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RESPA required use date pushed back
WASHINGTON (1/21/09)--The U.S. Department of Housing and Urban Development (HUD) has pushed back the effective date of its revised definition of “required use” under the Real Estate Settlement Procedures Act (RESPA). The definition was set to go into effect Jan. 16, but a final rule published last week in the Federal Register changed the date to April 16. RESPA currently allows businesses to make referrals to their affiliates that provide loan services, as long as the consumer is not required to use the service. The final rule on “required use” clarifies that referrals can include incentives, as well as disincentives. However, these provisions are not intended to eliminate the use of legitimate consumer discounts if they are not tied to the use of a specific settlement provider, according to Jeffrey Bloch, senior assistant general counsel of the Credit Union National Association (CUNA). An example of improper use of an incentive, Bloch said, could be a discount to a borrower if an affiliate is used for a certain service if the affiliate charges more than other competitors or if the discount is offset by higher costs elsewhere. However, providing a package of services in which the total price is less than the sum of the prices of the individual services will be permitted, assuming the use of the package is optional and that the lower price is not offset by higher costs elsewhere, Bloch said,
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