RESPA: Both Feet in the Tar Baby.

Posted By Cliff Tuttle | June 30, 2010

No. 462

HUD has just issued another interpretive ruling on RESPA kickback rules.  A real estate agent cannot accept compensation for “marketing” home warranties, but she can be paid for real services, like performing preliminary inspections.

It is surprising that HUD hasn’t just given up.  Some years ago, they rewrote the regs to enable real estate brokerage conglomerates to pay internal kickbacks.  But once Brer Rabbit got one foot stuck in the Tar Baby, he tried to use the other foot to extract himself and very soon he was stuck.  HUD has both feet in the Tar Baby.  Plus, enforcement of the rules has been so rare that there really aren’t any rules.  The only solution, as far as we see it is to throw HUD and its reg book into the briar patch.

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CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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