What is RESPA and how does it affect you, a home buyer?
RESPA stands for “Real Estate Settlement Procedures Act.” While the goal of RESPA regulations are to improve transparency for borrowers so they can better understand the relationships between real estate agents and loan officers, the end result sometimes ends up creating more confusion. Consider this FAQ from the National Association of REALTORS (NAR):
- A real estate agent is sponsoring an open house for other agents. A local title agency reimburses the real estate agent for the cost of a luncheon and the title agency does not market its title services at the open house. Is this a violation of Section 8 of RESPA?
- A: Yes, this is a violation of RESPA. By reimbursing the real estate agent for the cost of the luncheon, the title agency has given the real estate agent a thing of value in consideration for the referral of business. Both the title agency and the real estate agent could be held responsible for the RESPA violation. If, however, the title company attends the open house to make a presentation or to otherwise market its services, such payments may be lawful under RESPA.
In this case, if the title agency does not market its services at the open house, it is a violation of RESPA. If the title agencies does market its services there, it is not. This seems counterintuitive to most people.
What this makes clear is that the intention of the law sometimes doesn’t match the outcome. The intent was to clarify the relationship between different parties involved in a home transaction, but the outcome was to obscure the relationship between agent and title company.
Our stance on RESPA is simply to provide full transparency. We believe it is important to be up-front and out-in-the-open about our relationships. This website is owned by a real estate (Corey Chase) but developed and marketed by a loan officer (Audrey D’Orazio). There is no contractual agree between the two parties to share leads or revenue. We are just fellow professionals trying to help each other out.
If you have any questions about RESPA or the relationships involved in marketing this website, please don’t hesitate to call us at 208-450-3779.