Friday, July 12, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, January 18, 2015
Hawaii Escrow Companies: Federal 'Kickback' Rules Mean Realtors must do the Paperwork
By Andrew Walden @ 8:44 PM :: 5587 Views :: Small Business

by Andrew Walden

Transaction coordination services are prohibited 'kickbacks'.  That's the message licensed Hawaii realtors are receiving from escrow and title companies. 

Reacting to the new rules, one Maui real estate broker says:

"I just came back from an educational meeting sponsored by Realtor's Association of Maui (RAM) where the lawyers and the reps of a variety of escrow/title companies told a crowd of about 60 mostly residential realtors that they would be more strictly interpreting certain regulations.

"The cutbacks on food and beverage and marketing probably long overdue, but I think it's been at least a decade since I or any agent or broker prepared a time line or ordered a condo doc, or similar paperwork, that in the past had been a service provided by escrow. Now they're saying not only won't they do it any more but they won't give any advice on how the Realtors can now years later once again do it themselves.

"The real estate people are particularly unhappy about the ending of furnishing timelines, because this is the basic road map to what each side of a transaction has to perform and by when.

"In real estate it's making waves.  These RESPA changes will make a big difference in how the real estate business is conducted locally going forward, and the penalties are heavy duty including jail time."

The federal Real Estate Settlement Procedures Act Section 8 has been a source of confusion for years, but the Obama administration's newly formed Consumer Finance Protection Bureau is imposing its own interpretation.   

A December 1 letter to the Hawaii Association of Realtors from the Hawaii Land Title Association and the Hawaii Escrow Association lays down the law:

With the advent of regulation by the Consumer Financial Protection Bureau, the members of the Hawaii Land Title Association arid Hawaii Escrow Association have renewed their commitment to compliance with the Real Estate Settlement Procedures Act. As you know, Section 8 of RESPA states, in part, that "no person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."

The undersigneds' commitment to compliance with the law includes not participating in the following activities:

  • providing food, beverages, entertainment, transportation or free services and amenities in connection with Broker-sponsored functions, including open houses and awards events;
  • providing or printing marketing materials such as postcards and flyers, and postage, at anything less than market value charges;
  • providing door prizes or gifts, with the exception of promotional objects of nominal value (l.e., less than $25) with permanently-affixed company logos;
  • providing transaction coordination services by escrow or title company employees (e.g., timeline creation, ordering condominium document disclosure packages, ordering termite reports and surveys, furnishing closing/tabbed folders, etc.).

PDF: RESPA letter attached dated Dec 2014

HUD: Is timeshare covered by RESPA?  YES

Lexology: CFPB enforces RESPA referral prohibition against mortgage lender


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


Aloha Pregnancy Care Center


Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii


Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together


Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii


OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii