing so I could buy a home instead of rent. From then she has been nasty to me and has worked against me. She tried to get financing through Wells Fargo (so she said) but they turned her down because she did not have any money to put down. During this process I was very cooperative with her and provided to her all documents I had originally give to her back in August 2011. She stated I had never her anything so I provided them to her again. She has never understood the process of getting financing so on my occasions my mom and I sat down with her to try to help her understand. Each time she accused me of taking advantage of her and screwing her over. Her attitude was very bad and she never tried to even understand what we were saying. She has sent me text messages of how she felt I was screwing her over and even sent me a Bible scripture on how God will destroy those who are liars and thieves. I am trying to show you what kind of person I am dealing with....
    Last week I sent her a certified letter stating that the Lease Agreement was nearing the expiration date and that if she could not provide financing for the house or pay cash for the sales price I would need to take possession of the house and all monies paid would be non refunded. I even told her in the letter and on the phone that I would allow her to stay in the house until the end of August and if she left the house in good condition i would refund her $500. I got a letter in the mail yesterday from her Attorney stating that she has retained him to get documentation that I never provided to her. In the letter the attorney writes "Pursuant to Texas State Law, pertaining to Lease to Purchase Agreements, certain requirements are placed on the Seller which must be complied with. The Seller must make a number of disclosures pursuant to the Texas Property Code, both prior to possession and on an ongoing basis. There are obligations placed on the Seller relating to document recording and annual accounting. Moreover, there are Pre Contractual Notices that you were to provide to Ms. Crawford concerning the property at issue as well as specific terms that were to be written in the Contract."
    The attorney is requesting I provide to him within 10 days copies of all documentation and correspondence provided to the Buyer both prior to and since her occupancy of the property. My question is what documents besides the Sellers Disclosure were I to provide to her? What is he talking about "document recording and annual accounting?"
    Also what are the Pre Contractual Notices i were to provide to her? Is he referring to the Sellers Disclosure and Survey of property? What are the "specific terms" I am supposed to write in the contract? Help!!
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