The U.S. Court of Appeals for the D.C. Circuit has reinstated its prior holding that payments for bona fide services provided and made at fair market value do not violate the Real Estate Settlement Procedures Act (RESPA). This decision reinforces NAR’s support of marketing service agreements.
"The National Association of REALTORS® is pleased with the court’s reinstatement of its previous decision affirming that payments to settlement service providers are permitted by RESPA so long as those payments are for goods and services actually furnished or performed and are made at fair market value," said NAR President Elizabeth Mendenhall. "We’re hopeful this much-needed clarity will address any and all uncertainty moving forward for real estate professionals who have entered into marketing service agreements with settlement and other service providers."
The court’s reinstatement of the previous decision reaffirms longstanding RESPA interpretations issued by the Department of Housing and Urban Development that had been challenged by the Consumer Financial Protection Bureau (CFPB) in the agency's case against PHH, a mortgage lending and services company. NAR filed a “friend of the court brief” opposing CFPB’s interpretation, and the Court’s initial opinion upheld NAR’s position. Read NAR’s issue brief on the case, PHH v. CFPB.
The opinion of the en banc court—made up of all 13 judges in the D.C. circuit—was focused exclusively on the constitutional question regarding the structure of the Consumer Financial Protection Bureau. The judges ruled that the unilateral authority of the CFPB vested in a single person not subject to dismissal in the discretion of the President – the director of the CFPB – was not unconstitutional. The court upheld the provision in the 2010 Dodd-Frank law, which limited removal of the director only “for cause” as consistent with the President’s constitutional authority.
In affirming the constitutionality of the CFBP and reinstating the earlier court decision, the justices issued a variety of concurring and dissenting opinions. NAR will provide an analysis of the court’s opinion.