I would really like to know how the local HUD office treats builder discounts.

Jillayne – thank you for the wonderful and diplomatic comment. You’ve got a special way with the written word.

Thanks for the smileys! I’m smiling again! The reason why trade associations don’t jump up to sponsor RESPA classes are:

the American Land Title Assoc ALTA is not known at least in WA state as a trade group with any agenda remotely close to the word “education.” They use to do an escrow seminar once a year but this was mostly in order to keep their own costs down as business owners. ALTA in Wa state does not want to spend time and money educating their competitors.

Realtors don’t attend stand-alone RESPA classes because if they had a choice, they would rather attend something else, since most legal classes are very dry. The only way they will come is if it’s a required class OR if there is a local recent legal case in which a real estate agent got nailed.

Real estate BROKERs who own Affiliated Businesses (also known as controlled business arrangements) have a financial incentive to NOT HAVE THEIR AGENTS LEARN ABOUT RESPA. Because when the agents learn more about the affiliated business arrangement rules, they are less likely to refer business to the broker’s affiliated title/escrow/lending company….although we all know that in a public forum, they would argue that the opposite is true.

RESPA has not traditionally been a well-attended seminar. Trade associations need to cover costs and earn money on their sponsored classes.

In WA state, the Dept of Licensing included RESPA as one of the required topics within the agent’s CORE class, which must be taken by all agents each renewal.

Loan originators and real estate agents often don’t think about the appearance of impropriety since RESPA enforcement though stepped up nationwide, seems/feels distant to a local, street-level practitioner.

In WA state, the $25 rule applies to title insurance companies. Real estate agents might have a similar rule regarding an amount they can spend on consumers.

I do not need a legal opinion. I understand RESPA. I do not ask settlement service providers to give me a break. Some have offered without my asking and I refuse to accept reduced fees on my own transactions.

“When agents ask for fee reductions on their own deals, they are not thinking like an agent, they’re thinking like a consumer. The reduced fee request in Tim’s scenario came after the transaction was placed with an escrow firm, not beforehand.

Your example from comment #10 is referring to an escrow company giving a portion of the escrow company’s fee back to the real estate agent for referring the consumer to the escrow firm.

In Tim’s scenario, the fee reduction benefits the homebuyer, which is allowable under RESPA provided everything shows up on the HUD 1.
In Tim’s scenario the real estate agent is wearing two hats.”

You cannot as a settlement service provider wear two hats in a transaction. In my comment I specifically meant the savings to the agent in his own deal – that portion – is a thing of value and constitutes a kickback.

RESPA holds both the giver and the receiver responsible. Each must choose whether to participate. In today’s regulatory climate, I suggest avoiding the appearance of impropriety.

Aren’t you all in Washington? Without considering RESPA, isn’t your state limitation on things of value set at $25?

I truly do not mean to sound demeaning but attorneys and trade associations have done a crap job of advising their clients and members when it comes to RESPA and related compliance issues.

Tim – You have a hot topic here. Thanks for a good show.

Consider sending your case study in to the Washington Assoc of Realtors legal hotline. Attorney Annie Fitzsimmons will answer the quetion in her weekly email and then the answer will go out to all WAR members statewide. You can then save her answer and produce a copy when asked to reduce fees in the future.

Thanks for posting a very cool case study.

Please consider adding a smiley face next to your comments if you are trying to be sarcastic or joke when you offer comments such as:

“RESPA is not hard to understand if you want to understand it.”
“Those who disagree have not actually read RESPA or refuse to comprehend the English language.”

I read into this that you don’t think I (and any other reader) understand RESPA and that you believe you do, which comes across loud and clear. I can handle forthright comments. The above comments may come across as arrogant and demeaning to a reader and maybe you weren’t planning to come across that way?

The only people allowed to talk this way on RCG are attorneys (Joke.)

When agents ask for fee reductions on their own deals, they are not thinking like an agent, they’re thinking like a consumer. The reduced fee request in Tim’s scenario came after the transaction was placed with an escrow firm, not beforehand.

Your example from comment #10 is referring to an escrow company giving a portion of the escrow company’s fee back to the real estate agent for referring the consumer to the escrow firm.

In Tim’s scenario, the fee reduction benefits the homebuyer, which is allowable under RESPA provided everything shows up on the HUD 1.
In Tim’s scenario the real estate agent is wearing two hats.

I maintain that this is a long stretch to call this a CLEAR CUT violation. If you and Tim need a legal answer, run this whole scenario by an attorney well-versed in RESPA, get his or her answer in writing, and save the written letter for when you’re asked to reduce fees.

I really get a kick out of LO’s who max out their borrower closing cost/fees on a refi and ask escrow to drop their fee to get the borrower under the threshold. If anyone would like to see Lynlee or me throw a file across a room, just say those magic words and you’ll see how aerodynamic a 1″ file is. Actually we don’t throw files, but we do have this cool little urn that says “ashes of difficult clients.”