Posted On: January 30, 2009

REAL ESTATE SETTLEMENT PROCEDURES ACT REQUIRED USE SECTION 9 VIOLATIONS BY HUD SAYS ALTA

The American Land Title Association (ALTA) sent a letter to the Federal Housing Administration asserting that Department of Housing and Urban Development is violating Section 9 of the Real Estate Settlement Procedures Act (RESPA) with regards to the HUD-designated closing agent stipulation on all HUD properties for sale.

Section 9 of RESPA prohibits the seller of property from requiring the use of a particular title company unless the seller pays for all the borrowers title closing costs. Housingwire.com has more information on the letter sent to HUD by ALTA.

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Posted On: January 29, 2009

RESPA: 2009 NATIONAL COMPLIANCE SUMMIT TO FEATURE CHARLES C. CAIN AS GUEST SPEAKER IN LAS VEGAS

October Research has selected Charles C. Cain to be a speaker at the 2009 National Compliance Summit on February 19-20, 2009 at The Westin Casuarina Las Vegas Hotel, Casino & Spa. Charles Cain is Of Counsel to the Sterbcow Law Group LLC in New Orleans, Louisiana and is President of Alliance Solutions LLC based in Cincinnati, Ohio.

Posted On: January 28, 2009

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) LITIGATION UPDATE

A recent RESPA litigation ruling by the United States Sixth Circuit Court of Appeals in Cincinnati, Ohio sparked headlines this week when they overturned a district court ruling denying class certification in the Erik C. Carter, et. al., United States of America v. Welles Bowen Realty, Inc. et al lawsuit. No. 07-3965.

The issue at dispute is whether a Section 8 claim of the Real Estate Settlement Procedures Act violation gives consumers "standing even if the consumer does not allege an above-market race charge for services, i.e. an 'overcharge.'" The district court previously held that because the defendants did not over charge the consumers they didn't suffer an injury but the appellate court has overturned the district courts decision.

Welles-Bowen Title Agency is a joint venture affiliated business arrangement, owned by Welles-Bowen Realty, Inc. and Chicago Title Insurance Company--a Fidelity subsidiary. The alleged problem with the relationship however appears to be that Welles-Bowen Title Agency did not really perform any settlement work, review title, or even conduct the closings. However, Chicago Title gave Welles-Bowen Realty, Inc. seventy percent (70%) of the fees and title policy money generated. If the allegations are true then this relationship would appear to be an illegal sham affiliated business arrangement under federal RESPA guidelines. There are other issues at play as well, such as the State of Ohio's affiliated business arrangement ownership and profit requirements but those were not addressed in this appellate decision.

Continue reading " REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) LITIGATION UPDATE " »

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Posted On: January 17, 2009

NEW RESPA GUIDELINES WENT INTO EFFECT ON JANUARY 16, 2009

The new Real Estate Settlement Procedures Act (RESPA) guidelines are now officially enacted as of Friday, Jan. 16, 2009. However the Required Use Section 9 changes have been put on hold for 90 days pending a review by HUD which was prompted by the National Association of Homebuilders lawsuit.

The new Good Faith Estimate (GFE) and Housing & Urban Development Settlement Statement (HUD-1) can now be used but won't be required until next year. However if a lending institution does use the new Good Faith Estimate form then the new HUD-1 and HUD-1A must be used as well in order to be compliant with the new rules.

If you are a lender or title agent please make sure you and your staff are educated on these changes because the new rules will create a substantial risk for litigation for companies who are unaware of the new rules.

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Posted On: January 6, 2009

HUD DELAYS IMPLEMENTATION OF RESPA GUIDELINES 90 DAYS

We are hearing from multiple sources that the United States Department of Housing and Urban Development (HUD) will be formally announcing delaying the implementation of the new RESPA Reform rule which is scheduled to go into effect on January 16, 2009, The delay is in response to the National Association of Home Builder's (NAHB) lawsuit against HUD that was filed on December 23, 2008. We will provide an update on NAHB lawsuit later.

The RESPA implementation delay is rumored to be 90 days from Jan. 16, 2009, meaning the new RESPA guidelines rule regarding Required Use and Section 9 of RESPA at this point will go info effect on April 16, 2009. The 90 days will give HUD 90 days to study the NAHB lawsuit.


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