RESPA News reached out to Kim Morris, one of the crafters of the 1990 revision to RESPA and president of InteMind Business Solutions, Inc., to hear her take on RESPA’s creation, revision and its relevancy today.
From 1990-2022, Morris worked in mortgage servicing for Chase Home Mortgage, Transamerica Real Estate Tax Service, First American, Accumatch and in originations for Mr. Cooper and large investors such as Fannie Mae, where she was the director of servicing in the National Servicing Organization during the housing crisis.
Since 2023, Morris opened Axle Title Research and InteMind Business Process Solutions, which are vendors for mortgage servicers, title companies and underwriters. Her area of focus within RESPA is fraud prevention, specifically identifying and eliminating arrangements that disguise referral compensation, inflate settlement costs or obscure financial relationships that influence consumer choice.
Reflecting on the past
Morris emphasized that while drafting the 1990 revision to RESPA, “consumer protection” was about making real estate transactions transparent and eliminating the kickbacks and referral fees that companies were imposing.
“It was all about allowing the customer to choose and not be forced into a box,” she said.
Affiliated business arrangements (AfBAs), in particular, were viewed as a risk because “they were dealing in kickbacks and deals were being made under the table, most of the time unknown to the consumer,” she said. However, there was no way to eliminate AfBAs, so there needed to be a way to regulate them.
“Putting all the costs out there allowed the consumer to make an informed decision and held the industry to standards that were not there previously,” Morris told RESPA News.
When it came to anticipating the future of the industry while drafting RESPA, Morris shared that the statute was intentionally left fluid so it could “change with the times,” as there was no way to know how prevalent joint ventures between real estate brokers and settlement service providers would become and how far technology would change.
Along the same vein, crafters of RESPA could not have predicted the level of ambiguity that exists today around concepts like “things of value” and “referrals” as “there was no way to see how the market would evolve and who the players would be,” Morris said.
Following the implementation of RESPA, there was a shift away from outright kickbacks to compliant-looking compensation structures, Morris stated.
“The market adapted by developing marketing fees, service agreements, etc. These created compensation structures that were technically compliant but closely resembled referral payments in practice,” she explained.
RESPA today
While the interpretation of RESPA has clearly drifted from its original intent, the purpose “has remained in place,” Morris said. However, as technology advances, Morris believes RESPA should be regularly reviewed and updated to remain relevant.
“The core principle [of RESPA] remains the same, but as the industry has evolved, regulators have had to adapt, resulting in a much more complex regulatory environment,” Morris said. “It still serves its original purpose, but the level of advancement in the industry was not fully anticipated. … It is becoming more and more difficult for regulators to keep up with changing technology. [RESPA] is very different today than it was imagined originally, but still very relevant. Consumers need transparency and RESPA provides that security.”
“[RESPA] was designed for a market where transactions were straightforward and transparent, but today’s risks come from how businesses influence decisions, bundle services together and shape consumer behavior,” she added.
When asked what she would change about RESPA if she could rewrite it today, Morris emphasized that the statute does not need a new mission but instead needs an updated perspective.
“The goal should still be protecting consumers and competition, but in a market where influence, integration and experience, not just transactions, drive decisions. Most consumers are not well versed at all in the process and feel overwhelmed during the loan process because it is high stakes, complex information and tight timing all at once,” she said.
Morris stated that regulators trying to balance consumer protection with innovation should keep in mind that “everything changes, but if you create a strong base, it can always be rooted in industry standards.”
“We must remain fluid and change with new technology. The consumer must always be the focal point and whatever administration is in power, they must protect the consumer,” she said.
“Policymakers need to understand that the challenge today is not just stopping kickbacks and other illegal activity that impacts the consumer, but making sure competition is fair and consumers have real choice in highly connected systems.”