Real Estate Settlement Procedures Act (RESPA)
RESPA was designed to give home buyers and sellers better disclosure of settlement costs; and to elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services.
Prohibition Against Kickbacks and Referral Fees
12 U.S.C. §2607(a); 24 C.F.R. § 3500.14(b). RESPA prohibits the giving or receiving of any fee, kickback or other thing of value for the referral of a “settlement service” (defined at 12 U.S.C. § 2602(3) and 24 C.F.R. § 3500.2).
One court has stated that, in order to state a claim alleging a violation of this section, one must demonstrate:1) an agreement between the parties to refer settlement service business,2) the transfer of a thing of value, and3) the referral of settlement service business. “An agreement or understanding for the referral of business incident to or part of a settlement service need not be written or verbalized but may be established by a practice, pattern or course of conduct.” 24 C.F.R. § 3500.14(e).
Yield-spread premiums: A yield spread premium is a fee paid by a mortgage lender to a mortgage broker for arranging a loan with an interest rate at a higher amount than the par rate. Payment of a yield spread premium is not a per se violation of this section, but may be illegal under RESPA based on a factual inquiry into the circumstances surrounding the payment.
HUD (the agency charged with interpretative, investigative and enforcement powers under RESPA) recommends a two-step inquiry to determine whether a yield spread premium is illegal. First, one determines whether the payment of the yield spread premium was for services actually performed; if it is not, then the payment is an illegal kickback. If the payment was for services actually performed, then one looks at whether the total compensation paid to the broker reasonably related to the value of the services; if the compensation does not reasonably relate to the value of the services, the payment is a violation of this section.
Recently, some Courts have fashioned a five-part pleading standard for alleging a YSP-based violation of RESPA, three-part test and on HUD statements:
“(1) the existence of an agreement between the lender and broker whereby the broker promises to refer settlement service business to the lender;
(2) the transfer of a thing of value between the lender and broker based upon that agreement;
(3) the referral of settlement service business by the broker to the lender and either that
(4) the broker received a YSP without providing any goods or services of the kind typically associated with a mortgage transaction or (5) if the broker did provide such goods or services, the total compensation paid to the broker was not reasonably related to the total value of the goods or services actually provided.. As part of pleading (4) or
(5), a borrower must plead what services were offered, the reasonable value of those services, and the fact that total broker compensation exceeded that value. Also, a borrower alleging a YSP-based violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, or a YSP-based breach of fiduciary duty, can only do so by (also) meeting the RESPA pleading standard.
Prohibition Against Unearned Fees and Fee Splitting 12 U.S.C. §2607(b); 24 C.F.R. §3500.14(c). RESPA prohibits the giving or receiving of “any portion, split or percentage of any charge made or received for the rendering of a settlement services in connection with a transaction involving a federally related mortgage loan other than for services performed.” The regulations further state that, “A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section.”Remedies
There is a private right of action for violation of § 2607 (Illegal referral fee or kickback and fee splitting). Statutory damages: person charged for the settlement service can recover an amount equal to “three times the amount of any charge paid for such settlement service,” plus attorney’s fees and costs. 12 U.S.C. § 2607(d).
Practice Tip:
The bottom line is that any payment by the lender to the broker is illegal if it is not for the reasonable value of services actually performed. So if you see a high up-front broker’s fee plus a yield-spread premium or other broker fee paid by the lender, there’s a good chance the lender-paid is fee is “unearned gravy” and constitutes a violation.
There is a private right of action for violation of § 2605 (Servicing requirements and administration of escrow accounts). Actual damages for each failure to comply, additional damages for a pattern and practice of noncompliance, plus attorney’s fees and costs. 12 U.S.C. § 2605(f).
Statute of Limitations
• 1 year for affirmative (kickback and fee-splitting) claims. 12 U.S.C. § 2614;• Unlimited as a defense to foreclosure in the nature of a recoupment or setoff.
Archive for May, 2010
How Federal Laws About Mortgages Can Be Helpful to You?
Tuesday, May 11th, 2010Boost Your Career Potential With an Online Law Enforcement Administration Degree
Monday, May 10th, 2010Do you work in management but feel that your career isn’t going anywhere? If you have management experience but want to get into a new field you should get an online Law Enforcement Administration degree. An online Law Enforcement Administration Degree can give you the skills and knowledge that you need to manage a police station or sheriff’s office. It’s very important that police stations and sheriff’s offices have qualified, educated people running the day to day operations of the office because if a police station or sheriff’s office doesn’t run efficiently there could be serious consequences for the public. Also, if a police station or sheriff’s office doesn’t have an effective manager there could be all sorts of problems with lost paperwork and other slip ups that might end up putting criminals back on the street. The behind the scenes work in law enforcement can be just as important as the work of police officers so if you’ve ever thought about getting into law enforcement but don’t want to be a police office then getting an online Law Enforcement Administration degree can be just what you need to start a great new career in law enforcement. Every society will always need law enforcement offices and law enforcement personnel so you will be able to go anywhere in the world and find work with a Law Enforcement Administration Degree.
Since you can get an online Law Enforcement Administration Degree you can attend classes and do your work when it’s convenient for you. Most students who get an online Law Enforcement Administration degree have no trouble keeping their full time jobs and attending school part time online at night and on weekends. Attending class online usually involves using networking software and chat applications and also using email to stay connected to your other classmates and your teacher. Sometimes you may talk to your advisor or professor on the phone but most of the time you will be interacting online. Most of the lessons are interactive and all the materials that you need will be available online so that you can download them and save them for future reference. The Internet has made it easy for anyone who wants a Law Enforcement Administration degree to get one even if no schools in the area offer that degree. In the past some employers didn’t think that online degrees were as valuable as a degree from an established four year college or university but these days it’s become quite common for reputable four year and two year colleges to offer a wide variety of degree programs online for students that want to return to school or get a degree but need to work or have other commitments that make attending traditional classes difficult. An online Law Enforcement degree is the convenient way to get the education that you need to change your career and jump into a new industry. Since good managers will always be needed to help run police stations and sheriff’s offices having an online Law Enforcement Degree is a good way to make sure that your skills will always be in demand.
California Labor Laws: Asserting Your Employee Rights
Sunday, May 2nd, 2010
Many employees when experiencing a labor violation are confused as to where to turn and typically take one of four paths.
1. A very common path and usually the most treacherous, is doing nothing at all. When an employee is hesitant to hire California overtime lawyers or California labor law attorneys to handle a situation, it usually gets worse before it gets better. Complacency will typically cause labor violations to become more frequent. California labor law attorneys have found that “where there is smoke there is fire” and when one violation is discovered, many others are found.
2. The next course of action frequently taken by employees experiencing a California labor law violation is attempting to handle the problem “through the Employer’s channels or procedures”. This course of action has risks of its own and one of the biggest dangers in filing a formal Employer complaint “though the proper channels” is the risk of retaliation. Employees do not realize that by filing an official complaint they place their employers on guard and exposed to liability if the employer retaliates. Once a complaint is filed for a labor violation, if the employer then retaliates and demotes, harasses, suspends or fires the employee, that employer exposes themselves to additional liability.
3. Another option an employee may exercise is going to the labor board. The California Labor Board does however have limitations, in that they will not purse the 4th years (Unfair Business Practice Claim) as a private attorney would and therefore they may shorten the amount of their claim. Furthermore, the California Labor Board handles very small claims and may not always pursue the employee’s claims as vigorously as California overtime lawyers might. The California Labor Board also has a serious limitation in that if either party prevails, the other party has the option to appeal and have the case start all over. Once this occurs, and employee will need to find a California labor law attorney to represent them and also faces the risk that if they lose this appeal the loser must pay the winning parties attorney fees and court costs. On the other hand, if an employee hires California overtime lawyers to handle the claim from the outset and prevails on any part of the claim, the Employer must pay the Employee’s attorney fees. This is a huge advantage. As you can see the California Labor Board has severe limitations and is designed for smaller disputes where the employee does not mind some uncertainty of outcome. While the California Labor Board is free of charge- sometimes you get what you pay for!
4. California overtime lawyers and California labor law attorneys may be the best option when it comes to the enforcement of California labor laws. When an employee hires an attorney who is experienced in California overtime laws, the outcome may be better than testing the waters at the California Labor Board and surely much better than doing nothing at all. Case law and statutes are constantly evolving and knowledgeable California overtime lawyers or California labor law attorneys can in many instances pinpoint the applicable laws and cases that could bring an employee to victory. Even better, if your attorney wins, your employer must pay his or her legal fees!
In closing, an employee has several choices. Hiring a qualified professional to protect your interests is imperative if you want good results. Interview several California labor law attorneys and find out who you feel most comfortable with.