A little too Late…crash happened! HUD reconsiders RESPA rule on incentives

Now if “steering” was involved…

WASHINGTON – June 4, 2010 – The U.S. Department of Housing and Urban Development (HUD) is taking a closer look at the Real Estate Settlement Procedures Act’s (RESPA) prohibition against the “required use” of affiliated settlement service providers. DinSFLA: They need to take a closer look if these were part of “Appraisal Fraud” & “Illegal Kickbacks”.

It violates RESPA if a consumer is required to use a particular mortgage lender, title company or other settlement service provider that’s affiliated with another business in their mortgage transaction. However, it’s less clear whether it’s a RESPA violation if it is offered as a discount or other incentive to steer them to a lender, title company, etc. DinSFLA: COERCION or not COERCE is the Question! I wonder what they would think of the Mills using their own title companies to close on their foreclosures? Any violations?

HUD is currently trying to determine if incentives violate the “required use” requirement. As part of the process, HUD published a notice about the issue and is seeking public comment.

HUD took the step because it has received a number of consumer complaints, many of which focused on a home builder that might reduce the cost of a home (by adding free construction upgrades or by discounting the home price) if the homebuyer uses the developer or builder’s affiliated mortgage lender. In some cases, the incentives may not represent true discounts if the homebuyers ultimately pay more in total loan costs.

According to HUD, consumers also say that the timing of the contract with the builder precludes them from shopping around, and the builder’s lender can then charge higher settlement costs or interest rates not competitive with non-affiliated lenders. HUD says that the steering of clients ” effectively violates” the “required use” ban in RESPA.

“It is our intent to keep an open mind on how to approach this vexing question over what is, and what is not, ‘required use,'” says David Stevens, HUD’s Assistant Secretary for Housing/Federal Housing Commissioner. “Clearly, consumers are complaining that they are being presented offers they believe they can’t refuse, and are essentially being required to use certain affiliated service providers.”

HUD’s current definition of “required use” reads:

“Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process.”

HUD’s call for comments is published in the Federal Register. To view the document (PDF format), go to:http://edocket.access.gpo.gov/2010/pdf/2010-13350.pdf

Comments must refer to the docket number and title:

Docket No. FR–5352–A–01 RIN 2502–A178 Real Estate Settlement Procedures Act (RESPA): Strengthening and Clarifying RESPA’s “Required Use” Prohibition Advance Notice of Proposed Rulemaking.

Comment due date: Sept. 1, 2010.

HUD strongly encourages people to submit comments electronically through the Federal eRulemaking Portal atwww.regulations.gov.

Comments can also be mailed to:

ANPR to the Regulations Division Office of General Counsel Department of Housing and Urban Development

451 7th Street, SW. Room 10276

Washington, DC 20410–0500

No FAX comments are accepted.

© 2010 Florida Realtors®

RELATED STORY:

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

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ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

YOU MUST use Sellers Title Company! If you BUY before 6/30 I will give you an extra 3.5% towards your CC!
YOU MUST use Sellers Title Company! If you do by 6/30 I will give you an extra 3.5% towards your CC!
Found this in Trulia but it may get deleted once this is posted. It’s ok …thanks to Baby Jesus I saved it! But it goes exactly like this:

fannie mae owned.bank property. property is vacant.all offers requiring financing must have preapproval letter.all cash offer require proof of fund(see attachement).this property is eligible for home path renovation mortgage-as little as 3% down.buyer must close with seller closing agent(david j. stern law offices,p.a).investors not eligible for first 15days.*for showing instr please read broker remarks* note:offers must be submitted using attachment.close by 30 june and receive extra 3.5% in closing cost

Looking further into this I noticed the following:

  • Still in the name of the owner
  • NOT named under any REO
  • Home last sold for 245K
  • Now listed at 120K

Here is the BIGGEST:

I found a Bank-owned packet for this “SPECIALLY SELECTED” Agent/BROKER in many other REO’s and in this package it states the following:

9) Which title companies are the sellers and who do I make out the earnest money deposit to once offer is verbally accepted?

a. PLEASE LOOK ON MLX REMARKS FOR TITLE COMPANY. MLX WILL HAVE ONE OF THE FOLLOWING:
i. David Stern, P.A.
ii. Marshall C. Watson, P.A.
iii. Smith, Hiatt, & Diaz, P.A.
iv. Butler & Hosch, P.A.
v. Shapiro & Fishman, P.A.
vi. Spear & Hoffman, P.A.
vii. Adorno & Yoss, P.A.
viii. Watson Title

ix. New House Title (This is registered with FDLG address 9119 CORPORATE LAKE DRIVE, SUITE 300 TAMPA FL 33634)

10) Can the buyer use their own title company or must they use the title company selected by seller?

a. The buyer MUST HOLD ESCROW with Fannie Mae Title Company as stated on MLX.

NOW are we unleashing another dimension to this never ending SAGA?

We recently found out about WTF!!! DJSP Enterprises, Inc. Announces Agreement to Acquire Timios, Inc., Expand Presence Into 38 States , so is this a way for the Mills to Monopolize on the sales of these properties??

HERE IS same Agent/Broker for a FLORIDA DEFAULT LAW GROUP property:

THIS IS FANNIE MAE HOMEPATH PROPERTY.BANK OWNED.ALL OFFERS REQUIRING FINANCING MUST HAVE PREAPPROVAL LETTER. ALL CASH OFFERS REQUIRE PROOF OF FUNDS. THIS PROPERTY IS APPROVED FOR HOMEPATH AND HOMEPATH RENOVATION MORTGAGE FINANCING-AS LITTLE AS 3% DOWN,NO APPRAISAL OR MORTGAGE INSURANCE REQUIRED! ** FOR SHOWING INST PLEASE READ BROKER REMARKS** YOU MUST SUBMIT OFFER USING ATTACHMENT! INVESTORS NOT ELIGIBLE FOR FIRST 15DAYS.CLOSE BY JUNE 30 TO BE ELIGIBLE FOR EXTRA 3.5% SC. EMD: FL DEFAULT LAW GROUP.

Here is another same Agent/Broker for MARSHALL C. WATSON property:

FANNIE MAE OWNED.BANK PROPERTY. PROPERTY IS VACANT.ALL OFFERS REQUIRING FINANCING MUST HAVE PREAPPROVAL LETTER.ALL CASH OFFERS REQUIRE PROOF OF FUNDS(SEE ATTACHEMENT).THIS PROPERTY IS ELIGIBLE FOR HOME PATH RENOVATION MORTGAGE-AS LITTLE AS 3% DOWN.BUYER MUST CLOSE WITH SELLER CLOSING AGENT (LAW OFFICES OF MARSHALL C. WATSON).INVESTOR NOT ELIGIBLE FOR FIRST 15DAYS.*FOR SHOWING INSTR PLEASE READ BROKER REMARK* NOTE:OFFERS MUST BE SUBMITTED USING ATTACHMENT.CLOSE BY JUNE 30 TO GET 3.5% EXTRA IN CLOSING COST

Does the JUNE 30th Closing Day have any significance??

MAYBE it’s because of this? MERS May NOT Foreclose for Fannie Mae effective 5/1/2010I am just trying to make sense of this…Is there a grace period that followed?

  • What “if” the BUYER selects their own Title company? Does this eliminate their chances of ever even being considered as a buyer?
  • Why even bother to state this?
  • Is this a way for the selected Agent/ Broker to find the buyer and discourage other agents or buyers from viewing?
  • Was this at all even necessary to state?
  • Is this verbiage to coerce agents to get a higher commission rather than pass down the incentive of 3.5% towards closing cost “if” under contract by 6/30?
  • Why do investors have to refrain from buying for the first 15 days?

Coercion (pronounced /koʊˈɜrʃən/) is the practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, trickery, or some other form of pressure or force. Such actions are used as leverage, to force the victim to act in the desired way. Coercion may involve the actual infliction of physical pain/injury or psychological harm in order to enhance the credibility of a threat. The threat of further harm may lead to the cooperation or obedience of the person being coerced. Torture is one of the most extreme examples of coercion i.e. severe pain is inflicted until the victim provides the desired information.

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LENDER PROCESSING SERVICES (LPS) BUYING UP HOMES AT AUCTIONS? Take a look to see if this address is on your documents!