BrokerageIndustry News

Builders sue HUD over incentives

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The National Association of Home Builders has become the second industry group to file suit to block changes to the Real Estate Settlement Procedures Act, or RESPA, seeking a court injunction that would allow builders to continue offering consumers incentives for using their affiliated mortgage and title insurance companies.Some aspects of the new RESPA rule -- such as new standardized loan disclosure forms -- are being phased in over the course of the year (see story). But beginning Jan. 16, the Department of Housing and Urban Development will prohibit builders from offering incentives such as payment of closing costs or home upgrades when consumers use their affiliated companies.Enacted in 1974, RESPA is intended to prevent settlement services providers from paying illegal kickbacks and referral fees to people or companies that are in a position to send business their way. Since 1992, however, HUD has allowed real estate brokers, builders, title insurers and others to form affiliated...