Respa FAQ

HUD/RESPA Guidelines
Visit these sites for rules and regulations governing real estate practices.
RESPA, or Real Estate Settlement Procedures Act, first passed in 1974, is a HUD enforced consumer protection statute. Its objectives are to clarify and outline the settlement process and fees to consumers and to eliminate illegal kickbacks and referral fees which increase the cost of settlement services. It covers mortgage loans (first or subordinate position) placed on a one-to-four family residential property, including most purchase loans, lender-approved assumptions, refinances, property improvement loans, equity lines of credit, and reverse mortgages.
RESPA requires that mortgage lenders/brokers/bankers provide borrowers with certain disclosures at various times. Some deal with the associated costs, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.
RESPA prohibits certain practices which increase settlement service costs, such as giving or accepting referral fees or kickbacks from service providers.

FREQUENTLY ASKED QUESTIONS

1. When and where do I have to use the HUD logo? The HUD logo is not mandatory on any document at any time. It is optional to use by HUD-FHA approved mortgagees. Non-HUD-FHA approved mortgagees should not use the logo. The logo reflects that the mortgagee is approved by HUD to originate FHA loans.

2. Why don't you include the HUD logo on documents from LoanToolbox? The HUD logo is not included on documents from LoanToolbox because we do not verify that every member is HUD-FHA approved.

3. What can I give to "pay back" referral sources without violating RESPA guidelines?Absolutely nothing. You can give all your clients gifts or other signs of your appreciation, whether they referred others to you or not, but you may not give anything to referral sources SEPARATELY or on a PER-REFERRAL BASIS. Therefore:

YOU CAN:
Have a party to which you invite all previous clients and associates

Give a "thank you" card containing a Starbucks gift certificate to a client after their loan closes

Refer clients to other professionals (if they need a real estate agent, CPA, CFP, etc.)

YOU CANNOT:

Give a $100 referral bonus to clients, real estate agents, or anyone else who refers someone to you

Give a "thank you" card containing a Starbucks gift certificate to a client for a referral they sent

Pay for a Realtor's advertisements in a local magazine or newspaper

4. I heard you could give things to referral sources if they were less than $25 in value. The "$25 value" rule is false. No stipulations as to price are made in the actual RESPA regulations.
More FAQs concerning RESPA are available at http://www.hud.gov/offices/hsg/sfh/res/resindus.cfm.
This is not an attempt to give legal advice. We have merely given you a very brief overview of a few of the RESPA requirements. For complete rules and regulations please follow the link to HUD's website.
U.S. Department of Housing and Urban Development (HUD)
In addition, we have provided links to other websites which may be helpful, including state regulatory agencies.
Mortgage Bankers Association of America
National Association of Mortgage Brokers
The Association of Real Estate License Law Officials