by Michele Newbern Gillis
Staff Writer
The Women’s Council of Realtors held a luncheon at the San Jose Country Club last month to hear Kevin Baldwin of Stewart Title Guaranty speak about the Real Estate Settlement Procedures Act.
From Respanews.com:
First passed in 1974, the Real Estate Settlement Procedures Act is a federal statute enacted by the U.S. Department of Housing and Urban Development to govern the real estate settlement process by mandating all parties fully inform borrowers about all closing costs, lender servicing and escrow account practices, business relationships between closing service providers and other parties to the transaction. The RESPA statute covers mortgage loans on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans and equity lines of credit.
“According to HUD the goal of the rule is to clarify and outline the settlement process and fees to consumers and to eliminate illegal activities such as kickbacks and referral fees from settlement service providers,” said Baldwin.
He discussed scenerios in which real estate companies were hit by RESPA and ways to avoid problems in the future.
“Any time you are given a thing of value for referring settlement business, it is a violation of RESPA,” said Baldwin. “One RESPA violation is good for a $10,000 fine and a year in jail per violation.”
Quoting an expert on RESPA, Baldwin gave the audience some questions to ask themselves to determine if something is a violation of RESPA.
“Does the transaction make business sense? Does it promote commerce and does it affect and positively influence the business partners in the transaction and does it help the consumers?” he said. “If something makes business sense, helps business partners and helps consumers, then it is a violation of RESPA.”
Baldwin suggested going to www.respanews.com for more information on RESPA violations.