CUNA Regulatory Comment Call

July 7, 2010

Clarification of RESPA’s “Required Use” Provisions


Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Deputy General Counsel Mary Dunn at and to Senior Assistant General Counsel Jeff Bloch at; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you have questions or would like a copy of the ANPR. You may also access a copy of the ANPR here.


Under RESPA, referrals to affiliated settlement service providers are generally prohibited on the basis that the referrers’ return on investment in the affiliate would be considered a kickback or otherwise a thing of value in exchange for the referral, which is prohibited under Section 8 of RESPA. However, a referral will be permitted if the following conditions are met:

Under current RESPA rules, the “required to use” condition is not violated if the consumer is offered discounts or rebates for the purchase of settlement services from the affiliate, as long as it is optional for the consumer to use the affiliate and the discount is truly a discount below the prices that are otherwise available. Also, the discounted prices cannot be made up by charging higher costs elsewhere in the settlement process.


In 2008, HUD issued a final rule that amended the Good Faith Estimate form, the HUD-1 and HUD-1A settlement statements, and made other changes to the RESPA rules. The final rule also clarified that the provisions regarding the “required use” of affiliated settlement service providers, specifically by indicating that these provisions cover incentives as well as disincentives when providers impose a penalty or other type of economic disincentive if the consumer uses a nonaffiliated provider.

HUD clarified these provisions out of concern that consumers have essentially been required to use these affiliated providers because the timing of the contract precluded the buyer from shopping for settlement service providers, the costs and interest rates offered were not competitive, and it has been difficult to quantify certain of the discounts offered. However, litigation arose that challenged these provisions of the final rule and, as a result, HUD withdrew these provisions.

HUD has now issued the ANPR as the first step in reviewing these provisions and possibly issuing a new proposal to address these concerns. The purpose of the ANPR is to collect information as part of the process of developing the new proposal.


Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Deputy General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Luke Martone • Senior Regulatory Counsel • (202) 508-6743 •