RESPA

Marking Up of Third-Party Fees

RESPA § 8(b) provides:
No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for
the rendering of a real estate settlement  service in connection with a transaction involving a federally related 
mortgage loan other than for services actually performed.

HUD statement of policy 2001-1 reiterated HUD's position that RESPA prohibits the charging of unearned fees and identified three scenarios where it believes a RESPA violation will exist. The three scenarios giving rise to a RESPA violation are as follows:

• Two or more persons split a fee for settlement services and part or all of one

provider’s share of the fee is not in return for goods or facilities actually furnished or services actually performed;

• One settlement service provider marks up the cost of goods or services provided

by a third party and keeps the difference without providing actual goods or services to justify the additional charge; and

• One settlement service provider charges a fee for no, nominal or duplicative

work, or a fee that exceeds the reasonable value of goods or services provided.

HUD, therefore, has interpreted Section 8(b) to prohibit the marking up of third party vendor fees unless the markup is to compensate for actual goods or services provided and represents the reasonable value of those goods or services.

After the HUD interpretation, there was a split of opinion among the US Circuit Courts.

Two or more parties must split the unearned premium in order to violate Section 8(b)

• Boulware v. Crossland Mortgage Corp (4th Cir. 2002) (Mortgage lender marked up credit report fee)
• Haug v. Bank of America, N.A. (8th Cir. 2003) (Markup of Credit Report, appraisal and doc delivery)