HUD clarifies RESPA rules for home warranty companies

HUD has formalized a RESPA rule regarding payments from home warranty companies (HWC). Specifically, the rule provides:

  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 a referral under section 8;
  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; and
  3. The amount of compensation from the HWC that is permitted under section 8 for such additional services must be reasonably related to the value of those services and not include compensation for referrals of business.

Read the full interpretive rule.

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One Response to HUD clarifies RESPA rules for home warranty companies

  1. I love how HUD defines “clarification.” I wonder what HUD was trying fix this time while confounding the system and creating more confusion in the end. I wonder if we’ll ever have a day when RESPA is scrapped and rewritten.

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