Why it is So Hard to Understand RESPA, Part III.

by | Nov 3, 2017 | Legal Tips

We have been examining RESPA over the past few posts. As we discussed, Section 8(a) states that a person or entity may not give, accept, or transfer a fee, kickback, payment, commission, gift, tangible item, special privilege, or any other thing of value to any other person in exchange for a referral of business in a real estate settlement transaction.

To understand how RESPA affects your real estate practice, we need to examine how HUD and the CFPB have defined certain terms in the provision. Many RESPA sanctions revolve around the interpretation of “thing of value,” “referral,” as well as “agreement or understanding.”

This post will examine how HUD and CFPB have interpreted “a thing of value” under Section 8. Initially RESPA rulings held that a “thing of value” was any payment, advance, funds, loan, service or other consideration. Typically some form of money was exchanged between the parties. Over the years, the concept was broadened to include virtually any tangible, intangible, actual or theoretical asset of any nature whatsoever. The transfer of money was no longer required.  A benefit or financial gain was considered a thing of value. Recently, the CFPB went further and issued the broadest interpretation of “thing of value.” The CFPB stated in the Lighthouse Title that the mere execution of an agreement, not just the performance of it, was a “thing of value” under RESPA(8).  Then, in the Prospect Mortgage case the CFPB even suggested that gaining access to real estate agents through a marketing agreement was a thing of value.

Therefore, at this point basically everything seems to have value under CFPB rulings particularly anything that off sets your expenses, marketing or advertising costs. The interpretation of “thing of value” is so broad that it would be extremely difficult to argue effectively to CFPB that something did not have value.  Recently rulings appear to have eliminated virtually any defense claiming that the there was no transfer of a thing of value.

DID YOU KNOW? As college football seasons wind down, did you know that the first college football played in South Carolina was played December 14, 1889 between Wofford College and Furman College. The game was played in Spartanburg and featured no uniforms or positions and the rules were decided before the game. Of course Wofford prevailed 5 to 1. Go Terriers!

Call Now Button