Expert attorneys who spoke at October Research, LLC’s 2014 National Settlement Services Summit (NS3) said the answer to that question is yes. When a federal district court decided in the case of Henson v. Fidelity National Financial Inc. that the phrase “for services actually performed” contained in RESPA Section 8(c)(2) refers specifically to “settlement services,” it basically held that marketing services agreements (MSAs) are illegal. It is unlikely, however, that the interpretation will be upheld.
“Unfortunately, we now have a situation where a court is determining the meaning of the word “services” in Section 8(c),” said Jeffrey Arouh, a partner at McLaughlin & Stern LLP during an NS3 session covering affiliated business arrangements and MSAs. “And, for better or worse, what the court has said in Henson was that the term ‘services’ in Section 8(c)(2) exempts payment for settlement services actually performed.”
RESPA Section 8(a) prohibits the payment or acceptance of a kickback pursuant to an agreement that business incident to a real estate settlement service will be referred to any person. Section 8(c)(2) contains an exception, allowing for the “payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.”
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