[Federal Register Volume 66, Number 202 (Thursday, October 18, 2001)]
[Rules and Regulations]
[Pages 53052-53059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26321]



[[Page 53051]]

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Part V





Department of Housing and Urban Development





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24 CFR Part 3500



Real Estate Settlement Procedures Act Statement of Policy 2001-1: 
Clarification of Statement of Policy 1999-1 Regarding Lender Payments 
to Mortgage Brokers, and Guidance Concerning Unearned Fees Under 
Section 8(b); Final Rule

  Federal Register / Vol. 66, No. 202 / Thursday, October 18, 2001 / 
Rules and Regulations  

[[Page 53052]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3500

[Docket No. FR-4714-N-01]
RIN 2502-AH74


Real Estate Settlement Procedures Act Statement of Policy 2001-1: 
Clarification of Statement of Policy 1999-1 Regarding Lender Payments 
to Mortgage Brokers, and Guidance Concerning Unearned Fees Under 
Section 8(b)

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Statement of Policy 2001-1.

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SUMMARY: This Statement of Policy is being issued to eliminate any 
ambiguity concerning the Department's position with respect to those 
lender payments to mortgage brokers characterized as yield spread 
premiums and to overcharges by settlement service providers as a result 
of questions raised by two recent court decisions, Culpepper v. Irwin 
Mortgage Corp. and Echevarria v. Chicago Title and Trust Co., 
respectively. In issuing this Statement of Policy, the Department 
clarifies its interpretation of Section 8 of the Real Estate Settlement 
Procedures Act (RESPA) in Statement of Policy 1999-1 Regarding Lender 
Payments to Mortgage Brokers (the 1999 Statement of Policy), and 
reiterates its long-standing interpretation of Section 8(b)'s 
prohibitions. Culpepper v. Irwin Mortgage Corp. involved the payment of 
yield spread premiums from lenders to mortgage brokers. Echevarria v. 
Chicago Title and Trust Co. involved the applicability of Section 8(b) 
to a settlement service provider that overcharged a borrower for the 
service of another settlement service provider, and then retained the 
amount of the overcharge.
    Today's Statement of Policy reiterates the Department's position 
that yield spread premiums are not per se legal or illegal, and 
clarifies the test for the legality of such payments set forth in HUD's 
1999 Statement of Policy. As stated there, HUD's position that lender 
payments to mortgage brokers are not illegal per se does not imply, 
however, that yield spread premiums are legal in individual cases or 
classes of transactions. The legality of yield spread premiums turns on 
the application of HUD's test in the 1999 Statement of Policy as 
clarified today.
    The Department also reiterates its long-standing position that it 
may violate Section 8(b) and HUD's implementing regulations: (1) For 
two or more persons to split a fee for settlement services, any portion 
of which is unearned; or (2) for one settlement service provider to 
mark-up the cost of the services performed or goods provided by another 
settlement service provider without providing additional actual, 
necessary, and distinct services, goods, or facilities to justify the 
additional charge; or (3) for one settlement service provider to charge 
the consumer a fee where no, nominal, or duplicative work is done, or 
the fee is in excess of the reasonable value of goods or facilities 
provided or the services actually performed.
    This Statement of Policy also reiterates the importance of 
disclosure so that borrowers can choose the best loan for themselves, 
and it describes disclosures HUD considers best practices. The 
Secretary is also announcing that he intends to make full use of his 
regulatory authority to establish clear requirements for disclosure of 
mortgage broker fees and to improve the settlement process for lenders, 
mortgage brokers, and consumers.

EFFECTIVE DATE: October 18, 2001.

FOR FURTHER INFORMATION CONTACT: Ivy M. Jackson, Acting Director, 
RESPA/ILS Division, Room 9156, U.S. Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410; telephone 
(202) 708-0502, or (for legal questions) Kenneth A. Markison, Assistant 
General Counsel for GSE/RESPA, Room 9262, Department of Housing and 
Urban Development, Washington, DC 20410; telephone (202) 708-3137 
(these are not toll-free numbers). Persons who have difficulty hearing 
or speaking may access this number via TTY by calling the toll-free 
Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

General Background

    The Department is issuing this Statement of Policy in accordance 
with 5 U.S.C. 552 as a formal pronouncement of its interpretation of 
relevant statutory and regulatory provisions. Section 19(a) (12 U.S.C. 
2617(a)) of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2601-2617) (RESPA) specifically authorizes the Secretary ``to 
prescribe such rules and regulations [and] to make such interpretations 
* * * as may be necessary to achieve the purposes of [RESPA].''
    Section 8(a) of RESPA prohibits any person from giving and any 
person from accepting ``any fee, kickback, or thing of value pursuant 
to an agreement or understanding, oral or otherwise'' that real estate 
settlement service business shall be referred to any person. See 12 
U.S.C. 2607(a). Section 8(b) prohibits anyone from giving or accepting 
``any portion, split, or percentage of any charge made or received for 
the rendering of a real estate settlement service * * * other than for 
services actually performed.'' 12 U.S.C. 2607(b). Section 8(c) of RESPA 
provides, ``Nothing in [Section 8] shall be construed as prohibiting * 
* * (2) the payment to any person of a bona fide salary or compensation 
or other payment for goods or facilities actually furnished or for 
services actually performed * * *'' 12 U.S.C. 2607(c)(2). RESPA also 
requires the disclosure of settlement costs to consumers at the time of 
or soon after a borrower applies for a loan and again at the time of 
real estate settlement. 12 U.S.C. 2603-4. RESPA's requirements apply to 
transactions involving a ``federally related mortgage loan'' as that 
term is defined at 12 U.S.C. 2602(1).

I. Lender Payments to Mortgage Brokers

    The Conference Report on the Department's 1999 Appropriations Act 
directed HUD to address the issue of lender payments to mortgage 
brokers under RESPA. The Conference Report stated that ``Congress never 
intended payments by lenders to mortgage brokers for goods or 
facilities actually furnished or for services actually performed to be 
violations of [Sections 8](a) or (b) (12 U.S.C. sec. 2607) in its 
enactment of RESPA.'' H. Rep. 105-769, at 260. As also directed by 
Congress, HUD worked with industry groups, federal agencies, consumer 
groups and other interested parties in collectively producing the 1999 
Statement of Policy issued on March 1, 1999. 64 FR 10080. Interested 
members of the public are urged to consult the 1999 Statement of Policy 
for a more detailed discussion of the background on lender payments to 
brokers addressed in today's Statement.
    HUD's 1999 Statement of Policy established a two-part test for 
determining the legality of lender payments to mortgage brokers for 
table funded transactions and intermediary transactions under RESPA: 
(1) Whether goods or facilities were actually furnished or services 
were actually performed for the compensation paid and; (2) whether the 
payments are reasonably related to the value of the goods or facilities 
that were actually furnished or services that were actually performed. 
In applying this test, HUD believes that total compensation should be 
scrutinized to assure that it is reasonably related to the goods,

[[Page 53053]]

facilities, or services furnished or performed to determine whether it 
is legal under RESPA. In the determination of whether payments from 
lenders to mortgage brokers are permissible under Section 8 of RESPA, 
the threshold question is whether there were goods or facilities 
actually furnished or services actually performed for the total 
compensation paid to the mortgage broker. Where a lender payment to a 
mortgage broker comprises a portion of total broker compensation, the 
amount of the payment is not, under the HUD test, scrutinized 
separately and apart from total broker compensation.
    Since HUD issued its 1999 Statement of Policy, most courts have 
held that yield spread premiums from lenders to mortgage brokers are 
legal provided that such payments meet the test for legality 
articulated in the 1999 Statement of Policy and otherwise comport with 
RESPA. However, in a recent decision, Culpepper v. Irwin Mortgage 
Corp., 253 F.3d 1324 (11th Cir. 2001), the Court of Appeals for the 
Eleventh Circuit upheld certification of a class in a case alleging 
that yield spread premiums violated Section 8 of RESPA where the 
defendant lender, pursuant to a prior understanding with mortgage 
brokers, paid yield spread premiums to the brokers based solely on the 
brokers' delivery of above par interest rate loans. The court concluded 
that a jury could find that yield spread premiums were illegal 
kickbacks or referral fees under RESPA where the lender's payments were 
based exclusively on interest rate differentials reflected on rate 
sheets, and the lender had no knowledge of what services, if any, the 
broker performed. The court described HUD's 1999 Statement of Policy as 
``ambiguous.'' Id. at 1327. Accordingly, and because courts have now 
rendered conflicting decisions, HUD has an obligation to clarify its 
position and issues this Statement today to provide such clarification 
and certainty to lenders, brokers, and consumers.
    Because this clarification focuses on the legality of lender 
payments to mortgage brokers in transactions subject to RESPA, the 
coverage of this statement is restricted to payments to mortgage 
brokers in table funded and intermediary broker transactions. Lender 
payments to mortgage brokers where mortgage brokers initially fund the 
loan and then sell the loan after settlement are outside the coverage 
of this statement as exempt from RESPA under the secondary market 
exception.

II. Disclosure

    Besides establishing the two-part test for determining the legality 
of yield spread premiums, the 1999 Statement of Policy discussed the 
importance of disclosure in permitting borrowers to choose the best 
loan for themselves. The mortgage transaction is complicated, and most 
people engage in such transactions relatively infrequently, compared to 
the other purchases they make. In some instances, borrowers have paid 
very large origination costs, either up front fees, yield spread 
premiums, or both, which they might have been able to avoid with timely 
disclosure. Timely disclosure would permit them to shop for preferable 
origination costs and mortgage terms and to agree to those costs and 
terms that meet their needs. The Department therefore is issuing a 
clarification of the importance of disclosure, with a description of 
disclosures that it considers to be best practices.
    In this Statement of Policy, the Secretary is announcing that he 
intends to make full use of his regulatory authority as expeditiously 
as possible to provide clear requirements and guidance prospectively 
regarding disclosure of mortgage broker fees and, more broadly, to 
improve the mortgage settlement process so that homebuyers and 
homeowners are better served. Pending the promulgation of such a rule, 
the Secretary asks the industry to adopt new disclosure requirements to 
promote competition and to better serve consumers.

III. Unearned Fees

    The 1999 Statement of Policy also touched upon another area of 
recurring questions under Section 8 of RESPA: the legality of payments 
that are in excess of the reasonable value of the goods or facilities 
provided or services performed. See 64 FR 10082-3.
    Since RESPA was enacted, HUD has consistently interpreted Section 
8(b) and HUD's RESPA regulations to prohibit settlement service 
providers from charging unearned fees, as occurred in Echevarria v. 
Chicago Title & Trust Co., 256 F.3d 623 (7th Cir. 2001). Such an 
interpretation is consistent with Congress's finding, when enacting 
RESPA, that consumers need protection from unnecessarily high 
settlement costs. Through this Statement of Policy, HUD makes clear 
that Section 8(b) prohibits any person from giving or accepting any 
fees other than payments for goods and facilities provided or services 
actually performed. Payments that are unearned fees occur in, but are 
not limited to, cases where: (1) Two or more persons split a fee for 
settlement services, any portion of which is unearned; or (2) one 
settlement service provider marks-up the cost of the services performed 
or goods provided by another settlement service provider without 
providing additional actual, necessary, and distinct services, goods, 
or facilities to justify the additional charge; or (3) one settlement 
service provider charges the consumer a fee where no, nominal, or 
duplicative work is done, or the fee is in excess of the reasonable 
value of goods or facilities provided or the services actually 
performed.
    In a July 5, 2001 decision, the Court of Appeals for the Seventh 
Circuit concluded that unearned fees must be passed from one settlement 
provider to another in order for such fees to violate Section 8(b). 
Accordingly, the court held that a settlement service provider did not 
violate Section 8(b) when, in billing a borrower, it added an 
overcharge to another provider's fees and retained the additional 
charge without providing any additional goods, facilities or services. 
Echevarria v. Chicago Title & Trust Co. Other courts have held that two 
or more parties must split or share a fee in order for a violation of 
Section 8(b) to occur. Still other courts have stated, however, that a 
single provider can violate Section 8(b). Because the courts are now 
divided, HUD is issuing this Statement of Policy to reiterate its 
interpretation of Section 8(b).
    The Court of Appeals for the Seventh Circuit rendered its 
conclusion in Echevarria ``absent a formal commitment by HUD to an 
opposing position. * * *'' Id. at 630. In issuing this Statement of 
Policy pursuant to Section 19(a), HUD reiterates its position on 
unearned fees under Section 8(b) of RESPA, which HUD regards as long 
standing.

IV. Statement of Policy 2001-1

    To give guidance to interested members of the real estate 
settlement industry and the general public on the application of RESPA 
and its implementing regulations, the Secretary hereby issues the 
following Statement of Policy. The interpretations embodied in this 
Statement of Policy are issued pursuant to Section 19(a) of RESPA. 12 
U.S.C. 2617(a).

Part A. Mortgage Broker Fees

Yield Spread Premiums
    One of the primary barriers to homeownership and homeowners' 
ability to refinance and lower their housing costs is the up front cash 
needed to obtain a mortgage. The closing costs and origination fees 
associated with a mortgage loan are a significant component of these up 
front

[[Page 53054]]

cash requirements. Borrowers may choose to pay these fees out of 
pocket, or to pay the origination fees, and possibly all the closing 
fees, by financing them; i.e., adding the amount of such fees to the 
principal balance of their mortgage loan. The latter approach, however, 
is not available to those whose loan-to-value ratio has already reached 
the maximum permitted by the lender. For those without the available 
cash, who are at the maximum loan-to-value ratio, or who simply choose 
to do so, there is a third option. This third option is a yield spread 
premium.
    Yield spread premiums permit homebuyers to pay some or all of the 
up front settlement costs over the life of the mortgage through a 
higher interest rate. Because the mortgage carries a higher interest 
rate, the lender is able to sell it to an investor at a higher price. 
In turn, the lender pays the broker an amount reflective of this price 
difference. The payment allows the broker to recoup the up front costs 
incurred on the borrower's behalf in originating the loan. Payments 
from lenders to brokers based on the rates of borrowers' loans are 
characterized as ``indirect'' fees and are referred to as yield spread 
premiums.\1\
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    \1\ Indirect fees from lenders are also known as ``back funded 
payments,'' ``overages,'' or ``servicing release premiums.''
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    A yield spread premium is calculated based upon the difference 
between the interest rate at which the broker originates the loan and 
the par, or market, rate offered by a lender. The Department believes, 
and industry and consumers agree, that a yield spread premium can be a 
useful means to pay some or all of a borrower's settlement costs. In 
these cases, lender payments reduce the up front cash requirements to 
borrowers. In some cases, borrowers are able to obtain loans without 
paying any up front cash for the services required in connection with 
the origination of the loan. Instead, the fees for these services are 
financed through a higher interest rate on the loan. The yield spread 
premium thus can be a legitimate tool to assist the borrower. The 
availability of this option fosters homeownership.
    HUD has recognized the utility of yield spread premiums in 
regulations issued prior to the 1999 Statement of Policy. In a final 
rule concerning ``Deregulation of Mortgagor Income Requirements,'' HUD 
indicated that up front costs could be lowered by yield spread 
premiums.54 FR 38646 (September 20, 1989).
    In a 1992 rule concerning RESPA, HUD specifically listed yield 
spread premiums as an example of fees that must be disclosed. The 
example was codified as Illustrations of Requirements of RESPA, Fact 
Situations 5 and 13 in Appendix B to 24 CFR part 3500. (See also 
Instructions at Appendix A to 24 CFR part 3500 for Completing HUD-1 and 
HUD-1A Settlement Statements.) HUD did not by these examples mean that 
yield spread premiums were per se legal, but HUD also did not mean that 
yield spread premiums were per se illegal.
    HUD also recognizes, however, that in some cases less scrupulous 
brokers and lenders take advantage of the complexity of the settlement 
transaction and use yield spread premiums as a way to enhance the 
profitability of mortgage transactions without offering the borrower 
lower up front fees. In these cases, yield spread premiums serve to 
increase the borrower's interest rate and the broker's overall 
compensation, without lowering up front cash requirements for the 
borrower. As set forth in this Statement of Policy, such uses of yield 
spread premiums may result in total compensation in excess of what is 
reasonably related to the total value of the origination services 
provided by the broker, and fail to comply with the second part of 
HUD's two-part test as enunciated in the 1999 Statement of Policy, and 
with Section 8.
The 1999 Statement of Policy's Test for Legality
    The Department restates its position that yield spread premiums are 
not per se illegal. HUD also reiterates that this statement ``does not 
imply * * * that yield spread premiums are legal in individual cases or 
classes of transactions.'' 64 FR 10084. The legality of any yield 
spread premium can only be evaluated in the context of the test HUD 
established and the specific factual circumstances applicable to each 
transaction in which a yield spread premium is used.
    The 1999 Statement of Policy established a two-part test for 
determining whether lender payments to mortgage brokers are legal under 
RESPA. In applying Section 8 and HUD's regulations, the 1999 Statement 
of Policy stated:

    In transactions where lenders make payments to mortgage brokers, 
HUD does not consider such payments (i.e., yield spread premiums or 
any other class of named payments) to be illegal per se. HUD does 
not view the name of the payment as the appropriate issue under 
RESPA. HUD's position that lender payments to mortgage brokers are 
not illegal per se does not imply, however, that yield spread 
premiums are legal in individual cases or classes of transactions. 
The fees in cases and classes of transactions are illegal if they 
violate the prohibitions of Section 8 of RESPA.
    In determining whether a payment from a lender to a mortgage 
broker is permissible under Section 8 of RESPA, the first question 
is whether goods or facilities were actually furnished or services 
were actually performed for the compensation paid. The fact that 
goods or facilities have been actually furnished or that services 
have been actually performed by the mortgage broker does not by 
itself make the payment legal. The second question is whether the 
payments are reasonably related to the value of the goods or 
facilities that were actually furnished or services that were 
actually performed.
    In applying this test, HUD believes that total compensation 
should be scrutinized to assure that it is reasonably related to 
goods, facilities, or services furnished or performed to determine 
whether it is legal under RESPA. Total compensation to a broker 
includes direct origination and other fees paid by the borrower, 
indirect fees, including those that are derived from the interest 
rate paid by the borrower, or a combination of some or all. The 
Department considers that higher interest rates alone cannot justify 
higher total fees to mortgage brokers. All fees will be scrutinized 
as part of total compensation to determine that total compensation 
is reasonably related to the goods or facilities actually furnished 
or services actually performed. HUD believes that total compensation 
should be carefully considered in relation to price structures and 
practices in similar transactions and in similar markets. 64 FR 
10084.
Culpepper
    The need for further clarification of HUD's position, as set forth 
in the 1999 Statement of Policy, on the treatment of lender payments to 
mortgage brokers under Section 8 of RESPA (12 U.S.C. 2607), is evident 
from the recent decision of the Court of Appeals for the Eleventh 
Circuit in Culpepper.
    In upholding class certification in Culpepper, the court only 
applied the first part of the HUD test, and then further narrowed its 
examination of whether the lender's yield spread payments were ``for 
services'' by focusing exclusively on the presumed intent of the lender 
in making the payments. The crux of the court's decision is that 
Section 8 liability for the payment of unlawful referral fees could be 
established under the first part of the HUD test alone, based on the 
facts that the lender's payments to mortgage brokers were calculated 
solely on the difference between the par interest rate and the higher 
rate at which the mortgage brokers delivered loans, and that the lender 
had no knowledge of what services, if any, the brokers had performed.
    HUD was not a party to the case and disagrees with the judicial 
interpretation regarding Section 8 of

[[Page 53055]]

RESPA and the 1999 Statement of Policy.
Clarification of the HUD Test
    It is HUD's position that where compensable services are performed, 
the 1999 Statement of Policy requires application of both parts of the 
HUD test before a determination can be made regarding the legality of a 
lender payment to a mortgage broker.
    1. The First Part of the HUD Test: Under the first part of HUD's 
test, the total compensation to a mortgage broker, of which a yield 
spread premium may be a component or the entire amount, must be for 
goods or facilities provided or services performed. HUD's position is 
that in order to discern whether a yield spread premium was for goods, 
facilities or services under the first part of the HUD test, it is 
necessary to look at each transaction individually, including examining 
all of the goods or facilities provided or services performed by the 
broker in the transaction, whether the goods, facilities or services 
are paid for by the borrower, the lender, or partly by both.
    It is HUD's position that neither Section 8(a) of RESPA nor the 
1999 Statement of Policy supports the conclusion that a yield spread 
premium can be presumed to be a referral fee based solely upon the fact 
that the lender pays the broker a yield spread premium that is based 
upon a rate sheet, or because the lender does not have specific 
knowledge of what services the broker has performed. HUD considers the 
latter situation to be rare. The common industry practice is that 
lenders follow underwriting standards that demand a review of 
originations and that therefore lenders typically know that brokers 
have performed the services required to meet those standards.
    Yield spread premiums are by definition derived from the interest 
rate. HUD believes that a rate sheet is merely a mechanism for 
displaying the yield spread premium, and does not indicate whether a 
particular yield spread premium is a payment for goods and facilities 
actually furnished or services actually performed under the HUD test. 
Whether or not a yield spread premium is legal or illegal cannot be 
determined by the use of a rate sheet, but by how HUD's test applies to 
the transaction involved.
    Section 8 prohibits the giving and accepting of fees, kickbacks, or 
things of value for the referral of settlement services and also 
unearned fees. It is therefore prudent for a lender to take action so 
as to ensure that brokers are performing compensable services and 
receiving only compensation that, in total, is reasonable for those 
services provided. As stated, however, in the 1999 Statement of Policy:

    The Department recognizes that some of the goods or facilities 
actually furnished or services actually performed by the broker in 
originating a loan are ``for'' the lender and other goods or 
facilities actually furnished or services actually performed are 
``for'' the borrower. HUD does not believe that it is necessary or 
even feasible to identify or allocate which facilities, goods or 
services are performed or provided for the lender, for the borrower, 
or as a function of State or Federal law. All services, goods and 
facilities inure to the benefit of both the borrower and the lender 
in the sense that they make the loan transaction possible. * * * 64 
FR 10086.

    The 1999 Statement of Policy provided a list of compensable loan 
origination services originally developed by HUD in a response to an 
inquiry from the Independent Bankers Association of America (IBAA), 
which HUD considers relevant in evaluating mortgage broker services. In 
analyzing each transaction to determine if services are performed HUD 
believes the 1999 Statement of Policy should be used as a guide. As 
stated there, the IBAA list is not exhaustive, and while technology is 
changing the process of performing settlement services, HUD believes 
that the list is still a generally accurate description of settlement 
services. Compensation for these services may be paid either by the 
borrower or by the lender, or partly by both. Compensable services for 
the first part of the test do not include referrals or no, nominal, or 
duplicative work.
    2. Reasonableness of Broker Fees: The second part of HUD's test 
requires that total compensation to the mortgage broker be reasonably 
related to the total set of goods or facilities actually furnished or 
services performed.
    The 1999 Statement of Policy said in part:

    The Department considers that higher interest rates alone cannot 
justify higher total fees to mortgage brokers. All fees will be 
scrutinized as part of total compensation to determine that total 
compensation is reasonably related to the goods or facilities 
actually furnished or services actually performed. 64 FR 10084.

    Accordingly, the Department believes that the second part of the 
test is applied by determining whether a mortgage broker's total 
compensation is reasonable. Total compensation includes fees paid by a 
borrower and any yield spread premium paid by a lender, not simply the 
yield spread premium alone. Yield spread premiums serve to allow the 
borrower a lower up front cash payment in return for a higher interest 
rate, while allowing the broker to recoup the total costs of 
originating the loan. Total compensation to the broker must be 
reasonably related to the total value of goods or facilities provided 
or services performed by the broker. Simply delivering a loan with a 
higher interest rate is not a compensable service. The Department 
affirms the 1999 Statement of Policy's position on this matter for 
purposes of RESPA enforcement.
    The 1999 Statement also said:

    In analyzing whether a particular payment or fee bears a 
reasonable relationship to the value of the goods or facilities 
actually furnished or services actually performed, HUD believes that 
payments must be commensurate with the amount normally charged for 
similar services, goods or facilities. This analysis requires 
careful consideration of fees paid in relation to price structures 
and practices in similar transactions and in similar markets. If the 
payment or a portion thereof bears no reasonable relationship to the 
market value of the goods, facilities or services provided, the 
excess over the market rate may be used as evidence of a compensated 
referral or an unearned fee in violation of Section 8(a) or (b) of 
RESPA. 64 FR 10086.

    The 1999 Statement of Policy also stated:

    The level of services mortgage brokers provide in particular 
transactions depends on the level of difficulty involved in 
qualifying applicants for particular loan programs. For example, 
applicants have differences in credit ratings, employment status, 
levels of debt, or experience that will translate into various 
degrees of effort required for processing a loan. Also, the mortgage 
broker may be required to perform various levels of services under 
different servicing or processing arrangements with wholesale 
lenders. 64 FR 10081.

    In evaluating mortgage broker fees for enforcement purposes, HUD 
will consider these factors as relevant in assessing the reasonableness 
of mortgage broker compensation, as well as comparing total 
compensation for loans of similar size and similar characteristics 
within similar geographic markets.
    Also, while the Department continues to believe that comparison to 
prices in similar markets is generally a key factor in determining 
whether a mortgage broker's total compensation is reasonable, it is 
also true that in less competitive markets comparisons to the prices 
charged by other similarly situated providers may not, standing alone, 
provide a useful measure. As a general principle, HUD believes that in 
evaluating the reasonableness of broker compensation in less 
competitive markets, consideration of price structures from a wider 
range of

[[Page 53056]]

providers may be warranted to reach a meaningful conclusion.

Part B. Providing Meaningful Information to Borrowers

    In addition to addressing the legality of yield spread premiums in 
the 1999 Statement of Policy, HUD emphasized the importance of 
disclosing broker fees, including yield spread premiums.

    There is no requirement under existing law that consumers be 
fully informed of the broker's services and compensation prior to 
the GFE. Nevertheless, HUD believes that the broker should provide 
the consumer with information about the broker's services and 
compensation, and agreement by the consumer to the arrangement 
should occur as early as possible in the process. 64 FR 10087.

    HUD continues to believe that disclosure is extremely important, 
and that many of the concerns expressed by borrowers over yield spread 
premiums can be addressed by disclosing yield spread premiums, borrower 
compensation to the broker, and the terms of the mortgage loan, so that 
the borrower may evaluate and choose among alternative loan options.
    In the 1999 Statement of Policy, HUD stated:

    * * * HUD believes that for the market to work effectively, 
borrowers should be afforded a meaningful opportunity to select the 
most appropriate product and determine what price they are willing 
to pay for the loan based on disclosures which provide clear and 
understandable information.
    The Department reiterates its long-standing view that disclosure 
alone does not make illegal fees legal under RESPA. On the other 
hand, while under current law, pre-application disclosure to the 
consumer is not required, HUD believes that fuller information 
provided at the earliest possible moment in the shopping process 
would increase consumer satisfaction and reduce the possibility of 
misunderstanding. 64 FR 10087.

    HUD currently requires the disclosure of yield spread premiums on 
the Good Faith Estimate and the HUD-1. The 1999 Statement of Policy 
said:

    The Department has always indicated that any fees charged in 
settlement transactions should be clearly disclosed so that the 
consumer can understand the nature and recipient of the payment. 
Code-like abbreviations like `YSP to DBG, POC', for instance, have 
been noted. [Footnote omitted.] Also the Department has seen 
examples on the GFE and/or the settlement statement where the 
identity and/or purposes of the fees are not clearly disclosed.
    The Department considers unclear and confusing disclosures to be 
contrary to the statute's and the regulation's purposes of making 
RESPA-covered transactions understandable to the consumer. At a 
minimum, all fees to the mortgage broker are to be clearly labeled 
and properly estimated on the GFE. On the settlement statement, the 
name of the recipient of the fee (in this case, the mortgage broker) 
is to be clearly labeled and listed, and the fee received from a 
lender is to be clearly labeled and listed in the interest of 
clarity. 64 FR 10086-10087.
    While the disclosure on the GFE and HUD-1 is required, the 
Department is aware and has stated that the current GFE/HUD-1 
disclosure framework is often insufficient to adequately inform 
consumers about yield spread premiums and other lender paid fees to 
brokers. Under the current rules, the GFE need not be provided until 
after the consumer has applied for a mortgage and may have paid a 
significant fee, and the HUD-1 is only given at closing. Because of 
this, HUD has in recent years sought to foster a more consumer 
beneficial approach to disclosure regarding yield spread premiums 
through successive rulemaking efforts. This history is discussed more 
fully in the 1999 Statement of Policy.\2\
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    \2\ In both the HUD/Federal Reserve Board Report on RESPA/TILA 
Reform, 1998, and the HUD/Treasury Report on Curbing Predatory Home 
Mortgage Lending, 2000, the agencies recommended earlier disclosures 
to facilitate shopping and lower settlement costs.
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    Representatives of the mortgage industry have said that since the 
1999 Statement of Policy, many brokers provide borrowers a disclosure 
describing the function of mortgage brokers and stating that a mortgage 
broker may receive a fee in the transaction from the lender. While the 
1999 Statement of Policy commended the National Association of Mortgage 
Brokers and the Mortgage Bankers Association of America for strongly 
suggesting such a disclosure to their respective memberships, the 
Statement of Policy added:

    Although this statement of policy does not mandate disclosures 
beyond those currently required by RESPA and Regulation X, the most 
effective approach to disclosure would allow a prospective borrower 
to properly evaluate the nature of the services and all costs for a 
broker transaction, and to agree to such services and costs before 
applying for a loan. Under such an approach, the broker would make 
the borrower aware of whether the broker is or is not serving as the 
consumer's agent to shop for a loan, and the total compensation to 
be paid to the mortgage broker, including the amounts of each of the 
fees making up the compensation. 64 FR 10087.

    In HUD's view, meaningful disclosure includes many types of 
information: what services a mortgage broker will perform, the amount 
of the broker's total compensation for performing those services 
(including any yield spread premium paid by the lender), and whether or 
not the broker has an agency or fiduciary relationship with the 
borrower. The disclosure should also make the borrower aware that he or 
she may pay higher up front costs for a mortgage with a lower interest 
rate, or conversely pay a higher interest rate in return for lower up 
front costs, and should identify the specific trade-off between the 
amount of the increase in the borrower's monthly payment (and also the 
increase in the interest rate) and the amount by which up front costs 
are reduced. HUD believes that disclosure of this information, and 
written acknowledgment by the borrower that he or she has received the 
information, should be provided early in the transaction. Such 
disclosure facilitates comparison shopping by the borrower, to choose 
the best combination of up front costs and mortgage terms from his or 
her individual standpoint. HUD regards full disclosure and written 
acknowledgment by the borrower, at the earliest possible time, as a 
best practice.
    Yield spread premiums are currently required to be listed in the 
``800'' series of the HUD-1 form, listing ``Items Payable in Connection 
with Loan.'' This existing practice, however, does not disclose the 
purpose of the yield spread premium, which is to lower up front cost to 
borrowers. To achieve this end it has been suggested to the Department 
that the yield spread premium should be reported as a credit to the 
borrower in the ``200'' series, among the ``Amounts Paid by or in 
Behalf of Borrowers.'' The homebuyer or homeowner could then see that 
the yield spread premium is reducing closing costs, and also see the 
extent of the reduction.
    HUD believes that improved early disclosure regarding mortgage 
broker compensation and the entry of yield spread premiums as credits 
to borrowers on the GFE and the HUD-1 settlement statement are both 
useful and complementary forms of disclosure. The Department believes 
that used together these methods of disclosure offer greater assurance 
that lender payments to mortgage brokers serve borrowers' best 
interests.
    While the 1999 Policy Statement and IV. Part A. of this Statement 
only cover certain lender payments to mortgage brokers, as described 
above, HUD also believes that similar information on the trade-off 
between lower up front costs and higher interest rates and monthly 
payments should be disclosed to borrowers on all mortgage loan 
originations, not merely those originated by brokers. HUD is aware that 
while yield spread premiums are not used in loans originated by 
lenders, lenders are able to offer loans with low or no up

[[Page 53057]]

front costs required at closing by charging higher interest rates and 
recouping the costs by selling the loans into the secondary market for 
a price representing the difference between the interest rate on the 
loan and the par, or market, interest rate. Sale of such a loan 
achieves the same purpose as the yield spread premium does on a loan 
originated by a broker. The Department strongly believes that all 
lenders and brokers should provide the level of consumer disclosure 
that the purposes of RESPA intend and that fair business practices 
demand. As indicated in the 1999 Statement of Policy, HUD emphasizes 
that fuller information provided as early as possible in the shopping 
process would increase consumer satisfaction and reduce the possibility 
of misunderstanding. In the future, full and early disclosures are 
factors that the Department would weigh favorably in exercising its 
enforcement discretion in cases involving mortgage broker fees. 
Nevertheless, the Department also again makes clear that disclosure 
alone does not make illegal fees legal under RESPA. The Department will 
scrutinize all relevant information in making enforcement decisions, 
including whether transactions evidence practices that may be illegal.

Part C. Section 8(b) Unearned Fees

A. Background
    RESPA was enacted in 1974 to provide consumers ``greater and more 
timely information on the nature of the costs of the [real estate] 
settlement process'' and to protect consumers from ``unnecessarily high 
settlement charges caused by certain abusive practices * * *'' 12 
U.S.C. 2601.
    Since RESPA was enacted, HUD has interpreted Section 8(b) as 
prohibiting any person from giving or accepting any unearned fees, 
i.e., charges or payments for real estate settlement services other 
than for goods or facilities provided or services performed. Payments 
that are unearned fees for settlement services occur in, but are not 
limited to, cases where: (1) Two or more persons split a fee for 
settlement services, any portion of which is unearned; or (2) one 
settlement service provider marks-up the cost of the services performed 
or goods provided by another settlement service provider without 
providing additional actual, necessary, and distinct services, goods, 
or facilities to justify the additional charge; or (3) one settlement 
service provider charges the consumer a fee where no, nominal, or 
duplicative work is done, or the fee is in excess of the reasonable 
value of goods or facilities provided or the services actually 
performed.
    In the first situation, two settlement service providers split or 
share a fee charged to a consumer and at least part, if not all, of at 
least one provider's share of the fee is unearned. In the second 
situation, a settlement service provider charges a fee to a consumer 
for another provider's services that is higher than the actual price of 
such services, and keeps the difference without performing any actual, 
necessary, and distinct services to justify the additional charge. In 
the third situation, one settlement service provider charges a fee to a 
consumer where no work is done or the fee exceeds the reasonable value 
of the services performed by that provider, and for this reason the fee 
or any portion thereof for which services are not performed is 
unearned.
    HUD regards all of these situations as legally indistinguishable, 
in that they involve payments for settlement services where all or a 
portion of the fees are unearned and, thus, are violative of the 
statute. HUD, therefore, specifically interprets Section 8(b) as not 
being limited to situations where at least two persons split or share 
an unearned fee for the provision to be violated.
    As already indicated in this Statement of Policy, meaningful 
disclosure of all charges and fees is essential under RESPA. Such 
disclosures help protect consumers from paying unearned or duplicate 
fees. However, as noted above, in the 1999 Statement of Policy the 
Department reiterated ``its long-standing view that disclosure alone 
does not make illegal fees legal under RESPA.'' 64 FR 10087.
B. HUD's Guidance and Regulations
    HUD guidance and regulations have consistently interpreted Section 
8 as prohibiting all unearned fees. In 1976, HUD issued a Settlement 
Costs Booklet that provided that ``[i] t is also illegal to charge or 
accept a fee or part of a fee where no service has actually been 
performed.'' 41 FR 20289 (May 17, 1976). Between 1976 and 1992, HUD 
indicated in informal opinions that unearned fees occur where there are 
excessive fees charged, regardless of the number of settlement service 
providers involved.\3\
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    \3\ See e.g., Old Informal Opinion (6), August 16, 1976 and Old 
Informal Opinion (65), April 4, 1980; Barron and Berenson, Federal 
Regulation of Real Estate and Mortgage Lending, (4th Ed.1998). On 
November 2, 1992 (57 F.R. 49600), when HUD issued revisions to its 
RESPA regulations, it withdrew all of its informal counsel opinions 
and staff interpretations issued before that date. The 1992 rule 
provided, however, that courts and administrative agencies could use 
HUD's previous opinions to determine the validity of conduct 
occurring under the previous version of Regulation X. See 24 CFR 
3500.4(c).
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    In the preamble to HUD's 1992 final rule revising Regulation X (57 
FR 49600 (November 2, 1992)), HUD stated: ``Section 8 of RESPA (12 
U.S.C. 2607) prohibits kickbacks for referral of business incident to 
or part of a settlement service and also prohibits the splitting of a 
charge for a settlement service, other than for services actually 
performed (i.e., no payment of unearned fees).'' 57 FR 49600 (November 
2, 1992).
    HUD's regulations, published on November 2, 1992, implement Section 
8(b). Section 3500.14(c)\4\ provides:
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    \4\ The heading to 24 CFR 3500.14 is titled ``Prohibition 
against kickbacks and unearned fees.'' However, the heading of 
subsection (c) is titled ``split of charges,'' and the preamble to 
the November 1992 rule states ``[s]ection 8 of RESPA (12 U.S.C. 
2607) prohibits kickbacks for referral of business incident to or 
part of a settlement service and also prohibits the splitting of a 
charge for a settlement service, other than for services actually 
performed (i.e., no payment of unearned fees).'' 57 FR 49600 
(November 2, 1992). The rule headings and preamble text are a 
generalized description of Section 8 that is more developed in the 
actual regulation text. As discussed in Section D of this Statement 
of Policy, HUD believes that the actual text of the rules, as 
amended in 1992, makes clear that Section 8(b)'s prohibitions 
against unearned fees apply even when only one settlement service 
provider is involved.

    No person shall give and no person shall accept any portion, 
split, or percentage of any charge made or received for the 
rendering of a settlement service in connection with a transaction 
involving a federally-related mortgage loan other than for services 
actually performed. A charge by a person for which no or nominal 
services are performed or for which duplicative fees are charged is 
an unearned fee and violates this Section. The source of the payment 
does not determine whether or not a service is compensable. Nor may 
the prohibitions of this part be avoided by creating an arrangement 
---------------------------------------------------------------------------
wherein the purchaser of services splits the fee.

24 CFR 3500.14(g)(2) states in part:

    The Department may investigate high prices to see if they are 
the result of a referral fee or a split of a fee. If the payment of 
a thing of value bears no reasonable relationship to the market 
value of the goods or services provided, then the excess is not for 
services or goods actually performed or provided. These facts may be 
used as evidence of a violation of Section 8 and may serve as a 
basis for a RESPA investigation. High prices standing alone are not 
proof of a RESPA violation.

24 CFR 3500.14(g)(3) provides in part:

    When a person in a position to refer settlement service business 
* * * receives a payment for providing additional settlement 
services as part of a real estate transaction, such payment must be 
for services that are actual, necessary and distinct from the 
primary services provided by such person.


[[Page 53058]]


    In Appendix B to the HUD RESPA regulations, HUD provides 
illustrations of the requirements of RESPA. Comment 3 states in part:

    The payment of a commission or portion of the * * * premium * * 
* or receipt of a portion of the payment * * * where no substantial 
services are being performed * * * is a violation of Section 8 of 
RESPA. It makes no difference whether the payment comes from [the 
settlement service provider] or the purchaser. The amount of the 
payment must bear a reasonable relationship to the services 
rendered. Here [the real estate broker in the example] is being 
compensated for a referral of business to [the title company].

    In 1996, in the preamble to the final rule on the Withdrawal of 
Employer/Employee and Computer Loan Origination Systems Exemptions \5\ 
(61 FR 29238 (June 7, 1996)), HUD reiterated its interpretation of 
Section 8(b) of RESPA as follows:
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    \5\ This final rule was delayed by legislation, but the 
Department implemented portions of the final rule that were not 
affected by the legislative delay on November 15, 1996. 61 FR 58472 
(November 15, 1996).

    HUD believes that Section 8(b) of the statute and the 
legislative history make clear that no person is allowed to receive 
`any portion' of charges for settlement services, except for 
services actually performed. The provisions of Section 8(b) could 
apply in a number of situations: (1) where one settlement service 
provider receives an unearned fee from another provider; (2) where 
one settlement service provider charges the consumer for third-party 
services and retains an unearned fee from the payment received; or 
(3) where one settlement service provider accepts a portion of a 
charge (including 100% of the charge) for other than services 
actually performed. The interpretation urged [by the commenters to 
the proposed rule published on July 21, 1994], that a single 
settlement service provider can charge unearned or excessive fees so 
long as the fees are not shared with another, is an unnecessarily 
restrictive interpretation of a statute designed to reduce 
unnecessary costs to consumers. The Secretary, charged by statute 
with interpreting RESPA, interprets Section 8(b) to mean that two 
persons are not required for the provision to be violated. 61 FR 
---------------------------------------------------------------------------
29249.

    The latest revision to the Settlement Costs Booklet for consumers, 
issued in 1997, also provides ``[i]t is also illegal for anyone to 
accept a fee or part of a fee for services if that person has not 
actually performed settlement services for the fee.'' 62 FR 31998 (June 
11, 1997).
    Further, HUD has provided information to the public and the 
mortgage industry in the ``Frequently Asked Questions'' section of its 
RESPA Web site, located at http://www. hud.gov/fha/sfh/res/resindus.html>. Question 25 states:

    Can a lender collect from the borrower an appraisal fee of $200, 
listing the fee as such on the HUD-1, yet pay an independent 
appraiser $175 and collect the $25 difference?

The answer reads:

    No, the lender may only collect $175 as the actual charge. It is 
a violation of Section 8(b) for any person to accept a split of a 
fee where services are not performed.

    In 1999, by letter submitted at the request of the Superior Court 
of California, Los Angeles County, in the case of Brown v. Washington 
Mutual Bank (Case No. BC192874), HUD provided the following response to 
a specific question posed by the court on lender ``markups'' of another 
settlement service provider's fees:

    A lender that purchases third party vendor services for purposes 
of closing a federally related mortgage loan may not, under RESPA, 
mark up the third party vendor fees for purposes of making a profit. 
HUD has consistently advised that where lenders or others charge 
consumers marked-up prices for services performed by the third party 
providers without performing additional services, such charges 
constitute ``splits of fees'' or ``unearned fees'' in violation of 
Section 8(b) of RESPA.

HUD noted in its letter to the court that the response reflected the 
Department's long-standing position.
C. Recent Cases
    Notwithstanding HUD's regulations and other guidance, the Court of 
Appeals for the Seventh Circuit held, in Echevarria v. Chicago Title 
and Trust Co., 256 F.3d 623 (7th Cir. 2001), that Section 8(b) was not 
violated where a title company, without performing any additional 
services, charged the plaintiffs more money than was required by the 
recorder's office to record a deed and the title company then retained 
the difference. The court reasoned that plaintiffs ``failed to plead 
facts tending to show that Chicago Title illegally shared fees with the 
Cook County Recorder. The Cook County Recorder received no more than 
its regular recording fees and it did not give to or arrange for 
Chicago Title to receive an unearned portion of these fees. The County 
Recorder has not engaged in the third party involvement necessary to 
state a claim under [RESPA Sec. 8(b)].'' Id. at 626. The court in 
essence concluded that unearned fees must be passed from one settlement 
provider to another in order for such fees to violate Section 8(b).
    Earlier, in Willis v. Quality Mortgage USA, Inc., 5 F. Supp. 2d 
1306 (M.D. Ala. 1998), cited by the Seventh Circuit in support of its 
conclusion, the district court concluded that 24 CFR 3500.14(c), 
``[w]hen read as a whole,'' prohibits payments for which no services 
are performed ``only if those payments are split with another party.'' 
Id. at 1309. The Willis court held that there must be a split of a 
charge between a settlement service provider and a third party to 
establish a violation Section 8(b). The court also concluded that 24 
CFR 3500.14(g)(3) only applied when there was a payment from a lender 
to a broker, or vice versa. The payment from a borrower to a mortgage 
lender could not be the basis for a violation of 24 CFR 3500.14(g)(3) 
and Section 8(b).
    HUD was not a party to the cases and disagrees with these judicial 
interpretations of Section 8(b) which it regards as inconsistent with 
HUD's regulations and HUD's long-standing interpretations of Section 
8(b).
D. Unearned Fees Under Section 8(b)
    This Statement of Policy reaffirms HUD's existing, long-standing 
interpretation of Section 8(b) of RESPA. Sections 8(a) and (b) of RESPA 
contain distinct prohibitions. Section 8(a) prohibits the giving or 
acceptance of any payment pursuant to an agreement or understanding for 
the referral of settlement service business involving a federally 
related mortgage loan; it is intended to eliminate kickbacks or 
compensated referral arrangements among settlement service providers. 
Section 8(b) prohibits the giving or accepting of any portion, split, 
or percentage of any charge other than for goods or facilities provided 
or services performed; it is intended to eliminate unearned fees. Such 
fees are contrary to the Congressional finding when enacting RESPA that 
consumers need protection from unnecessarily high settlement charges. 
12 U.S.C. 2601(a).
    It is HUD's position that Section 8(b) proscribes the acceptance of 
any portion or part of a charge other than for services actually 
performed. Inasmuch as Section 8(b)'s proscription against ``any 
portion, split, or percentage'' of an unearned charge for settlement 
services is written in the disjunctive, the prohibition is not limited 
to a split. In HUD's view, Section 8(b) forbids the paying or accepting 
of any portion or percentage of a settlement service--including up to 
100%--that is unearned, whether the entire charge is divided or split 
among more than one person or entity or is retained by a single person. 
Simply put, given that Section 8(b) proscribes unearned portions or 
percentages as well as splits, HUD does not regard the provision as 
restricting only fee splitting among settlement service providers. 
Further, since Section 8(b) on its face prohibits

[[Page 53059]]

the giving or accepting of an unearned fee by any person, and 24 CFR 
3500.14(c) speaks of a charge by ``a person,'' it is also incorrect to 
conclude that the Section 8(b) proscription covers only payments or 
charges among settlement service providers.\6\
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    \6\ HUD is, of course, unlikely to direct any enforcement 
actions against consumers for the payment of unearned fees, because 
a consumer's intent is to make payment for services, not an unearned 
fee.
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    A settlement service provider may not levy an additional charge 
upon a borrower for another settlement service provider's services 
without providing additional services that are bona fide and justify 
the increased charge. Accordingly, a settlement service provider may 
not mark-up the cost of another provider's services without providing 
additional settlement services; such payment must be for services that 
are actual, necessary and distinct services provided to justify the 
charge. 24 CFR 3500.14(g)(3).\7\ The HUD regulation implementing 
Section 8(b) states: ``[a] charge by a person for which no or nominal 
services are performed or for which duplicative fees are charged is an 
unearned fee and violates this Section.'' 24 CFR 3500.14 (c).
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    \7\ HUD notes that some lenders have charged an additional fee 
merely for ``reviewing'' another settlement service provider's 
services. HUD does not regard such ``review'' as constituting an 
actual, necessary, or distinct additional service permissible under 
HUD's regulations.
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    The regulations also make clear that a charge by a single service 
provider where little or no services are performed is an unearned fee 
that is prohibited by the statute. 24 CFR 3000.14(c). A single service 
provider is also prohibited from charging a duplicative fee. Further, a 
single service provider cannot serve in two capacities, e.g., a title 
agent and closing attorney, and be paid twice for the same service. The 
fee the service provider would be receiving in this case is duplicative 
under 24 CFR 3000.14(c) and not necessary and distinct under 24 CFR 
3000.14(g)(3). Clearly, in all of these instances, the source of the 
payment--whether from consumers, other settlement service providers, or 
other third parties--is not relevant in determining whether the fee is 
earned or unearned because ultimately, all settlement payments come 
directly or indirectly from the consumer. See 24 CFR 3500.14(c). 
Therefore, a single settlement service provider violates Section 8(b) 
whenever it receives an unearned fee.
    A single service provider also may be liable under Section 8(b) 
when it charges a fee that exceeds the reasonable value of goods, 
facilities, or services provided. HUD's regulations as noted state: 
``If the payment of a thing of value bears no relationship to the goods 
or services provided, then the excess is not for services or goods 
actually performed or provided.'' 24 CFR 3500.14(g)(2). Section 8(c)(2) 
only allows ``the payment to any person of a bona fide salary or 
compensation or other payment for goods or facilities actually 
furnished or services actually performed,'' i.e., permitting only that 
compensation which is reasonably related to the goods or facilities 
provided or services performed. Compensation that is unreasonable is 
unearned under Section 8(b) and is not bona fide under Section 8(c)(2).
    The Secretary, therefore, interprets Section 8(b) of RESPA to 
prohibit all unearned fees, including, but not limited to, cases where: 
(1) Two or more persons split a fee for settlement services, any 
portion of which is unearned; or (2) one settlement service provider 
marks-up the cost of the services performed or goods provided by 
another settlement service provider without providing additional 
actual, necessary, and distinct services, goods, or facilities to 
justify the additional charge; or (3) one service provider charges the 
consumer a fee where no, nominal, or duplicative work is done, or the 
fee is in excess of the reasonable value of goods or facilities 
provided or the services actually performed.

V. Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) has reviewed this 
Statement of Policy in accordance with Executive Order 12866, 
(captioned ``Regulatory Planning and Review''). OMB determined that 
this Statement of Policy is a ``significant regulatory action'' as 
defined in Section 3(f) of the Order (although not an economically 
significant regulatory action under the Order). Any changes to the 
Statement of Policy resulting from this review are available for public 
inspection between 7:30 a.m. and 5:30 p.m. weekdays in the Office of 
the Rules Docket Clerk.

    Dated: October 15, 2001.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 01-26321 Filed 10-15-01; 4:51 pm]
BILLING CODE 4210-27-P