TopMortgage Compliance Update (1)
November 29, 2010
HUD: Will Not Change Interpretive Rule

Follow us on Twitter

Find us on Facebook

View our profile on LinkedIn
Action Button Image 1
Your Feedback
Our professionals and support staff have extensive experience.

Titles Held

Chief Compliance Officer
General Counsel
Compliance Counsel
Compliance Manager
Senior Regulator (federal)
Senior Examiner (state)
Quality Control VP
Operations EVP
Underwriting EVP
HMDA Auditor
Forensic Loan Auditor
Licensing Manager
SarBox Auditor



Mortgage Compliance

Service Presentations

CORE Compliance

About Us

Our Clientele

News & Views Posts



Contact Us


Mortgage Compliance

Due Diligence

Defaults and Claims

Forensic Mortgage Audit

FHA Examinations

Legal Reviews/Remedies

CORE Compliance Matrix

Loss Mitigation

Mortgage Fraud Audit

Quality Control



Business Development

Policy Guides/QC Plans

Information Security Plans

Email Us
Email Us-4
On June 25, 2010, we notified you about the National Association of Realtors asking the Department of Housing and Urban Development (HUD) for clarification on an unofficial staff interpretation HUD had issued on February 21, 2008 regarding Home Warranty Companies.

In that interpretation, HUD's Office of General Counsel opined that services performed by real estate brokers and agents on behalf of a home warranty company (HWC) are compensable as additional settlement services if the services are actual, necessary and distinct from the primary services provided by the real estate broker or agent, and allowed that the real estate broker or agent may accept a portion of the charge for the homeowner warranty only if the broker or agent provides services that are not nominal and for which there is not a duplicative charge.

HUD's Office of General Counsel published an Interpretive Rule which interprets Section 8 of the Real Estate Settlement Procedures Act (RESPA) and HUD's regulations as they apply to the compensation provided by home warranty companies to real estate brokers and agents. Generally, an interpretive rule is exempt from public comment, but HUD offered a comment period.

After reviewing the comments received, on November 23, 2010 HUD determined that changes are not needed to the interpretative rule.

An interpretive rule does not change existing law. It represents HUD's interpretation of its existing regulations.

Therefore, this interpretive rule does not constitute a change in HUD's interpretation of RESPA or the RESPA regulations, but is an "articulation" of HUD's interpretation of RESPA and the implementing regulations that specifically apply to home warranty company payments to real estate brokers and agents.


Interpretive Rule
  1. A payment by an HWC for marketing services performed by real estate brokers or agents on behalf of the HWC that are directed to particular homebuyers or sellers is an illegal kickback for referral under Section 8 of RESPA.
  2. Depending upon the facts of a particular case, an HWC may compensate a real estate broker or agent for services when those services are actual, necessary and distinct from the primary services provided by the real estate broker or agent, and when those additional services are not nominal and are not services for which there is a duplicative charge.
  3. The amount of compensation from the HWC that is permitted under Section 8 of RESPA for such additional services must be reasonably related to the value of those services and not include compensation for referrals of business.
Visit Library for IssuanceLibrary
Law Library Image

HUD: RESPA - Home Warranty Companies' Payments to Real Estate Brokers and Agents, Interpretive Rule: Response to Public Comments, Questions and Answers

November 23, 2010

Suite of Services and Specializations

Mortgage Compliance Compliance Administration

Defaults and Claims Reviews Forensic Mortgage Audit

Mortgage Defaults Task Force Mortgage Quality Control

FHA Examinations State and Federal Examinations

Mortgage Due Diligence FNMA|FHLMC|GNMA Applications

Legal Reviews & Remedies Loss Mitigation Compliance

Sarbanes-Oxley Compliance HMDA & CRA Processing

Mortgage Fraud Audit Disaster Recovery Plans

CORE Compliance MatrixStatutory Licensing

Business Development Information Security Plans

IT & IS Compliance RESPA-AfBAs

Lenders Compliance Group
is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.

We are pioneers in outsourcing solutions for mortgage compliance.

This communication is sent to our valued clients and colleagues, who regularly receive our Advisory Bulletins, Mortgage Compliance Updates, and Compliance Alerts.

These publications are free to subscribers. Information contained herein is not intended to be and is not a source of legal advice.

� 2007-2010 Lenders Compliance Group, Inc. All Rights Reserved.