The document provides an overview of the Real Estate Settlement Procedures Act (RESPA). It discusses RESPA's prohibitions against kickbacks and referral fees under Section 8, as well as exceptions. The summary also addresses RESPA's prohibition on sellers requiring the use of title companies under Section 9 and servicing disclosure requirements under Section 6. The document is intended to help mortgage companies ensure compliance with RESPA through policies, procedures, and employee training. It analyzes permissible and prohibited conduct and includes enforcement actions as an exhibit.

1. MBA Compliance
Essentials
SM
ba
m
ed
Phillip L. Schulman
Partner
K&L Gates LLP
Holly Spencer Bunting
Partner
K&L Gates LLP
13597
g
or
n.
io
at
uc
Real Estate Settlement
Procedures Act (Part I)

2. MBA Compliance Essentials℠:
Loan Originator Compensation Rule Resource Guide
m
ba
Real Estate Settlement Procedures Act (Part I)
MBA Compliance Essentials
Resource Guide
g
or
n.
io
at
uc
ed
DC-9714376 v3

3. MBA Compliance Essentials℠:
RESPA I Resource Guide
DISCLAIMER
ba
m
PLEASE TAKE NOTE: These materials have been produced by K&L Gates LLP.
These materials are designed to provide the reader with a general overview and
understanding of certain provisions of the Real Estate Settlement Procedures Act
(“RESPA”). These materials are not intended to and do not provide legal advice,
and do not create an attorney-client relationship with the firm of K&L Gates LLP
and the recipient. These materials also do not necessarily reflect the opinions of
K&L Gates LLP or any of its attorneys or clients. Provisions of RESPA described
herein are, in many instances, paraphrased, and a careful reading of the relevant
laws, regulations or cases thereunder may reveal exceptions or different
interpretations that might be applicable to a particular set of facts. These
materials cover areas in which the proper interpretation of law and regulation can
be highly dependent upon particular facts. Accordingly, taking action simply
upon the basis of information provided in these materials is not advisable. The
materials are not a substitute for consultation with qualified legal counsel
regarding the manner in which the laws and regulations referenced herein may
be interpreted and applied to particular facts or to particular business models.
These materials are for informational and educational purposes only and are not
a solicitation and should not be construed as such. K&L Gates LLP expressly
disclaims all liability with respect to actions taken or not taken based on any or all
the contents of these materials.
g
or
n.
io
at
uc
ed
©2013 K&L Gates LLP
Copying or other unauthorized redistribution of this publication — in whole or in part — violates
U.S. copyright law. No part of this publication may be reproduced, stored in a retrieval system or
transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or
otherwise, without the prior written permission of the copyright owner.
MBA is not responsible for the content of these materials
-2-

4. MBA Compliance Essentials℠:
RESPA I Resource Guide
TABLE OF CONTENTS
Author Biographies and Information about the Firm………………………………..….……
Page 5
Introduction……………………………………………………………………….…………………
Page 9
RESPA Background………………………………………………………………………………..
Page 11
Part I: Scope of RESPA…………………………………………………………………………....
Page 13
Part II: Section 8 of RESPA: Prohibitions Against Kickbacks and Referral Fees……..
Page 16
m
Section 8(a) Anti-Kickback Provisions………………………………………………..
Page 16
Examples of Permissible and Prohibited Conduct…………………….....
Page 17
ba
Examples of Section 8(a) Enforcement Actions………………………......
Page 20
Section 8(b) Fee-Splitting Provisions…………………………………………………
Page 21
ed
Page 22
Section 8(c) Exceptions to the Anti-Kickbacks and Referral
Fee Prohibitions.......................................................................................................
Page 24
Affiliated Business Arrangements……………………………………………
Page 24
Payments for Services or Goods Provided…………………………...........
Page 32
Promotional and Educational Activities……………………………………..
Page 36
Payments from an Employer to its Employee……………………………...
Page 38
Cooperative Agreements Between Real Estate Brokers and/or
Agents……………………………………………………………………………..
Page 39
Payments by a Lender to its Duly Appointed Agent……………………...
Page 40
g
or
n.
io
at
uc
Examples of Permissible and Prohibited Conduct………………………..
Payments by a Title Company to its Duly Appointed Title
Agent for Services Performed in the Issuance of a Title Policy………...
Page 41
Payments to an Attorney for Services Actually Rendered……………….
Page 43
Summary…………………………………………………………………………..
Page 43
Section 8(d) Penalty Provisions………………………………………………………..
Page 43
Criminal Penalties……………………………………………………………….
Page 43
Treble Damages……………………………………………………………….....
Page 44
Injunctive Relief……………………………………………………………….....
Page 46
-3-

5. MBA Compliance Essentials℠:
RESPA I Resource Guide
Statute of Limitations…………………………………………………………...
Page 46
Regulator Enforcement Authority and Actions…………………………….
Page 46
Summary…………………………………………………………………………..
Page 47
Part III: Section 9 of RESPA: Prohibitions on the Required Use of Title
Companies…………………………………………………………………………………………...
Page 49
Part IV: Section 6 of RESPA: Servicing Disclosure Requirements……………………....
Page 51
Conclusion………………………………………………………………………………..………….
Page 53
m
Page 54
Exhibit B – Draft RESPA Policy and Procedures……………………………………………..
Page 64
Exhibit C – RESPA Compliance Checklist……………………………………………………..
Page 75
ba
Exhibit A – Summary of HUD and CFPB Section 8 RESPA Enforcement Actions……..
g
or
n.
io
at
uc
ed
-4-

6. MBA Compliance Essentials℠:
RESPA I Resource Guide
AUTHOR BIOGRAPHIES AND INFORMATION ABOUT THE FIRM
Phillip L. Schulman is a partner in the
Washington, DC office of K&L Gates LLP. Mr. Schulman
has a national practice specializing in a range of matters
related to real estate finance, mortgage banking and
consumer finance in both the primary and secondary
markets, including:
ba
m

ed
Representing companies in the mortgage lending,
home building, title insurance and real estate
industries in connection with administrative and
regulatory compliance matters, including those
involving the CFPB, HUD, VA, Ginnie Mae, Fannie
Mae, and Freddie Mac;
Advising clients on matters related to approval, origination and servicing
requirements under the Federal Housing Administration single-family loan
programs;

Defending companies in connection with governmental audits,
investigations and enforcement proceedings, before, among others, the
CFPB, HUD, VA, DOJ and FTC with specialties involving defense of False
Claims Act, FIRREA, Mortgagee Review Board and RESPA enforcement
matters;

Developing and analyzing proposed business plans, and drafting the
related agreements and disclosures, based upon applicable federal and
state laws, regulations and rules, such as the Dodd-Frank Act, Real Estate
Settlement Procedures Act, the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Housing Act, state
licensing laws, consumer credit laws, usury laws, unfair and deceptive
trade laws and real property laws; and

Assisting in litigation involving consumer class action lawsuits and
commercial claims.
g
or
n.
io
at
uc

Mr. Schulman is nationally ranked by Chambers USA 2012 under Financial
Services Regulation: Consumer Finance (Compliance) (Band 2). Mr. Schulman,
a member of the American College of Financial Services Lawyers, is also the
former General Counsel to the Home Improvement Lenders Association and was
the former Assistant General Counsel of the Inspector General and
-5-

7. MBA Compliance Essentials℠:
RESPA I Resource Guide
Administrative Proceedings Division, U.S. Department of Housing and Urban
Development.
Mr. Schulman is a frequent lecturer for seminars and conferences sponsored by
the Mortgage Bankers Association, the American Land Title Association, the
National Association of Realtors and other industry-related groups on various
legal issues involving real estate, title, mortgage banking and consumer finance.
ba
m
Mr. Schulman has authored dozens of articles on issues affecting the settlement
service industry, and is a contributor to Mortgage Banking magazine, October
Research’s The Title Report, NAR’s RESPA Realities and NAHB publications.
He is also co-author with Larry Platt of A Practical Guide to the Real Estate
Settlement Procedures Act, published by Warren Gorham & Lamont. Mr.
Schulman received his undergraduate degree in 1972 and his law degree in
1975 from Northeastern University.
*
*
*
*
ed
g
or
n.
io
at
uc
Holly Spencer Bunting is a partner in the Washington,
DC office of K&L Gates LLP. She practices in the areas
of mortgage banking and consumer finance, and
concentrates on issues of federal and state regulatory
compliance and enforcement. Ms. Bunting represents
companies in the mortgage lending, title insurance and
real estate industries in connection with regulatory
compliance matters, and defends clients subject to
government audits, investigations and enforcement
proceedings. Her practice also includes advising clients
about federal and state consumer credit and protection
laws and regulations, including the Real Estate
Settlement Procedures Act, and reviewing and
analyzing existing and proposed business
arrangements for compliance with federal and state
requirements.
In particular, Ms. Bunting specializes in assisting companies in complying with
RESPA’s Good Faith Estimate and HUD-1 Settlement Statement disclosures, as
well as reviewing business arrangements under Section 8 of RESPA. Ms.
Bunting also counsels mortgage companies related to approval, origination, and
servicing requirements under the Federal Housing Administration single-family
loan program and defends companies in connection with government
enforcement proceedings, including RESPA enforcement matters, FHA audits,
and CFPB investigations. She frequently publishes articles related to RESPA
and FHA issues in industry publications and is a regular speaker at webinars and
mortgage and title insurance industry events.
-6-

8. MBA Compliance Essentials℠:
RESPA I Resource Guide
Ms. Bunting received her J.D. in 2003 from the American University, Washington
College of Law, and was a Note and Comment Editor for the American University
Law Review. Ms. Bunting is licensed to practice law in the District of Columbia
and North Carolina. She received her B.A. in Political Science from the
University of North Carolina at Asheville in 2000.
*
*
*
*
ba
m
K&L Gates LLP’s Financial Services practice area
includes one of the largest and most experienced
consumer financial services practices in the United
States. The Consumer Financial Services group
divides its work among transactional, regulatory
compliance, government enforcement, licensing and
approvals, public policy and governmental affairs, and
litigation (including class action defense). With an
exceptional depth of knowledge and experience, the
group leads the way in assisting clients with navigating
the complex array of federal and state laws that
regulate their businesses, structuring transactions, and
defending private and government actions
io
at
uc
ed
Our strong presence in Washington, D.C. enhances our ability to work with the
various federal agencies that supervise financial service providers. Our close
proximity to those agencies is particularly useful in our efforts to obtain agency
approvals and defend against administrative enforcement actions. A number of
our lawyers have worked at various federal and state agencies including the
Department of Justice, the Department of Housing and Urban Development, and
state Offices of the Attorney General, and maintain good working relationships
with senior regulatory officials and key industry leaders.
n.
g
or
Our clients represent a cross-section of the financial services industry, including
traditional financial services companies (such as depository institutions,
mortgage banks, consumer finance companies, loan servicers, broker dealers,
investment banks, money services businesses, prepaid card issuers and sellers,
and payment systems providers), as well as non-financial companies that might
incidentally provide financial services to their customers (such as homebuilders,
retailers, title insurers and agencies, real estate brokers, relocation service
companies, and technology companies).
We also represent companies that support the consumer financial services
industry, but which do not provide services directly to consumers. For example,
we represent venture capital firms and hedge funds that invest in providers of
consumer financial services, rating agencies, vendor and appraisal management
companies, technology vendors to the financial services industry, and document
preparation companies.
-7-

9. MBA Compliance Essentials℠:
RESPA I Resource Guide
K&L Gates LLP comprises more than 2,000 lawyers who practice in 48 offices
located on five continents: Anchorage, Austin, Beijing, Berlin, Boston, Brisbane,
Brussels, Charleston, Charlotte, Chicago, Dallas, Doha, Dubai, Fort Worth,
Frankfurt, Harrisburg, Hong Kong, Houston, London, Los Angeles, Melbourne,
Miami, Milan, Moscow, Newark, New York, Orange County, Palo Alto, Paris,
Perth, Pittsburgh, Portland, Raleigh, Research Triangle Park, San Diego, San
Francisco, São Paulo, Seattle, Seoul, Shanghai, Singapore, Spokane, Sydney,
Taipei, Tokyo, Warsaw, Washington and Wilmington.
ba
m
g
or
n.
io
at
uc
ed
-8-

10. MBA Compliance Essentials℠:
RESPA I Resource Guide
INTRODUCTION
This manual is designed to provide a description of certain core requirements under the Real
Estate Settlement Procedures Act (“RESPA”) and information to assist mortgage companies in
structuring and testing their business operations to ensure compliance with RESPA. This manual
also can be used by mortgage companies as a template to craft policies and procedures
addressing compliance with RESPA, as well as training guides for employees and business
partners.
m
As discussed in more detail below, RESPA was enacted to address four primary issues:
consumer disclosures, escrow requirements, local recordkeeping and land records, and
kickbacks. This manual, however, will focus on RESPA’s anti-kickback requirements and certain
other provisions of RESPA that impact the origination of a mortgage loan. Specifically, after
providing a brief background regarding the purposes for RESPA and the current regulatory
environment, the manual is organized as follows:

Part I of this manual describes RESPA’s overall scope, including the kinds of services
and types of transactions to which RESPA applies. This section also highlights the kinds
of transactions that are not covered by RESPA.
ba

io
at
uc
ed
Part II discusses RESPA’s prohibitions against kickbacks and referral fees contained in
Section 8(a), RESPA’s prohibitions against the sharing of unearned fees in Section 8(b),
the kinds of payments and arrangements that are exempt from Section 8 and, thus,
permissible under the law, and the penalties and enforcement risk applicable to violations
of Section 8. Part II also includes numerous examples of permissible and prohibited
conduct under Section 8 to illustrate the kinds of business activities mortgage companies
can pursue or should avoid under RESPA. With regard to those arrangements exempt
from Section 8, this section also provides considerable detail on the structuring of
affiliated business arrangements and services agreements to comply with RESPA.
Part III explains RESPA’s prohibition on a seller’s required use of title insurance
companies under Section 9. This section summarizes ways that a seller of residential
real estate could violate Section 9.

Part IV addresses the servicing disclosure statement contained in Section 6 of RESPA
and required in conjunction with a mortgage company’s receipt of a loan application.

Exhibit A summarizes HUD and CFPB enforcement actions under Section 8.

Exhibit B contains sample provisions for a policy and procedures document addressing
compliance with Sections 6, 8, and 9 of RESPA.

Finally, Exhibit C comprises a sample checklist that can be used by a mortgage
company’s quality control or compliance personnel to review the company’s activities
under RESPA and evaluate the associated risks of such activities under Section 8 and
Section 9 of RESPA.
g
or
n.

Note: As indicated, RESPA also requires certain consumer disclosures related to the origination
and servicing of federally related mortgage loans, including a HUD-1 Settlement Statement, a
Good Faith Estimate, Special Information Booklets, Transfer of Servicing notices, Escrow
Account Statements and statements concerning prohibited fees related to disclosures. These
disclosures and the substantive requirements related to escrow accounts are not covered in this
manual. Revised RESPA-TILA disclosures have not yet been finalized but will be a subject of a
forthcoming Compliance Essentials publication soon after they are final. Escrow and servicing
disclosures and other servicing-related RESPA requirements will be addressed in the Compliance
Essentials Servicing publication.
-9-

11. MBA Compliance Essentials℠:
RESPA I Resource Guide
Finally, many states have enacted laws with similar prohibitions and consumer protections as
provided under RESPA. This manual discusses only the federal requirements of RESPA and
does not take into consideration any additional laws or regulations that may have been imposed
on the state level. It is possible that state laws may prohibit activities that are permissible under
RESPA, which means that compliance with federal law may not assure that a mortgage
company’s business activities are safe from state law scrutiny. A mortgage company should
consult with an attorney if it has any questions related to the legality and other risks associated
with its current or proposed business activities under RESPA and/or similar state laws.
ba
m
g
or
n.
io
at
uc
ed
- 10 -