Affiliated Business Arrangements Are on the Rise—With Them Come Statutory and Regulatory Hurdles (Volume 34, Number 10– October 2018)
Author: Phillip L. Schulman.; Emily J. Booth-Dornfeld.
Source: Volume 34, Number 10, October 2018 , pp.113-124(12)
Abstract:
An exception to RESPA’s anti-kickback and fee-splitting rules allows settlement service providers to use affiliated entities without violating the statute, subject to extensive statutory and regulatory conditions. The authors outline RESPA’s general prohibition on kick-backs and the splitting of unearned fees, and the penalties for noncompliance. They then discuss the affiliated business arrangement exception, including its history, HUD’s initial implementing rules, and the conflicting court decisions applying them. They then turn to the statutory definitions and safe harbor, and the HUD 10-factor criteria for a bona fide provider of settlement services. They close by describing recent enforcement proceedings and provide a takeaway.Keywords: In the Matter of PHH Corporation; Sections 8(A) and 8(B): Anti-Kickback and Fee-Splitting Provisions; Section 8(C)(4)10: Affiliated Business Arrangements
Affiliations:
1: Mayer Brown LLP; 2: Mayer Brown LLP.